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Financial Literacy

We’ve always been fans of Quicken here at Consumerism Commentary, and we’ve got a lot of reviews floating around to prove it. But you don’t really need reviews of Quicken from five years ago. You just need to know what to expect from the latest version: Quicken 2017.

Here, we’ll give you the highlights, and we’ll also talk you through the basics of using this interface.

quicken guide

The Highlights

Quicken still provides everything you’ve come to expect, including the ability to track all of your money in one place. If you’re big on tracking your net worth, it’ll help you do that. It tracks both assets and debts, and it will also track investments. (Though if you’re a serious investor, you may want to upgrade to Quicken Premier.)

What’s new with the 2017 version? Not a whole lot has changed, but there are a couple of upgrades you should know about, including:

  • Mobile: Now you can download the Quicken app to track your investments and budget on the go. The mobile app has a nice interface with everything you’ll find in the desktop version. Plus, you can add budget line items as you spend.
  • Advanced Search: You can find mobile transactions more easily with the mobile advanced search feature.
  • Refresh: Quicken got a refresh this year. The screen looks nicer, and the interface is a little more user-friendly. It’s not a major overhaul, but it’s easy on the eyes.
  • Zillow: You can connect with Zillow to automatically import your home’s estimated value. While Zillow may not be the most accurate option if you’re actually getting ready to buy or sell a home, this is a simple way to get a ballpark idea of your home’s value when calculating your net worth.
  • Alerts: You can get alerts sent to your phone or email inbox when bills are due or when you’re about to go over your budget.
  • Receipt Storage: Need to track expense receipts, but tired of paper clutter everywhere? You can snap photos of your receipts and store them with the mobile app.

Related: How to Track and Manage Receipts with Google Docs

Once you get set up, keeping track of everything in Quicken is relatively simple. Here’s what it all looks like:

First, import your accounts

As with other popular budgeting and financial tracking software, Quicken will automatically sync with your bank and credit card accounts, as well as your investment accounts. This makes it easy for you to track transactions without having to enter them manually.

In fact, the very first thing Quicken asks you to do after you enter your credentials is to sync a new account. To make it happen, you’ll just need your account’s login information. You can import all sorts of accounts, even to the basic version of Quicken, though investment tracking is more robust with the higher-level versions.

Next, check your recent transactions

When your accounts are imported, it can seem a little overwhelming at first. Quicken automatically categorizes your transactions, but you’ll likely have to go through a recategorize many of them. Quicken will give you the last thirty days’ worth of spending information to work with.

I do like how the system breaks everything down graphically. Once you set all of your transactions into categories, you can see what percentage of your budget goes to each category, and check out a corresponding chart breaking down your spending. It looks like this:

Quicken 1

You can see that Quicken will alert you when there are uncategorized transactions. You can click into that directly to see those transactions. Then, you can sort your transactions by account, date, and type of spending (with or without taxes).

You can also click into spending categories to figure out which transactions Quicken has placed into which categories. Chances are you’ll want to change some of those if you’re a budgeting stickler!

Quicken 2

Related: A 10-Minute Budget That Actually Works

Try the bill reminder system

Once you’ve been in the spending category interface, you can use the bill system to remind you when your bills are due. It’ll look at your last two months’ worth of transactions and find recurring bills and their due dates. The system will also track any paychecks you have automatically deposited to your bank account.

Quicken 3

You can then set up the reminders, which will alert you when bills are due and project your checking account balances over the next 12 days, based on your upcoming income and expenses.

Quicken 4

Since it’s not accounting for one-off spending like groceries and gas, this balance isn’t very accurate. At least not for me! But it can be a helpful way to stay on top of your bills so you don’t miss any due dates.

Learn More: Track Your Cash Flow with Google Docs

You can also sign up to have Quicken actually pay your bills for you. This requires a validation of your bank account and a monthly payment of $9.95. Since many banks offer free bill pay services, this one may not be worth the additional spend.

Create a budget

As with other pieces of this interface, Quicken will automatically create a budget for you based on past spending. However, this spending is according to Quicken’s categorizations. If you think Quicken has gotten a few things wrong, it’s best to re-categorize your existing transactions before delving into the budget tab.

Once you do, though, you can get access to a quick budget that you can change from there. The budget interface now looks very similar to Intuit’s Mint.com, which features slider bars to show how close you are to the budget limit in each category.

Quicken 5

You can, of course, change the budget for each category depending on your preferences and needs. You can also look at the budget in terms of only certain bank accounts, toggling between transactions in each account on the left sidebar.

One of the interesting things about this budget interface is that you can run various reports. These come out as very nice, color-coded documents that you could print off or store electronically, for an over-time view of your personal finances.

You can run reports for a variety of scenarios, including spending by category, spending versus available budget, income versus expenses, or spending for the month versus average spending by category. These over-time reports will become more useful the longer you use Quicken, which gives it more data to pull from. But some of the reports look like this:

Quicken 6

These reports could be really helpful if you’re trying to meet specific financial goals, like reducing spending in a few categories or tracking your budget over time.

What about upgrades?

My review has been based on the Quicken Starter option, but there are other options currently available, too. Here’s a quick breakdown of what they offer:

Quicken Deluxe

Quicken Premier

Quicken Home & Business

Quicken Rental Property Manager

Is Quicken right for you?

Quicken offers a load of great features, and its new interface is definitely more user-friendly than the last version I reviewed in 2014. If you want a one-stop-shop for tracking all of your personal finance details — from budgeting to investments to debt — then Quicken may be a worthwhile investment.

With that said, I don’t think I’d pay for the basic version of Quicken when free tools like Mint.com can do basically the same thing. My personal preference for budgeting is YNAB, though it does come with a $5/month fee.

However, if you want to add investment tracking and detailed financial planning into the mix, Quicken Deluxe might be a good option for you. And, of course, if you run rental properties or a small business, you can’t go wrong with the robust business-oriented versions of Quicken.

So, tell us: do you think Quicken is the right option for your personal finance tracking needs?

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It’s a good thing I’ve been saving a good portion of my income for the past year. Even with making estimated tax payments — the last of which was due on January 16 — I still have a significant tax bill this year, thanks to increased income.

Many taxpayers dread filing their taxes, even if they receive a refund from the IRS. It’s often a time-consuming process that can be fairly stressful. Plus, pressing Submit on your electronic return (or licking the stamp of your paper return) can bring out fears and anxiety over the possibility of an audit, no matter how diligent you were about your records.

Some people, like me, have a stronger reason for the lack of anticipation: we will end up owing money. And for those who haven’t saved enough money throughout the year, this is a dreaded situation.

TAX BILL

What If You Can’t Afford Your Tax Bill?

First of all, you don’t want to owe the IRS money. This type of debt is one of the hardest types to erase. There is no statute of limitations on IRS debt, either, so it won’t just go away on its own if ignored long enough. Even if you declare bankruptcy, it’s very difficult to get rid of tax debt.

Related: How to Adjust Your Witholdings for a $0 Return

Sometimes taxpayers receive a notification saying they owe money, but it might not be accurate. The IRS is a system subject to human error, just like any other agency. You can dispute the amount you owe if it doesn’t match your records and you have a reason to believe your calculation is correct.

Need More Time to File? How to Get an Extension on Your Taxes

The government is sensitive to the issue of whether you can afford to pay, so they’re willing to work with you a little bit. The best option is to avoid using a credit card to pay your debt, which would ordinarily be many consumers’ first choice. When you file your taxes, don’t pay online at that time if you can’t afford it in cash. Instead, wait until after you submit your form and it’s accepted by the IRS. Then, visit the IRS website to file an Online Payment Agreement.

If you take long enough, the IRS will send you a tax due notification, but there’s no need to wait for that to arrive. If you have your adjusted gross income (AGI) from your tax return, the amount you owe, and, of course, your Social Security number, you can get started. The form will first ask you how much you can pay and when you can pay it. Then, it will come up with a payment plan that works for you.

The payment plan will allow you to spread your tax bill out over a longer period of time. This improves the chances that paying your bill won’t cause you a financial hardship, and the IRS still manages to collect the monies due —  a win-win in their book. There is a fee for creating a payment plan, ranging from $43 to to $225.

If your financial hardship is only temporary, the IRS may delay collection, though interest and late fees will still be added to your bill. The IRS could also file a federal tax lien, even if they delay collection. This means your property could become property of the government in order to satisfy your debt.

The last line of negotiation with the IRS is an Offer in Compromise. There are only a few situations in which the IRS will accept a lower tax payment than what they believe is due. If the IRS believes you’ll never be able to satisfy your tax liability, but you agree to the amount you owe, an Offer in Compromise might satisfy the IRS.

If there is legitimate doubt about the tax bill — this will usually happen only in complicated situations — the IRS might consider an Offer in Compromise. Also, if you could afford your tax bill, but paying it would create a significant economic hardship, the IRS might consider an Offer in Compromise for you, as well. This is only in exceptional circumstances.

Because the IRS does charge you interest and penalties when you don’t pay in full or on time, the best solution is to pay the bill in full as soon as possible to reduce these extra costs, even if you agree to payment plans. I prefer the above options over other payment types (such as a high interest credit card) when cash isn’t available at the time the bill is due. However, the IRS offers these additional suggestions:

I’m not a big fan of any of these, but it is important to take care of your IRS debt above many other financial priorities.

Have you ended up with a big tax bill you couldn’t immediately pay? What was your plan of action?

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Budgeting doesn’t come naturally for everyone. Some of us need a little assistance with tracking our income and spending. That’s where budgeting tools come in.

There are several front runners in this space. Many of them offer a wide range of features to help you manage your money better. Here are four of the best budgeting tools that we’ve found:

Personal Capital

Personal Capital is a money management tool that tracks your investments and other financial accounts. What’s great about Personal Capital is that it’s an all-in-one tool. Not only can you track things like your net worth and portfolio balances, but you can also get down to the nitty gritty details of your budget.

After you link your financial accounts by logging into them through the Personal Capital website, you’ll see different charts on the main dashboard. One of those is a cash flow chart. This chart shows you your income and spending for the last 30 days — a quick glance at your budget details.

Personal-capital-cash-flow-spending

Simply click the chart to be brought to another page. Here, it will show you the details of your budget. You’ll see where your income is coming from, and where you’re spending money.

Personal Capital is free to use, but it charges a fee for optional wealth management services for people with investment portfolios worth over $1 million.

Mint

Mint has long been considered the gold standard for budgeting tools. Between its website and mobile app, Mint gives users the ability to see their money activity in real time. Much like Personal Capital, Mint syncs all of your financial accounts into one dashboard. From there, you can see your spending categories, investment balances, and upcoming bills.

Mint-Review

What’s unique about Mint is that it also offers a free credit score. You’ll see the number on your dashboard every time you log in, and your score is updated every three months. Although there are plenty of websites offering free credit scores these days, Mint makes it easy to keep all your financial data in one place and avoid having to log in to multiple websites.

Mint is free to use. You’ll receive financial product recommendations for things like credit cards and savings accounts, based on your profile.

Learn More: Mint vs Personal Capital

You Need a Budget (YNAB)

You Need a Budget (YNAB) is a premium budgeting tool for the more involved users. The latest update included direct import, which allows users to sync their bank accounts with YNAB and have transactions imported automatically rather than manually. Despite this, users still have to manually categorize each expense, which can be a benefit to some because it creates more awareness of spending.

YNAB

What sets You Need A Budget apart from other budgeting tools is its comprehensive knowledge base. Users can sign up for free 30 minute online workshops on topics ranging from credit to debt. YNAB has a podcast with over 250 budgeting episodes and a YouTube channel that features weekly tutorial videos.

YNAB comes at a cost of $50 per year. This price tag may deter some users who aren’t looking to add another bill to their budget. However, YNAB’s website claims that new budgeters save on average $200 their first month, making the investment in the budgeting tool worth it. You can try out YNAB on a free trial for 34 days.

Good Ol’ Spreadsheet

Let’s not forget about the good ol’ spreadsheet for budgeting. Years ago, before online budgeting tools were popular, many people who budgeted simply tracked their income and spending in spreadsheets. It definitely takes more manual work and time than simply syncing your accounts on a financial aggregator. But the awareness you create when you update the budget spreadsheet yourself can be enough to get you out of bad spending habits and reach your savings goals.

You can grab a free budget template online with a simple Google search. If you have Microsoft Office, the program also includes free budget templates for Excel.

Stay On Track: 10 Guardrails to Help You Reach Financial Freedom

Final Thoughts

When choosing an online budgeting tool, it’s important to make sure the website is secure. The three online budgeting tools mentioned in this article (Personal Capital, Mint, and YNAB) have all been vetted for proper security protocols. Another benefit of using a spreadsheet for your budget is that you avoid giving external websites access to your financial accounts.

No matter how you choose to track your income and spending, the important thing is that you do it, especially if you are trying to save or get out of debt. Being aware of where your money goes, and knowing how to cut expenses, is a great first step toward financial freedom.

What’s your favorite way to budget?

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At some point in your life, you’ve talked about your credit score. In fact, you’ve probably talked about it many, many times. What it is, how to improve it, how much you paid to get it… But what if I told you that “it” is really just one of dozens of potential scores out there, all based on your credit history?

That’s right: you don’t have just one credit score.

The variance in your score can depend on when you acquire your score, who you choose to calculate your score, and even what you want to do with your score (get an auto loan or bankcard, for example). Some lenders may use a standard scoring model, but alter the formula to suit their lending needs. Others may even take two or more scores and create an average. So you see, the results are almost endless.

Why Do You Have a Credit Score Anyway?

Credit scores are used by lenders as a way to determine your creditworthiness. Essentially, they want to know: how likely are you to pay back your debts, if they were to lend you some money in the form of a mortgage, car loan, or line of credit?

Resource: How to Get Your Credit Score for Free

This is calculated using a number of historical predictors. How long have you held lines of credit? Have you ever paid late and, if so, just how late were you? How much available credit have other lenders given you and, of that, how much have you already used up? How often do you apply for new credit?

While these may not be completely perfect ways of deciding whether you’ll pay your debts in a timely fashion, most lenders seem to think that they’re a good place to start.

Different lenders look at different scoring models, depending on what they deem to be the most important determining factor. Since each scoring model is weighted differently and has a unique range, they can all tell a different story.

The Main Scores

While there are dozens of credit scores that could be created based on your unique credit history, there are a couple main players in the game. These are FICO® and VantageScore.

FICO®, short for the Fair Isaac Corporation, has been the most trusted name in credit scoring for almost three decades. They have released nine different scoring versions thus far, as well as industry-specific scoring models such as Auto and Bankcard. Their FICO® 8 formula is by far the most popular and most utilized version around. They have released a newer version, the FICO® Score 9. However, the vast majority of lenders still seem to prefer the version 8, at least for the time being.

The other big fish in the credit score pond is VantageScore.  They have released three versions to date, currently on VantageScore 3.0.  As with FICO®, they also offer industry-specific scoring formulas and, as with FICO® again, lenders may choose to utilize their earlier models when calculating your credit score.

The Small Fish

As mentioned, each of the two companies above also offer industry-specific models, in addition to their basic scoring calculations. VantageScore and FICO® have special calculations for things like auto loans or if you’re seeking a new bank credit card, which are different from their standard models.

Learn More: Manage Your Finances with Personal Capital

You also have unique calculations that are created by each of the three credit reporting bureaus: Experian, Equifax, and TransUnion. Since some lenders will only report credit-related items (such as late payments, inquiries, and collections) to one or two bureaus, your history can vary greatly between the three. Your report — and therefore, your score — may be entirely different between each of the bureaus, simply because your lenders are reporting selectively.

This is also why it is important to obtain all three credit reports at least once a year (this is free!). That way, you can ensure that there are no errors being reporting to one of the bureaus, which you may have missed if you only chose to get one of the other bureaus’ reports.

Why Are They So Different?

What makes all of these scores so very different from one another, even if they receive the same information? Well, it all comes down to what they deem to be most important.

Take the FICO 8 compared with the newer FICO Score 9, for example. Even though the FICO 8 is expected to remain the most popular model for at least a while longer, the FICO 9 would actually benefit most consumers more.

This is because the FICO 9 takes into consideration things that are issues among Americans today. For example, student loan debt combined with rising housing costs and a tough job economy mean that we have more adults renting homes than ever. So, on the new FICO® scoring model, it will take into account rental payment history (if your landlord chooses to report it).

We also live in a time when 26% of Americans say they’ve had trouble paying medical bills in the past year, to the extent of being detrimental to their personal finances. If a patient cannot pay an unexpected medical charge right away, these bills will often get sent to collections. Even if they end up paying this bill soon thereafter, it will still remain on their credit history as a negative report – for seven years!

Related: The Correct Way to Pay Off Personal Debt

Well, the new FICO® takes this into account. It prefers to take the common sense view that medical bills are rarely planned. Even if a person is late to pay them off, it probably doesn’t indicate that they are not creditworthy. Hospital bills can be sudden and unavoidable – a heart attack is very different from an unpaid Best Buy credit card or a repossessed convertible.  So, the FICO 9 actually does not factor any paid collection accounts into its scoring model.

The Difference Between Bad Credit and Good Credit

We all know the general rule: bad credit = higher interest rates, secured credit cards, denied lines of credit, etc. Meanwhile, good credit = low (or 0%) interest rates, credit limits out the wazoo, credit cards with excellent perks. Obviously, the goal should be to improve your credit as much as possible.

So, what exactly qualifies as “good” or “bad” credit? Well, that depends on exactly which scoring model you use, but there is a general range. Since FICO is the most widely referenced credit score out there, it makes for a good standard.

The FICO score ranges anywhere from 300 to 850, with the lower scores being the worst. Where you fall in that range will be determined by your open accounts, debts, and payment histories, among others. It will also depend on whether your lender pulls the FICO version 8 or 9. Either way, your score will be classified as Bad, Poor, Fair, Good, and Excellent. While the guideline below exists, keep in mine that some lenders may even set their own ranges, and decide what they deem to be “good” or “bad” credit. But in general:

fico

As mentioned above, this is the range for basic FICO scores (300 to 850). But some of the other companies out there choose to alter this range slightly in either direction. Even FICO has a different score range for its industry-specific models, which extends from 250 to 900. This can affect how different scores are actually categorized (bad, good, etc.), so keep that in mind when pulling your own. Here are a few of the more common calculation ranges:

ranges

How Do I Watch My Score?

As I’ve mentioned, choosing different companies will result in a different credit score. This is why, if you’re looking to watch your score over time, you should pick one or two scores. Then, only track those. Don’t compare between other models, just simply track the one (or two) that you pick. (Personally, I prefer tracking my free score through Credit Sesame, as well as one directly from Equifax.)

You have the issue of each model using a slightly different calculation. The possibility of each credit bureau receiving slightly different information, from which they base their score. Oh, and lenders creating their own unique calculations or simply averaging scores.

On top of that, though, your score can also fluctuate depending on when you check it. Since credit utilization is a nice chunk of each scoring model, the score calculated can be different based on where in your credit card cycle you may be.

Do you rack up the charges each month to earn cash back rewards, but pay it off in full after each billing cycle? If so, you’re still being smart about your credit. However, if you check your credit score at a time when you’re using maybe 70 or 80% of your credit limit (right before a billing cycle closes), it will be much different than if you check it right after paying a statement balance in full (with a 0% utilization).

In Summary

So, now you know that when you talk about your “credit score,” you actually mean any one of dozens of potential scores, all based on your credit history. While you can’t track every credit score that’s out there, you can pick one or two. Then, track and keep a close eye on them over time. This will be a good barometer for you as to how your credit is doing as you go along.

Ouch… 10 Purchases That Can Actually Harm Your Credit

You also can’t choose which of these numerous score options a lender will pull. So, your best bet is to try to improve your credit in as many ways as possible. Pay your bills on time, try to use less than 30% of your available credit, don’t hold balances on credit cards, increase your credit limits, and be cognizant of the number of inquiries you receive in a given year.

That way, no matter which score you — or your lender — choose to pull, you’ll be good to go!

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6 Ways Your Bank is Ripping You Off

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Last week, I criticized the McDonald’s corporation for producing a website and a toolkit, aimed at their employees, designed to help those employees tackle the financial obstacles they are most likely to face. My first point was that financial literacy education hasn’t been proven to help the most needy, and in some studies, has been […]

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Don’t Take Budgeting Advice From McDonald’s

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I had planned to write about McDonald’s ridiculous budgeting tips for employees when I first saw the news circulating through social media. I’m so far behind with my editorial plan that every last Consumerism Commentary reader has probably heard about this latest manifestation of corporate ignorance of reality by now. Writers of all stripes and […]

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