For the last few days, I’ve been testing the new version of Quicken Home and Business. While most people who track their finances have moved to online services like Mint.com, some of us are holding out until the online software offers the same advanced features as the desktop Quicken software. I enjoy my ability to track my investments, create and customize reports, export information into Excel, and look into the future with planning tools.

Quicken 2012 is set to be released on October 10, 2011 and offers several new features, particularly in that last category. The programmers at Intuit have refreshed and improved the Budget Planner and the Debt Reduction Planner, available in all flavors of Quicken 2012.

Quicken 2012 Budget Planner

The new Budget Planner is a combination of the budget planner from previous versions of Quicken and the spending planner. When creating a new budget, you have two choices. The “Automatic Budget” looks at your recent spending to determine the five most important categories for budgeting. Quicken estimates the amount for each category on a monthly basis and presents its suggestions to the users for customization. The “Advanced Budget” invites the user to select the categories to be used in the spending and income plan.

Each line on the budget is configurable by period. You could, for example, assign a budget of $300 a month for Food and Dining (overall, which includes specific categories like Groceries and Restaurants) and set a budget of $10,000 per year for Property Taxes. If your annual salary is $60,000, you can enter this. Automatically, Quicken will assign the average monthly budget in this category to $5,000, but if you are paid bi-weekly, you don’t receive the same amount of income each month. You can edit the individual months if you like.

One drawback to Quicken’s budgeting tool is that it does not include a rollover feature. For example, if you budget for an expense of $200 in groceries each month, but you only spent $150, the extra $50 is lost. In real life, and in other budgeting software, that $50 would be available to add to the following month’s spending on groceries, but Quicken does not automatically handle surpluses. Rather than focus on these details, you could change the budget view in Quicken from monthly to quarterly to get a better overview of how you spend when expenses cross months. This is also helpful for those infrequent expenses that are often forgotten when you look at a budget on a monthly level.

Each Quicken file can contain multiple budgets, so you and your spouse could maintain separate measurements of spending, even including the same accounts.

If you’re just getting started with budgeting, consider these resources:

• Money Basics: Budgets
• Budgeting Based on Maslow’s Hierarchy of Needs
• Podcast: Building a Better Budget (with J.D. Roth)

Quicken 2012 Debt Reduction Planner

The new Debt Reduction Planner in Quicken 2012 has been completely redesigned. The focus here is on credit card repayment, but the planner can be easily configured to include student loans, a mortgage, and any other debt that is destined for elimination.

If your credit card issuers support it, Quicken downloads the interest rate and minimum payment information directly through the internet. If all the information isn’t available for automatic download, users will need to enter it manually from the latest statement or by accessing the account online. The interest rates and minimum payment amounts are important because Quicken needs this information to calculate the payoff plan.

Quicken’s programmers have decided that the Debt Avalanche method of paying off debt is the most appropriate philosophy for prioritizing debt. This means that the Debt Reduction Planner advises users to pay minimum payments to all debts, and any left over cash available for debt repayment should be directed to the one loan or credit card with the highest interest rate.

This is the fastest, cheapest, and most efficient way to pay of debt. The Debt Reduction Planner creates a chart and reminders to keep borrowers focused on paying the correct amounts to the appropriate debts.

Although Quicken defaults to prioritizing debt by interest rate, any user who prefers to follow the Debt Snowball approach, where debt is prioritized by size to payoff the smallest debt first, taking advantage of the psychological “quick win,” can apply this philosophy with one click. Furthermore, if there is a reason to customize the order of debt accounts due to some other reason, such as the desire to eliminate a low-interest loan from a family member before tackling an otherwise important credit card debt, users can easily manipulate the list.

Once users and the software agree on priorities, Quicken uses a visual approach to illustrating the debt payoff plan. This slider can be moved back and forth to represent the total cash available to pay off debt. While moving the slider, Quicken updates the target date for complete debt repayment and the total amount of interest paid over time.

The screen also includes a monthly chart to show the payment amounts that should be directed to each debt to stay on track. I’ve included a video capturing how the new Debt Reduction Planner feature in Quicken 2012 works, in action.

Quicken 2012 bugs

Since upgrading to Quicken Home & Business 2012 from the 2011 version, I’ve noticed that the “One Step Update” frequently doesn’t complete without causing the application to become unresponsive. This was an occasional problem with all prior versions of the software, and forcing the application to close and restarting the program usually solved the problem despite the inconvenience. With Quicken 2012, more often restarting the program does not fix the problem.

I can avoid this problem by avoiding the One Step Update function and downloading transactions for each account separately. I’ve always liked the convenience of downloading transactions across all accounts at once, so I would like to see this fixed in one of the many patches Intuit is sure to release.

If you discover any additional problems with Quicken 2012, such as calculations that don’t seem correct, let me know by leaving your comments below.

Other questions

In addition to the above, Intuit has been busy adding more financial institutions to the “Direct Connect” or “Express Web Connection” features, so transaction information can be downloaded directly into the software with as little manual entry as possible. With Quicken 2012, I’ve found that the software much more intelligently assigns categories to new transactions.

Quicken 2012 offers a new feature, good for users with high-definition screens. A toggle allows users to switch to a larger font, making the information much more legible. This follows the design trend leading towards larger text on the web. You may find the large text more appealing. Also, the account bar now features new icons, supplementing the familiar red flag. The new icons help to identify whether there are downloaded transactions to accept into the register, upcoming reminders or bills, or any other issue needing attention.

The latest development of Quicken is available only for computers running the Windows operating system. Apple users with the Mac OS will need to continue using Quicken Essentials for Mac for the near term, or use the Windows version in a virtualization.

Buy Quicken 2012 today

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