However, I didn’t want to deprive my loyal (or not so loyal) readers of the excitement that comes with watching the tips, tricks, and advice I jot down each week come to life in a real world example. So, I’ve decided to create the “BeancounterBlog Wish Fund” which will serve as my surrogate net worth meter. With your help, we’ll invest the BeancounterBlog Wish Fund wisely and watch it grow until we’re so rich we begin to live off the interest.

But to begin this little exercise/experiment, I need to set some ground rules. I don’t want to make this example overly-complicated, but I also don’t want to throw the money into an HSBC online savings account and let it accrue interest at 5%. So, here are the guidelines that we’re going to start with:

1. Monthly amount available to invest: $1,000. Some might say this is a bit too high, or perhaps not high enough. But this will represent 30% of a $40k after-tax salary, or 20% of a $60k after-tax salary. I realize that it’s VERY difficult to put away 30% of your income… but just roll with me on this one.
2. We’re going to begin by using investment options available on Yahoo! Finance. As I mentioned, we’re going to start off simple, by using stocks, bonds, and mutual funds available for tracking on Yahoo! Finance. As the experiment progresses, we’ll throw in a few more complicated investment options and diversify our portfolio a bit more. But as a real world example, this is fairly realistic. Most people sign up with an eTrade or ShareBuilder account and begin making monthly stock purchases because they’re less familiar with mutual funds, bonds, foreign currency, etc.
3. Assume broker commissions of $10 per stock trade
4. Assume broker commissions of .30% for mutual funds
5. Assume dividends are going to be re-invested

So what I need from you right now are ideas for investment opportunities. If you have a favorite stock you want me to invest in, or have a “feeling” about a certain mutual fund… let me know in the comments section below. I’ll be making the final decision by the end of next week, so be sure to add your comments by then.

As this project progresses, we’ll revisit the portfolio often to see what has worked, what hasn’t worked, and why. We’ll also begin to compare return percentages for each type of investment, and compare short-term vs. long-term goals.

So… I’ve got a $1,000 of cash for October, what should I invest in?

If you couldn’t guess from the title to this post, I finally received my free iPod Nano from Key Bank!

I initially wrote about the promotion here, and months later wrote about my frustrations at having never received the iPod. After several phone calls and letters, I still had nothing to show for my $50 tied up in a checking account at Key Bank.

However, after I called to have them reverse my 1099-misc that they had sent me for the value of the iPod, they got down to the bottom of my little mystery in no time! It’s funny how motivated they were when it came to avoiding some paperwork.

The tax department found out that the iPod had never reached my previous address, so it was delivered instead to the Key Bank branch where I opened my account - in Utah. After a phone call to that branch they confirmed that they did, in fact, have my iPod sitting there ready to be picked up. The problem, of course, was that I am now living in California, and wouldn’t be able to pick it up. The employee offered to mail the iPod, but couldn’t spring for insurance, so I had my sister, a local college student, pick it up for me and mail it this week.

So, the question now is: was it worth it? Were the months of frustration and numerous phone calls worth the free iPod?

Maybe it’s because I’m an Apple fanboy, or perhaps because I’m a sucker for free stuff… but I thought the promotion was worth it - for me at least. As for Key Bank, they are going to lose my business in about a month, when the terms of the promotion end and I can pull out my $50 from my checking account. If I was this frustrated at their handling of my free iPod, I can’t imagine how frustrating it would be when dealing with significant amounts of my own money.

I’ll pass on Key Bank, but I thank them graciously for my free iPod!

So about 2 weeks ago I applied online at KeyBank.com for their free online checking account. However, there are a few “hoops” when it comes to the free iPod offer:

1. You have to sign up before Sept. 16th (so hurry!)
2. You have to sign up for either direct deposit or their KeyBank credit card (I opted for the credit card)
3. You need to keep your account open for 180 days to avoid the cancellation fee
4. To open the account a minimum $50 deposit is required (a simple bank transfer took care of this)
5. You’ll receive a 1099-INT for the value of the iPod

But this week I received my credit card (actually issued through CitiBank) as well as confirmation of my account opening. So now it’s just a waiting game (up to 60 days) until I get that shiny new iPod!

If you can jump through the hoops that this offer requires and can part with $50 for 6 months than I encourage you to sign up. If the hoops are too much for you then I’ll keep you up-to-date as to the progress of my own experiment.

Well, as I promised in that post I was going to take on the website’s product - MySpendingPlan - as an experiment. Here’s what has happened so far - just one week into the month.

First of all I created an account at MySpendingPlan and began to create my own spending plan. The website provides a few templates to get you started so that you don’t have to create everything from scratch - so I chose one and went from there. However, I just mention that everything went downhill from there.

The website is very clean and very good at keeping track of everything - but it is dang near impossible to use! The main page presents your virtual envelopes with the spending status, budget, payments, and deposits - along with your balance.

If you want to adjust your budget, add payments, add deposits, or anything else - you must go to a different section. If you want to delete an envelope or just edit its name, you must also go to another screen. With the overwhelming presence of AJAX these days I’m surprised they didn’t allow this sort of editing on the same screen. So, after going to the “Edit Budget” page you are presented with a list of the envelopes, each with an “edit” button to the side. Again, if I want to edit a budget amount I must click on each individual “edit” button, edit the amount, and then click save. I think you are beginning to understand what I’m trying to get at here. All in all I would estimate that the entire process of creating the envelopes, adding funds, adding my budget, and adding bank accounts took me well over 3,000 clicks and about 1 1/2 hours.

Obviously if setting up the program was going to be that difficult I could only imagine what the day-to-day use was going to bring. So, like any good accountant would do I switched to our friend Excel. Instead of messing with the 3,000 clicks and page reload time I decided to create a template in Excel that did the same thing. I will post up the “template” as soon as I make it presentable, but basically I created three worksheets:

1. Envelope Categories: this worksheet contained the names of all the envelopes in a named range
2. February Summary: this worksheet contained a nice looking presentation of the budget categories, the budget amounts, the payments, and the deposit amounts. The payment amounts came from a ‘countif’ statement that summed the transactions on the next worksheet.
3. February Transactions: this worksheet contained the transactions for the month including the date, description, location, amount, and envelope name. The envelope name was restricted to a list generated from the first worksheet so that the ‘countif’ statement from the second worksheet would work correctly.

In conclusion, my experiment is progressing well although I was forced to switch to Excel due to MySpendingPlan’s user-unfriendliness. Stay tuned to see how the envelope system experiment progresses…

A new website for people and groups who are looking for powerful, collaborative, and free software to mange their finances, announced its official launch. MySpendingPlan.com is free secure online personal finance budgeting software that’s easy to use for a variety of budgeting purposes from personal home finance, to vacation planning, home remodeling, and organization budgeting.

The site is based upon a common budgeting technique — called the “Envelope System” — that has lost steam as more and more people use plastic for everything. The evelope system consists of taking a month’s or week’s worth of income in cash and dividing it up among your budget categories which are represented by actual physical envelopes. This way, each time you need to go out for lunch, you take the appropriate cash out of the “Dining Out” envelope so that you can see how much will be left in there after you buy your Big Mac. Seeing the actual cash leave the envelope is a lot more effective at curbing spending that using your debit or credit card where your Big Mac is “magically” paid for and you don’t give a second thought to it.

I’m a fan of the evelope system; however, it does take some sacrifices. As I’ve already mentioned before, switching to a cash-based payment system is a big change from the prolific use of credit cards. But despite this drawback, I’ve decided to try out both the envelope system and
MySpendingPlan.com for the month of February. I’ve created a new category as well, called “Experiments” that will be used to track this and other experiments. Feel free to subscribe to that feed as well. I’ll be releasing more details about my experiment as February approaches, but I wanted to let you know about the new program in case you wanted to experiment as well!