I remember a year before starting college I spent a summer working at a hotel in Bethesda, Maryland. I was a front desk associate. All I did was basically check people in and out. Most of the people who stayed were business travelers coming from all parts of the country, from California to New York. I would see the stockbrokers coming from New York to see their rich clients in Bethesda and Potomac. I remember seeing them with the fancy clothes, nice suits and expensive cars. The Wall Street Journal was always with them. I always thought to myself, these guys are living large. Some day I will have that lifestyle. They were all quite friendly to me. And often would share some good advice and some motivational quotes on making money. Advice that really helped me get to where I am now. But this post is not about Wall Street or Stockbrokers. It is about technology. I will save those stories for later.
Lockheed Martin and IBM had offices nearby so we would often get guests that were more on the engineering and technology-side than anything else. One manager from IBM, a nice gentleman, would come and stay with his wife at the hotel suite for weeks on and off. The guy had a very high management position. For some reason, he saw a future in me in technology. He made me an offer to leave the hotel job and join IBM. I was young back then. But I thought about what would I do without a college education. How far would I go. So at the end of the day, I thanked him and politely declined the offer. But now, with Facebook, Twitter, Amazon, eBay and all these tech companies I wonder, maybe I would have become the next Jeff Bezos. Okay, enough daydreaming.
Technology. Many people wonder what technology or app I use to keep track of my personal and business finances. I know on my last post It is All About Net Worth I mentioned that at the end of the day it does not matter all the technology, all you need is a piece of paper. But as your income and net worth grows, things get a bit more complicated. Plus, it is good to start using the technological tools from day one if you can.
You don’t have to break the bank in bloated and expensive software to get things rolling. All you need is to look for open source or free software that can help you accomplish the monitoring of your expenses and income. I tried hundreds, hundreds of apps before picking the one that works extremely well. I have been using this app for eight years now. Now, keep in mind I am not an Apple guy so the app that I use is an Android one but I am sure you can find one that is similar in the Apple Store.
Gnucash. Yes the name is weird. I don’t know where the name comes from but boy is this app powerful and best of all free. I think the name comes from the Linux operating system. You know, those systems that geeky people (like me) used at one point in their lifetime. Well, Android system is a Linux-based system. But back to Gnucash. This app allows you to setup different accounts. I run my personal finances, two businesses and rental property from this free app. It is a Quicken computer program on steroids but without the inflated price. Free as a beer.
You can find it on the Play Store. Here is a screenshot from the Google Play Store. Yes. The last version is June 15, 2018. Over two years old and they have not updated it. But like I always say, if it works, why change it. Anyhow, the only reason corporations update or “improve” bloated software is to charge you every time you upgrade it. They come up with names and numbers so you feel you are behind and using old technology. Just think Office 2008/10/16/20/30 an so on. Who cares. Here it is, search GnuCash and you will get this:
Here is how the main screen looks like. There are lots of reports you can run and see. Most important of all is the net worth.
As you can see, everything is nicely organized on the main screen. You can see a quick bird’s eye view of all your net worth and accounts. Reports going back 12 months, two years or ten years. You can see income and expenses. Everything is there. You can edit the categories but the ones that are there are good for most of us. I do have four files or databases I use because of my businesses. Personal, two businesses and rental property. The personal database, for instance, does not have Depreciation & Section 179 for example. That is for business. Now when I say databases I do not mean Accounts. I mean a new completely different database. You will see what I am talking about once you install and begin to use the program.
Double-Entry Accounting
The GnuCash system uses double-entry accounting. If you do not know what that is, I recommend you google it now. It is very important that you learn accounting, at least the basic accounting principles. It is important. It will make you a better investor. I may write a blog post later about double-entry accounting. Think of double entry as buckets. Each account is a bucket. Money is water. So if you move the water from one bucket to another then you are using double-entry. If you debit an account you must credit another account. If you take water from the Asset bucket you have to move it to the Liability bucket. Or if you take water (money) from the Asset bucket (say checking) you have to offset that water from another bucket, say Housing (utility bills) and so forth. The buckets have to always balance.
Imputing Transactions
Every time you use your credit card or you take money out of your wallet or you buy something online with Paypal or whatever, you have to always use your phone to record the transaction. That is very important. Don’t leave it for later. For example, if you are adding gas to your car and then you tell yourself, I will add this to my GnuCash system when I get home. Forget it. You will not do it. Take your phone out and record the amount you spent on gas right there and then. This is important because at the end of the day, week or month you can reconcile all your accounts. Checking and credit cards. This way you can see where your money is going and whether you are spending more on things that you should not be spending money on. Plus, it helps because you are able to track any suspicious transactions on your accounts. Read my experience with Credit Card Charges and how I had to deal with an Amazon charge on my American Express.
Ok. That is enough. My fingers are hurting from typing this much. I will write another post on how this lovely program is able to make it so easy for me to generate reports to my computer and come tax time I make my CPA super happy because in literally 15 minutes I can generate reports for him to complete my taxes. Generating these detailed reports really feels like I am working for him to do my taxes and he charges me on top of that. To be realistic and fair, there is more to preparing taxes than imputing numbers. Anyhow, as our income and expenses and net worth grows things get a bit more complicated. By the way, there is a companion Windows-based GnuCash software that works well with the phone app. On the internet you will find people saying that it does not sync or work well with the computer version but it does. I will show you how on a separate post. The computer version is free as a beer too.
Thanks for reading and please share my blog website with your friends and family. This is the way, we bloggers are able to get some return on our time writing and sharing our secrets to financial independence. You can share the blog in your Facebook timeline so your friends can read it.
Enjoy the few days we have left of summer. This summer has been very, very bad for us all with the Covid-19. Washington, D.C. weather is still muggy and humid as ever. The Pony Pals Camp for my two kids had to be cut short because of the Covid-19. One of the employees came back positive. Sucks. But at least my son’s soccer club is still active and his karate lessons. My little princess is hoping to restart her ballet classes again soon.
Sincerely,
The Economy Chief
What to read a brief bio of the Economy Chief? Sure. Click Here – Economy Chief bio.