Ok, it’s only been a couple days since I said I was going to give Mint.com a two-week trial, but things are already looking a bit bleak in terms of Mint.com being my primary personal finance tool. Here are a few of the issues:

1. Budgeting feels like an afterthought

Budgeting and planning are pretty important parts of personal finance, but they feel like an afterthought in Mint.com. From what I understand, it launched without them, and then they were added later. It shows. Budgeting should probably have its own tab, but it’s just a box on the overview tab. Adding budget line items feels clunky and the list isn’t organized in any meaningful fashion that I can discern, so it’s hard to check a specific category without scanning all of them.

2. No way to enter manual transactions

Here’s another reason that budgeting isn’t terribly useful: transactions lag several days before they show up in Mint.com. This isn’t their fault, it’s just how the financial institutions work. But if I could enter a manual transaction and then clear it when it posts from my bank, I could keep my budget up-to-date. If Mint.com doesn’t know that I just dropped $300 on a new iPhone, it might think that I still have plenty of money left in my spending category, when it’s actually over budget.

Plus, I do occasionally spend cash and it would be nice to enter manual transactions for that. You can split ATM transactions into different categories, so perhaps that accomplishes the same thing for most people.

3. No way to enter manual assets or liabilities

I like tracking my net worth, and I currently enter all the numbers once a month into networthiq.com, but it would be great if the tool I use to track personal finances could tell me this. And Mint.com does have this feature, but the problem is that you can’t add manual assets or liabilities. This is a bit of a problem if some of your assets or liabilities are in institutions not connected to Mint, or if you’ve got real estate. Ironically, you can add mortgages, but not the underlying real asset that the mortgages are written against, so your net worth will be ridiculously skewed to the negative if you do this.

4. No custom categories

Mint lets you create budget tracking items and categorize your spending, but the categories are all pre-defined and there doesn’t seem to be any way to create your own categories. This is really annoying, because you spend a bunch of time hunting for the best category, and often end up using one that doesn’t fit super well. I’m guessing that one of the reasons they do this is that having every user on the same category taxonomy makes it much easier to automatically tag transactions based on how other users have tagged them. Still, it would be nice to have the option, even if you do give up some benefit.

5. No way to anticipate future spending

This is similar to #2, in that it prevents your budget from being a true picture of what you have available to spend. One of the best things about the envelope method of budgeting is that it allows you to allocate income for *future* expenditures that you anticipate. This is really handy, because if you have $15k in your checking account, it might be because you have a lot of free cash to spend, or it might be because your rent is $1500 and your taxes due are $13k and you’re paying them in two weeks, in which case you’ve only got $500 to spend. To be fair, this one isn’t completely Mint’s fault, as a lot of personal finance and budgeting tools work like this. However, it would be awesome if Mint could find some way to work it in.

6. No way to transfer money between budget categories

If you’re spending way too much in one category, and a lot less in another, it would be nice to adjust your budget temporarily for the month by transferring money from one budget category to another. You can do this with Mvelopes, but the only way to accomplish the same thing with Mint is to edit your budget and then remember to change it back at the end of the month.

So it’s looking like I’ll have to stick with Mvelopes for now, though I plan on checking Mint.com on a regular basis for its analysis tools. Perhaps they’ll get their act together on some of the points above, but for now, it’s just not that useful to me. Too bad, because the design and UI are one of the best I’ve ever seen on a web app.

If anyone from Mvelopes ever reads this, please listen to me: your model is awesome and your features are amazing. But your platform sucks. Ditch the flash, cut your price down, and you’ll have a customer for life.

I’ve been using Mvelopes.com off-and-on for the last two years, but I’ll confess that I haven’t been so good about it for the last twelve months or so. Here’s why: it sucks. It has a horribly flash interface, is ridiculously slow and clunky, has bugs, and is always having issues with downloading my account data. It’s also completely manual, so it adds a few minutes of work every day. Let it slip for a week or two and you’ve got 50 - 75 transactions that need to be categorized using a brutally painful interface. Ugh. On top of that, it’s like $7 - 15 / month.

So why do I keep using it (or trying to)? Because when you get it rolling, it’s amazing. The envelope method of budgeting works like this: for each spending category, you put money in as you get it, based on your budget, and you take it out as you spend it. When it’s gone, it’s gone. If you don’t spend all the money in that envelope for that month, it carries over to the next month. For example, let’s say I make $2000 per month. I put $700 into a rent envelope, $200 into food, $200 into utilities, $200 into spending, $300 into savings, and $400 into gas As I spend money out of each of those categories over the month, I take that money out of the appropriate envelope. At the end of the month, if I have $45 left in the spending envelope and everything else is empty, I’ll have $245 in my spending envelope for the next month. Envelope budgeting is a great way to control spending and save for things over a long period of time, like an annual insurance payment, or Christmas gifts.

Anyway, about a year or so ago, I signed up for Mint.com, which is kind of like Quicken, but online and free. The interface was good, but this was at the height of my enthusiasm for Mvelopes, and since Mint.com was mainly about seeing how you’d already spent your money, I didn’t spend much time on it.

Fast forward twelve months and Mint.com is starting to look a lot better. It’s got more robust budgeting features, some amazing graphing, trend analysis, automatic transaction categorization, and best of all, it’s all free. But at the end of the day, it still feels more geared towards tracking the money you’ve already spent than helping you spend correctly in the future.

So should I switch? I’m not sure. I really like the envelope budgeting method, but if the interface is so horrible and painful to use that I won’t do it, it’s not really giving me much benefit. If Mint.com would just add something close to the envelope method of budgeting, I would be a customer for life. I’d gladly fork over $10 / month to never have to log into Mvelopes.com again.

I’m going to get Mint.com all setup and rocking for the rest of this month. In two weeks, I’ll evaluate where I’m at and post a status update. If it’s working well for me, I’ll stick with it and cancel Mvelopes. If anyone has found any other alternatives, I’d love to hear about them

When I first heard that Yammer (the “twitter for business” startup) had won TechCrunch50, I had mixed feelings. On the one hand, I’ve been using Backpack’s Journal feature to do something similar with an agency that I do work with, and I immediately saw the value. It’s interesting to see what other developers or designers are up to. For a freelancer, Twitter itself is almost like working in an office, and I can see the value of doing something like a mini-twitter just within your organization.

On the other hand, it doesn’t seem that innovative or impressive from a technology standpoint, just a slightly modified take on a concept that’s been around for awhile.

But then I heard about Yammer’s business model. I’m sure this is a big part of why Yammer won, because it’s brilliant. Basically, users sign up to this thing using their corporate email address, which makes sense since they’re using it for work. It’s completely free for any employee to sign up, and they can do so without the knowledge or blessing of their employer. However, if the company wants to “claim their network” and have administrative control over the user account that their employees have, they have to pay $1 / month / account.

Here’s why this is brilliant: in a typical corporate environment, tools and services are imposed in a top-down fashion, and then HR spends tons of effort trying to get people to use them. I used to work at CNET, and we had this terrible internal productivity tracking tool that everyone was supposed to use. The interface was awful, the integration was terrible, and probably cost CNET a ton to use the service for thousands of employees. But it would have been worth it if it actually increased productivity by 1/10th of a percentage point, or allowed CNET to ferret out their most productive employees. But I doubt that it did, because the person using the system and person gaining value from the system were not the same person. Employees didn’t get much extra out of it, and largely saw it as what it was: more work so that management could keep an eye on them. All the value was to the organization, not the users.

Contrast that with Yammer. A couple people from CNET sign up, they want to see what their colleagues are doing at work, so they invite them. Some of those people sign up, invite more people, and so on. Pretty soon, hundreds of people at CNET are using Yammer to share what they’re working on, ask questions, etc. Then the organization finds out that there’s all this value locked up in Yammer, and they can pay a measly $12 / year for each employee to access that value. Think they’ll be willing to do so? You bet.

The problem with many enterprise tools is that the organization is the primary customer, and then they have to push their employees to use the tool, because the employees view it as just more work. But the brilliance of Yammer is that they’ve built a tool that infiltrates value into an organization, then charges the organization if they want to unlock that value. If you hit the users first and add value and then layer on features that the business wants, you’ve got an irresistible combination. Employees will sign up and use it on their own, without any prompting or cajoling from the organization, and the business will find that it needs to pay up to unlock all the value that employees are naturally creating because they want to. It’s a classic bottom-up strategy, and one that I’ve started to think about for some of my own entrepreneurial pursuits.

I’m a big fan of the “release early, release often” philosophy, where you break your software into small chunks and release it to market as soon as you can, let people play with it and give you feedback, and iterate from there. The other common option is to build a huge release and push it all out there at once, and then only release changes every so often, and usually very large groups of changes.

I’ve been working on an idea with some friends for a few months now, which I’ll talk more about in a future post. Anyway, one of the constant challenges we face is where exactly to draw the line for our first release. We want to build something simple, but something that’s still useful. It can’t be too simple. As part of the process of deciding where to draw that line, I’ve been doing a lot of research and thinking a lot about other apps and sites and how they’ve dealt with the challenge of where to draw the line of simplicity. I wanted to give what I think is a good example of simple / too simple:

CheckYesOrNo

CheckYesOrNo is a small one-day project that was done by Ben Rasmusen and Gordon Brander, both friends of mine. It started out as a spur of the moment project that they quickly knocked out and put out there, which is awesome. It allows anyone to create a yes or no poll and solicit feedback from others via a URL. That’s it. There’s no registration, login, profiles, etc. Just a very simple concept and a beautiful design. However, once I used the app for a little while, I started to notice a small frustration: a lot of my questions didn’t fit into the “Yes or No” mold. Sometimes I had three alternatives that I wanted to ask people to choose between. Also, sometimes when I answered a poll, I wanted to provide more detail about my answer. And there was no way for me to keep track of the questions I had asked and the results other than keeping a list of URLs somewhere. In short, I felt like the app was just a little too simple for me.

FriendFeedback

Today, Ben released FriendFeedback.com, which is still a very simple poll creator, with three main differences from CheckYesOrNo:

• It allows you to define multiple answers (including yes or no, if you choose)
• It allows those responding to the poll to leave short comments
• It has a dashboard where you can track responses to all your polls

It still features a great design, clear functionality, and a solid user experience, but the usefulness is so much higher to me, just because it’s now just a bit more flexible, but virtually no usability has been sacrificed for the added functionality. It’s a great product and has drawn the line of simplicity quite skillfully.

In fact, I’ve been racking my brain for the last day or two and the only real enhancement I can think of at this point is to allow people to create polls without registering if they so desire. I’m sure other suggestions and improvements will emerge from people’s usage patterns and feedback, but that’s the whole point. When you throw it out there at the right point, it’s useful enough that people will actually use it and tell you what needs to be changed and improved. Any more simplistic and people won’t bother.

How simple is too simple to you?

My wife and I are both self-employed consultants, we have several investment properties, and we each have entrepreneurial pursuits on the side. All of these endeavors have income and expenses that need to be tracked, not to mention our personal finances, which are currently being tracked with Mvelopes and Mint. I took a bunch of accounting and finance classes while I was in college, so I understand accounting quite well, and I understand how important it is. I want a system that gives me a real visibility into my businesses and how they’re performing. However, no matter how hard I search, I can’t seem to find a decent small-business accounting solution out there. What I’m asking for isn’t THAT difficult:

• Basic features, without all the feature-bloat that is so common these days
• Track income, expenses, account balances, etc.
• Dashboard view with charting and recent / upcoming income / expenses
• Preferably web-based, but if not, with a solid OS X version
• Ability to import and export in a variety of formats, including xml, xls, pdf, and csv
• Available in U.S. with US currency and tax info
• Inexpensive or free

Yesterday, I spent most of my afternoon and evening surveying the available options and guess what I found: they all still suck.
Read the rest of this entry »

Rich Dad, Poor Dad by Robert T. Kiyosaki
When I was about 19, this book changed my entire outlook on money and finances. Looking back, and reading through the book now, I see a lot that I disagree with, but it sparked my thinking about how to manage money, and what financial freedom truly means. Not a practical book, but definitely a good start if you have no “financial motivation.”

The Millionaire Next Door by Thomas J. Stanley
This book, which I read recently, is the result of years of research of America’s millionaires: how they live, what they wear, what cars they drive, how they made their money, etc. It was definitely inspiring to me, and also got me thinking about the impact of wealth on future generations, both good and bad.

Cashflow Quadrant by Robert T. Kiyosaki
This book builds on Rich Dad, Poor Dad and goes into detail about how to build multiple streams of income and gradually reduce your reliance on earned income. It contains overviews of the impact on personal finances and income of things like real estate investment, entrepreneurship, and investing in businesses.

The Richest Man in Babylon by George S. Clason
This is a deceptively simple book that contains a series of financial parables that teach the importance of always saving, the power of compound interest, investment, insurance, and other time-tested financial truths. Easy read and a good reminder of some very basic lessons. Again, good to read if you find yourself lacking that “financial motivation.”

I’ve been putting together a list of recommended books for this blog and I decided to take a few minutes to play around with LibraryThing.com. I’m very impressed. LT is a site that helps people track their personal libraries. You can quickly and easily enter the books you own, rate them, tag them, etc. They also provide RSS feeds and widgets so you can push your data out to your blog or feed reader. I especially like the ability to view my library by cover. It’s so much more interesting to look at than a list of text titles.

If you love books, give LibraryThing a try. You’ll like it.

My wife works at Current TV. They recently had their Christmas party, and they gave a 30gb black video ipod to every employee as a little Christmas bonus. Fortunately, I had just bought my wife a green nano a couple months ago, so she had no choice but to give me the video ipod. It’s pretty sweet, though encoding all the shows and things that I download for it is something of a pain. It almost makes it worth it to buy shows off of itunes for $1.99. Almost.

So I’ve had a huge problem with comment spam since I launched this blog. I was getting 10+ per day and climbing. I finally took the time to setup Akismet, which is a neat little service that moderates your comments and helps filter out spam. It’s a distributed service, so it compares comments posted on your blog with millions of others posted on blogs that it’s connected to in order to gauge the likelihood that a particular comment may be spam. Setup was very simple, as it’s included as a plugin with WordPress. You’ll need to sign up for an account on Wordpress.com. More details can be found on akismet.com.

I’ve been using it for about a week now, and I haven’t had a single spam comment get through. I highly recommend it.

Early last month, I started using a service called mvelopes.com. This is a personal finance and budgeting program that you would use instead of MS Money or Quicken. I had tried both Money and Quicken with very mixed results. I found them to be bloated, buggy, and trying to do too much and failing to do it well. So I decided to take the plunge and give mvelopes a try.

Mvelopes is basically an online representation of the envelope budgeting method, where you put cash into envelopes for groceries, spending, medical, gas, etc and then take the cash out when you need to spend it. When it’s gone, it’s gone. This can be a very effective method of budgeting, but it’s 2006, and I don’t want thousands of dollars in cash sitting in my house, not to mention the fact that I only use cash for a tiny percentage of my monthly transaction volume.

Enter Mvelopes.

Basically, Mvelopes works using the exact same concept as cash in envelopes, but online. So you setup a budget and then when your paycheck comes, you divvy it up into the envelopes, which represent budget categories. Mvelopes doesn’t move any money, it just keeps track of how the money in your checking account is allocated. Then, as your transactions come in (automatically downloaded from the 12000 financial institutions they have relationships with), you assign them to the envelopes that they correspond to and they reduce the envelope by that amount.

Perhaps an example will help. Let’s say you get paid $100 and you put that cash in the “Clothing” envelope. The balance of the envelope (assuming it was $0 before) is now $100. You buy a sweater for $25. When that transaction is downloaded from your bank, you just drag it into the clothing envelope and it reduces your balance by $25, to $75.

The service has a ton of other benefits and it takes a little bit to get the hang of everything, but it’s awesome. I highly recommend it.

http://www.mvelopes.com