Bonnie Biafore, author O'Reilly's latest book, Quicken 2009: The Missing Manual is a self-described incorrigible tinkerer. "My personal finances have lived in Quicken since the early 90s, so I've had to do a lot of coaxing over the years to get Quicken to do what I want," she says. "My new book is my way of sharing the love."
Adds Bonnie: "Unless you're a survivalist type, money pays for food, shelter, other necessities, and fun. Keeping track of your finances helps you make ends meet while you're working and can help you save enough to live comfortably for several decades of retirement. Baby boomers are approaching retirement, which will bring a tidal shift from socking away savings to spending those savings. Quicken budgeting and tracking features can help retirees live within their retirement means."
The economy isn't pretty, so most of us want to protect the money we have and use money more wisely. Here Bonnie offers her Top 10 Tips to help us find ways to cut expenses and build up emergency savings.
1. Tracking overdraft protection and home equity loans
If you have overdraft protection for your checking account or you want to track a home equity line of credit (HELOC), Quicken's credit card account type fits the bill. Both of these financial features act like credit card accounts, with credit limits, minimum payments, and interest charged on credit balances.
When you set up a credit card account for overdraft protection or a HELOC, fill in the Opening Balance field with zero and the Credit Limit field with the maximum amount of credit you receive from your bank. Then, when you withdraw money, record that transaction in your Quicken credit card account register. (The withdrawal increases the balance you owe.) When you make a deposit, record it as a payment in the credit card register.
Recording the interest you pay on your HELOC is similar to recording interest payments on a credit card. The only difference is that you use a tax-deductible category for interest, like Mortgage Interest Exp:Bank.
2. Tracking business reimbursements
If you receive expense reimbursements from your company or volunteer association, having a category for tracking reimbursements can help you determine whether you've received all the money you're due. Simply create an income category called, say, Business Reimbursements. (Income categories are usually fewer in number than expense categories, so they're easier to spot.)
Then, every time you spend money on reimbursable expenses (like parking), assign the transactions to the Business Reimbursements category. When you run an Itemized Categories report, the value for Business Reimbursements shows up as a negative number--your cue that you're still waiting for your reimbursement. You can use that Itemized Categories report to prepare your expense report.
When you receive your reimbursement check, assign the deposit to the Business Reimbursements category. You'll know you've been reimbursed for all your expenses when the total for this category is equal to zero or to the amount of any unreimbursed expenses.
3. Remembering how to load preprinted forms in your printer
Once you figure out what direction to load pre-printed forms like checks in a page-oriented printer (for example, printed side down with the top of the page nearest to you), jot down those instructions and tape them to your printer. That way, you won't have to sacrifice additional preprinted forms to determine the correct way to load them in the future--and you'll feel super smart.
4. Moving an investment account to a new brokerage
If you decide to move one of your investment accounts to a different brokerage, updating your account in Quicken is easy compared to the real-world process. If you're moving an entire account to a new financial institution, all you have to do in Quicken is change the name and account number of the investment account. The securities stay in the same Quicken account and your transaction history and performance is untouched.
If you set up the original account for online access, the process is slightly different. You first have to accept any downloaded transactions and then deactivate the online services. Then you can edit the account's details to change the name and account number. To set up the Quicken account to work with the new financial institution's online services, simply activate those services using the new institution and account number.
5. Deleting downloaded transactions
Every now and then, your downloaded transactions will get out of synch with what's in your register. For example, if you've just activated online services for an account you've reconciled manually, Quicken downloads transactions that you've already reconciled.
The program doesn't check reconciled transactions for matches, so older transactions show up with a New status. At that point, you don't need to accept the downloaded transactions, because they duplicate the ones you've already reconciled.
To delete a duplicate downloaded transactions, simply select the transaction in the Downloaded Transactions tab, click Edit, and then choose Delete from the drop-down menu. In the confirmation dialog box that appears, click Yes. Quicken removes the downloaded transaction without adding it to the account register. (Unfortunately, you have to delete downloaded transactions one at a time.)
6. Turning checks into transfers
Sometimes, checks you write act like transfers in Quicken. For example, consider the check you write to pay your credit card bill. In the real world, the credit card company cashes your check and credits your account with the payment. In Quicken, the check transfers money out of your checking account and reduces the balance on your credit card account. (The same goes for a check you deposit into your money market account: it transfers money from your Quicken checking account to your Quicken money market account.) Instead of recording two separate transactions (one in your checking account and one in your credit card or money market account), you can save time by simply recording the check and then converting it into a transfer.
Transforming a check into a transfer is easy: When you record the check in Quicken, in the Category field, simply choose the appropriate account--like your credit card or money market account--instead of a category like Groceries or Gas. Easy, huh?
7. Finding transactions that keep your Quicken account from reconciling with your bank statement
If you can't quite get a Quicken account to reconcile, look for a transaction equal to the amount of the difference. The culprit could be a single transaction that you marked or unmarked by mistake, or a duplicate transaction that you marked as cleared. The fastest method is to use Quicken's Find command to search transaction Amount fields for matching values.
If that doesn't turn up anything, look for a transaction equal to half the difference, in case you recorded a transaction the wrong way around. For example, if your reconciliation is off by $1,000, the problem could be a $500 check that you recorded as a $500 deposit by mistake. You'll be off by $1,000 because a $500 check is missing and there's an erroneous $500 deposit.
Next, review transactions for transposed numbers: It's easy to type $95.40 when you meant $94.50. But before you examine every transaction amount for these hard-to-spot errors, divide the Difference value by 9. If the result is a whole number of dollars or cents, such as 5 dollars or 10 cents, chances are you've transposed numbers. For example, say you have a difference of .90, or 90 cents. Dividing by 9 results in .1--that is, 10 cents. If, on the other hand, the result of the division is something like 1.52 or .523 (52.3 cents), transposed numbers aren't to blame.
For extra credit, here's why this trick works: Transposing two numbers changes the order of 10 that each digit is multiplied by. Take the numbers 87 and 78, for example. In 87, the number 8 is multiplied by 10 and the number 7 is multiplied by 1. The opposite is true for the number 78. Substituting a for 8 and b for 9, the arithmetic looks like this: (a x 10) + (b x 1) - (a x 10) - (a x 1). That's the equivalent of 10a + b - 10b - x, or 9a - 9b. Divide by 9 and you have a whole number!
8. Refinancing a loan
When you refinance a loan or mortgage, you use money from a new loan to pay off the balance of the old loan and a few refinancing fees. The balance on the old loan drops to zero. In Quicken, the new loan should be linked to the asset it's paying for. If the thought of getting all these changes straight makes you sweat, relax. All you have to do is follow the money, and Quicken makes that easy.
First, create a loan account for the new loan as you would for any other. You'll have an opening balance transaction in this new loan account that's equal to the amount you've borrowed with the new loan. All you have to do is split this opening balance transaction to account for the items that the new loan covers: paying off the old loan, closing costs, and any accrued interest. (If you roll the closing costs and payoff interest into the new loan, then the split transaction includes entries for paying off the balance, closing costs, and interest.)
To pay off the balance on the old loan, in the Category field, choose the liability account for the old loan. In the Amount field, type the balance on the old loan. This transfer reduces the balance on the old loan to zero. To allocate some of the new loan to pay your closing costs, choose a category like Fees. In the Amount field, type the value of the closing fees.
When you close out an old loan, you typically have to pay some interest that accrued after the last payment you made. In the Category field, choose the category you use to track deductible interest expense, such as Quicken's built-in Mortgage Interest Exp:Bank.
9. Changing an account's value without showing the amount in a Quicken category
You'll often want to change the value of an asset account to, for example, reflect the increase or decrease in your home's value. However, you don't want these value changes to appear in income and expense reports or other accounts, because the money isn't going anywhere--all it does is change the value of that account (and your net worth). If you assign a big increase or decrease in asset value to a category, your income and expense reports look better or worse than they really are, kind of like Enron accounting. (A $20,000 drop in value assigned to the Misc category, say, shows up as $20,000 in expenses in an income and expense report. But you didn't actually spend $20,000. Likewise, a $20,000 increase in house value assigned to the Misc category makes it look like you spent $20,000 less in expenses.)
To change an asset's value without affecting income or expenses, update the account balance and assign that update back to the same asset account. In the account register's menu bar, choose Update Balance and type the new value in the "Update Balance to" text box. In the "Category for Adjustment" drop-down menu, choose the asset account you're updating. (You may see a warning about transferring into the same account. Just click OK.) By doing this, the update doesn't show up in a category or other account; it simply changes the value of your asset account--with no unwelcome side effects.
10. Tracking black box investments
Suppose you invest with money managers who trade securities more than you care to know. All you care about is how much your account is worth, and the performance the money managers deliver in exchange for their extravagant fees. Because you don't have transactions or price quotes to download, you have to trick Quicken into calculating performance for this kind of investment. Here's how:
Create a security for the investment (you don't have to add a ticker symbol). When Quicken tells you it can't find data for the security, select the "Add manually" option. Record a purchase transaction that buys a number of shares equal to the dollars you invested: In the "Price paid" box, type 1, which tells Quicken you bought those shares for one dollar each. If you invested $10,000, type 10,000 in the "Number of shares" box.
When you receive your statement, you can create a new price to reflect the investment's current value. Choose Investing→Security Details View and choose the security from the drop-down list. In the Security Detail View window's menu bar, choose Update→Edit Price History. In the Price History dialog box, click New. Fill in the Price box with the value that makes the account balance equal the statement balance. (Calculate the price by dividing the balance from your statement by the number of $1 "shares" you originally entered. For example, if you own 10,000 "shares" that are now worth $25,500, your new share price is $2.55.)
When you create a new price in this way, the Security Details view shows the percentage gain, as if this were a regular stock or mutual fund. In addition, performance reports will show the annual returns.
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