| We used to use "Managing your Money" and now we use Quicken for the most part. (that becomes more and more egregious given their changes). We also live within our means which means managing future costs to the extent that we can/could. We paid off student loans, cars, and credit card debt. Then saved for a down payment and bought a house. We track 100% of the money coming in and the money going out and categorize it in as many ways as possible. This sounded pretty anal retentive to some friends of mine but they had to admit I knew exactly how much money I spent on food, mortgage, utilities, entertainment, etc each month. And that knowledge was usually enough to keep things from getting out of hand. We targeted saving 10% of our income every year. Early on that was a more aspirational target, but by keeping our burn rate as constant as possible, with raises the target became achievable. We typically reserved 50% of any "bonus" or unexpected money for spending foolishly (well on things that aren't normally budgeted) and saved the other half. Once our savings reached a point where we had enough for emergencies we bifurcated into savings for us and savings for the kids college. Then we started getting stock options or employee purchasable stock from our companies and used that to start a brokerage account (today I'd probably just put it in e-trade or something and go long on the S&P 500.) We were fortunate (really, its all about luck) to have chosen some good companies where the stock had some value. We diversified stock to fund the college fund. We were always "behind" our peers in terms of new cars, or fancy vacations because we chose not to go into debt on such things once we could save up for them. Looking back at it though it didn't really matter what program we used, what mattered were three things: 1) Keeping the discipline to track every dollar. This avoids "burn creep" where you start spending more and more and don't know it. 2) Always minimizing variability in costs (going from renting which was variable to a mortgage which was fixed, going from credit cards as cash flow (having a burn rate that is not always met by your cash flow means the occasional finance charge) to credit cards as payment device (once you have a reservoir of cash for overages you can always pay 100% of the balance every month) 3) Re-evaluating and adjusting costs every couple of years (new phone plan, swap out cable for satellite, sattelite for over the air, swap out ISP providers, magazine subscriptions, Insurance, etc. Any recurring cost from vendors in a competitive market has opportunities on about a 24 month schedule) The only other thing is that we started pretty explicitly associating lifetime costs with bits of gear. (accounts call it depreciation) Basically saving $25 a month for "phone instrument" means that in 24 months you have a $600 to buy a new phone) Once you are keeping track of costs long enough and go through a replacement cycle or two you can get a pretty good feel for what things should cost) |