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Quicken

Excel vs. Quicken

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So…how’s the bookkeeping working, after a year of using Excel instead of Quicken for Mac?

Last January I switched to Excel for tracking my bank accounts, budget, and credit card charges. After years as a Quicken customer, I’d really lost patience: data vanished in the transfer from Windows to Mac, Quicken for Mac was clunky, and I’d long ago had it with having to upgrade to a pricey  new version every time I turned around. It appears I’m not alone in those sentiments.

Excel has its advantages and its disadvantages vis à vis Quicken. Biggest negative: it can’t talk to your bank or your investment house. Quicken lets you upload and download transactions and data from those august institutions. Nor does Excel care to converse with TurboTax, Intuit’s tax preparation software. Excel talks to you and only to you (or so we hope).

If you want to integrate your bookkeeping with your banking and investing, however, there are alternatives, some of them out there in the Cloud. Programs such as Mint.com (which, alas, was purchased by Intuit), Buxfer, MoneyStrands, Pear Budget, or Thrive sometimes do that sort of thing, and of course Mint will now interact with TurboTax. Not having tried one of these programs, I hesitate to state that any are better, worse, or the same as Quicken. But there they are: something to try if your patience with Intuit wears thin.

Excel has one helluva learning curve, especially for those of us with English-major math skills. After a year of working with it, I’d say my skills are no better than they were at the outset. A year of manipulating Quicken left me with a black belt in Advanced Quickening. However, a rudimentary understanding of Excel’s functions allowed me to build checking and savings accounts and to massage the data into something that I think will be intelligible for my tax accountant.

It’s useful to know that Microsoft now offers a variety of home and office financial  management templates, designed to work with Excel. But it’s pretty easy to build your own.

To build the new Excel workbook, I tried to ape the accounts and functions of Quicken. This entailed creating spreadsheets for each bank account, laid out in identical patterns, plus another spreadsheet for credit-card charges. The latter allowed me to reset the balance each month to the amount budgeted for discretionary spending (which is all that goes on my credit cards), so that the bottom line showed how much was left in any given month’s allowance.

Typical headers for bank account
Tracking credit-card spending against an $800 budget

Come the first of this year, I created what I hope is an intelligible spreadsheet for the accountant by merging data from the credit-card spreadsheet with the bank-account spreadsheet entries and then sorting all the data by category. This made it possible to summarize tax-related data while also making all the year’s transactions, organized by budget category, easily visible and transparent to her.

A number of revelations ensued as I tried to organize this material for the tax accountant. One is that it makes sense to number tax-related categories (1, 2, 3…), so a “sort” command will bring them up at the top of the “sorted” spreadsheet. For example,

1 Medical
2 Mortgage interest
3 Trade group dues

…And the like. When “sorting” data, Excel wants to put numbered items before alphabetical items; so, if you preface each tax-related category with a numeral, the “sort” function will gather all the tax-relevant categories together.

Yeah, I know there’s something called a “pivot report,” and yes, I do suspect it could solve all my problems. However, only a Druid could comprehend the instructions in Excel’s Help file. I gave up after several efforts at trying to call upon those spirits.

In addition to its impenetrability, Excel has the annoying quirk that the (very simple!) formula you enter to create a running balance sometimes comes unstuck for no discernible reason, giving you an incorrect balance. Occasionally I haven’t discovered this until I’ve tried to reconcile my books with the bank’s. Figuring out the problem can be really difficult, because it often results not from incorrect data entry but from some mysterious disjunct between what you’ve asked the program to do and what it decides, midway through the process, to suddenly start doing. When gut instinct tells you something like this is happening, the solution is to go up to a row where the formula is visibly working and then drag the “balance” cell’s qualities all the way down the column. This corrects the error, wherever the heck it started.

We know the irritants presented by Quicken. It’s bloatware. It’s vaporware. The Mac version is clunkware whose files can neither be read by the PC version nor converted to a readable version. Your accountant, you can be sure, uses the PC version. And worst of all, its maker Intuit forces you to buy new, ever-more-bloated versions every time you take a deep breath. IMHO, these are very, very large irritants.

So, of course, is the difficulty of learning and manipulating Excel.

For me, just now it’s a toss-up. For a brief, not-so-shining moment last month, I considered running out and buying the latest version of Quicken to restart my books in 2011. But, on reflection, possibly not. Quicken’s biggest advantage over Excel is its ability to commune with your financial institutions. I’ve never felt moved to use that feature; my financial manager does the buying and selling of shares, and it’s pretty easy to access the credit union, the IRA, and the brokerage accounts online. Comparing and reconciling them is very simple, and I don’t need a piece of intermediary software to perform the desired transactions.

So. To the extent that one can be said to ♥ any software, I suppose I ♥ Excel.

What program do you prefer for bookkeeping, and why?

Quicken: Jumping ship

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In another two weeks, I’m jumping Intuit’s ship, diving off the side of the SS Quicken into the cool waters of Excel.

Over the past five years as a program administrator, I’ve learned just enough about how Excel works to set up a spreadsheet to operate as a checkbook. Using very basic skills (indeed), I’ve figured out not only how to create a running balance but also how to make Excel reconcile a checkbook against a bank statement. None of this is rocket science. What’s new is realizing I can make a generic program like Excel or its open-source equivalents do all I need Quicken to do.

Because I don’t use Quicken for online banking, my needs for the program are pretty plain-vanilla: keep track of expenses and income, categorize them, create an annual tax report, and reconcile bank accounts. Quicken’s various planning calculators, especially the ones related to loans, come in handy, but similar calculators are all over the Internet.

Nor do I use Turbotax, Intuit’s companion to Quicken, billed as the answer to all your income-tax reporting problems.

Why, you ask, do I eschew Quicken’s whiz-bang online features? Simple: I don’t trust Intuit, a corporation that issues ever-more-bloated versions of its program each year and then forces consumers to buy them by jimmying the code to render data entered in “older” programs unreadable. I can’t say how much I resent that. Also, customer service is nonexistent. It’s a consumer-unfriendly product manufactured by a consumer-unfriendly corporation. There is no way I’m going to put my personal data online through that outfit’s tentacles.

I do my online banking directly with the credit union, thank you. Every financial institution that does business with me makes online transactions and statements readily available. All I need to do that is a reasonably secure browser, say…Firefox running on a Mac, for example.

My taxes are so complicated, there is no chance on God’s green earth I could do them myself, nor would I trust Turbotax to stuff all my square pegs into its round holes. Income has, over the years, derived from salary, contract work, limited partnerships, securities investments, nontaxable bonds, mutual funds, a 403(b), an annuity, a whole life policy, alimony, Social Security, unemployment insurance, sales of real estate, a C-corporation, a sole proprietorship, an S-corporation…it goes on and on. A vast array of laws and loopholes applies to these things, none of them even faintly comprehensible to the amateur.

It’s also very frustrating that Quicken data will convert from PC format to Mac format, but not back. This means that when the day comes that I no longer can afford Macintosh computers—and that day arrived on Tuesday, after I bought the MacBook—to continue using Quicken I will have to start completely anew, losing all historical data. Excel operates smoothly on both platforms, and so I can move between the PC and the Mac with no problem.

After Canning Day, my banking strategy will be much simplified. Instead of disbursing paychecks into various piggybanks (one to cover the monthly credit-card bills; one to “escrow” the annual property tax, homeowner’s insurance, and car insurance; one for monthly savings; one for monthly nondiscretionary bills; one to pool all income; one for the S-corporation; a joint checking account with M’hijito to handle the mortgage payments…and so on ad infinitum), all incoming money will go into one checking account, which will have a $10,000 cushion to back up the poverty-level wages I’ll be making. Most expenses will be paid from this account. The self-escrow account will stay in business, since the only way I can be sure to have enough to cover those breathtaking bills is to set aside $325 a month, every month. I will try to set something aside each month in a savings account to cover budget overruns and buy occasional indulgences like clothing. And of course the joint checking account will have to stay.

That will cut the number of credit-union accounts from eleven to four, not counting the redundant savings accounts, which sit dormant and so really don’t need to be reconciled anyway.

Further simplifying matters is the S-corporation itself. When The Copyeditor’s Desk was a sole proprietorship, I ran business income and expenses through my personal checking and credit-card accounts. This meant I had to run a category report for the tax lawyer. Now all tax-related items except the mortgage interest and medical costs will go through CE Desk’s dedicated checking account. This will make it very easy to run out a report: everything related to FaM and CE Desk is gathered in one account. Mortgage interest is reported on a yearly form from the lender. That leaves only one category, “medical,” in my personal accounts to report on…and that’s easy.

Reconciling an account against a bank statement is also pretty easy in Excel. Just translate the instructions on the back of your statement into Excel actions:

First check off all the cleared transactions in your checkbook spreadsheet; changing their font color makes it easy to spot uncleared entries.  Then enter your current bank balance, subtract uncleared debits (checks and EFTs) and add uncleared credits (deposits). Click AutoSum (Σ) to total these figures.  Next, enter your bank statement’s ending balance, add any deposits made after the ending date, and subtract uncleared debits. Click AutoSum again to tote up those figures. Now compare the two totals: if you haven’t missed entering anything, then the two should be the same. If they’re different, you’ve made a mistake and need to recheck the figures in your checkbook spreadsheet.

NuHowToReconcile

So, how will this work with day-to-day bank and credit-card transactions? It’s easy to track credits (deposits) and debits (checks and electronic payments) in an ordinary spreadsheet. However, because I charge all my grocery and other discretionary spending on credit cards, paying them off in full at the end of each month, the single payment to American Express or Visa doesn’t show what, specifically, that payment covered. In Quicken, this failing can be addressed with split transactions. Since I don’t know how to enter a Quicken-style split transaction in Excel (or even if that can be done), I believe one would need a separate spreadsheet to track credit-card charges. In my case, this represents no extra work: I already do that in Quicken, because I make too many charges each month to stuff into a single split transaction.

So, we first set up a spreadsheet for the checking account:

To explain how Excel builds the figures in the “Balance” column, in the “Cleared” column I’ve noted the commands I entered in “Balance.” For those who are even less conversant with Excel than I am, here’s what I did: Place the cursor in the target cell; type the = sign and then click on the cells you want Excel to total; after each cell, enter a + sign.  In my first row, I’ve asked Excel to take the next cell under “Credit, “$10,000, and add it to the figure under “Debit,” which is blank, giving an opening balance of $10,000. That little green triangle on the opening balance is Excel complaining that no value appears in the second (“Debit”) cell. This is just whining—you can either ignore it or quiet the program down by entering a 0 in those blank cells.

This establishes the opening balance. To figure the running balance, remember that you have to include deposits as well as checks and electronic payments. So, I’ve gone to the second row, placed my cursor in the second cell under “Balance,” and asked Excel to take the previous figure under “credit” and add it to “debit” and then add these to the previous figure under “balance.” Because the debits are entered with minus signs (i.e., as negative numbers), using the + sign will cause Excel to subtract that figure from the series’ total. That is, you’re getting x + (-y) + (z).

(And yes, Virginia: that’s why we take algebra in high school or college!)

Now, to keep track of what that $800 paid to American Express was actually spent on, we have a second spreadsheet:

In this spreadsheet, I would like to know not only what specifically I’m diddling away money on, but also how much is left out of each month’s $800 credit-card spending budget. So under “credit” I enter the amount budgeted. This spreadsheet doesn’t represent a bank account and so never has to be reconciled. Consequently I can be a bit more casual here. I create the opening balance simply by copying the first make-believe “credit” into the “Balance” column. Now to make Excel do a running balance, all I have to do is ask it to subtract each debit from the preceding balance. I do this by entering an = sign in the first cell below the opening balance, then clicking on the first debit (notice that it also has a minus sign in front of it, making it a negative number), then entering a + sign, then clicking on the number right above, in the “Balance” column. This subtracted $86.50 from $800, showing $713.50 was left in the monthly budget. Now click on that “$713.50” cell, notice the little “knob” in the cell’s lower right-hand corner; grab that with the cursor and pull the cursor down the column. Every cell the cursor has swooped over will perform the same function as new values are entered in “credit” and “debit,” neatly keeping a running balance for you.

Nifty, eh?

Excel will default to show negative numbers in red, in parentheses—accountant-style. It also probably will default to give you plain-vanilla figures with only one decimal place, as it has done here. To adjust these formats to fit your taste, go to Format > cells and explore around…that’s about the only self-explanatory part of this program.

Come April, I’ll want to send a report on tax-related expenditures to my tax lawyer. It is possible to make Excel do reports, but I’ve never figured out how. The online “Help” manual is utterly incomprehensible to the English major’s mind, and the reports chapter in Excel for Dummies is also over my head. However, it’s easy to generate an English-major report by using the “sort” function. Here, I’m pasting entries from the check-register spreadsheet and entries from the credit-card spreadsheet into a single new spreadsheet and running a “sort” on them:

To sort a spreadsheet, highlight the data you want to sort and then go to Data > Sort. Here I’ve asked Excel to sort first by Category, then by Income, then by Expenses. The result appears above.

As I mentioned above, most tax-related transactions will now occur in the S-corporation. However, it develops that COBRA, Medicare, and long-term care premiums are tax-deductible, and of course these will be paid from personal checking.  So I’ve created a category, TR, to flag tax-related items. Sorting the data first by categories gathers transactions by category. From there, it’s easy to tote up the expenses or income in each category. To arrive at $388.09 worth of tax-related transactions, I clicked in a cell next to where those transactions are grouped, and entered the = sign + each figure in the TR category.

In this sheet, as you can see, it’s also very easy, to arrive at a whole year’s income and expenses: just put your cursor in the cell at the bottom of “Income” or of  “Expenses” and click the AutoSum icon (looks like a Greek letter Σ).

Excel is easier than it looks. Describing these maneuvers, even in plain English, makes them look harder than they are.

If I Had It to Do Over: 10 money moves I’d do differently

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Ever think about what you’d do if you could turn back the clock and be 20 again? Though I wouldn’t especially want to live my life over, there are a number of money moves—and decisions that had more influence on lifelong personal finance than I could have guessed at the time—that I’d either not do at all or that, given a peek forward 40 years, I’d do differently.

For example:

• I would have taken advanced degrees in disciplines whose graduates make decent pay.

Can’t say I regret having prepared for an academic career. It has allowed me to earn an adequate (not generous) living after spending way too much time as a lady of leisure. However, I’d never recommend to a young person who wants a life in academe that she or he pursue a doctorate in the humanities. University faculty in business, engineering, and law earn more than those in other disciplines. A Ph.D. in accounting can start at the assistant-professor level with a six-figure salary, and believe you me, that is one hell of a lot more than you earn teaching history or English.

Mind-numbing major? Puh-leeze! What could be more mind-numbing than postmodern theory? Oh yah: postmodern feminist theory! Give me a bag of beans to count, any day!

Knowing what I know today, I’d still want a career in higher education. I would take an undergraduate degree in a humanities discipline that a) interested me, b) would furnish a young mind, and c) would build skills in logical thinking. But at the same time I would take lower- and upper-division courses in statistics and basic college-level math. Then I would get myself an M.B.A. and a Ph.D. in business management, a subject not too taxing for my sketchy math skills. With those credentials—which certainly demand no more work, expense, or skill than the doctorate in English that resulted in a well respected book published through a prestigious press—I’d be earning about twice what I make now.

• I would have started working in higher education early on, even though it entailed having to teach five sections a semester of freshman comp at a community college.

What I didn’t understand, in my callow youth, about that horrifying prospect is that over time community college faculty find ways to evade the most onerous courses and to wangle course release time, just as university professors do. Nor did I have any idea how much more community college faculty here earn, compared to GDU, UofA, and NAU faculty.

Without the fugues into magazine journalism, today I’d be earning a decent income, and I’d probably occupy a layoff-proof job. Or, more likely, I would have retired by now with plenty of savings to support me in the style to which I was accustomed while I was married to the corporate lawyer.

• If I were 25 again, I would insist that my husband include me in the marital finances.

It was easy to tell my women friends to get a grip on their family finances, establish credit in their own names, and know where the money was. But all the time I was dispensing that excellent advice, I wasn’t following it myself! I had no idea where all our money was going, I did not know what my husband was investing our money in or what debt he was obligating us to, and to tell the truth, I never did know exactly how much he earned. Because he deliberately entered false figures in the checkbook, I couldn’t reconcile the bank statements when I tried, and so I had no clue how much we had in our joint account. Nor did I know about the two other bank accounts he’d opened without my name on them.

• I would open my own savings and checking accounts—preferably at an institution other than the one that held our joint account—and set aside part of my paychecks, my freelance income, or (when I wasn’t working) part of the grocery money.

Being my relentlessly frugal father’s child, I was bothered when the husband refused to save for our son’s college education. But he never tried to exercise any serious control over how much I spent. In those days, I paid for everything with checks and often asked grocery-store cashiers for cash back (cash-back policies were more generous then). I could easily have creamed off $100 a month—weekly cash-backs of $25 would’ve gone unnoticed. If I’d started doing that the month my son was born, I would have stashed $21,600 for him by the time he graduated from high school.

My husband also refused to budget; his express reason was that budgeting is for poor people. Consequently I had no control over our spending and no idea whether I was spending more than we had. If I’d put aside money  for myself, I could at least have budgeted independent of his whims and felt more in control of some of our finances.

• I’d use a credit union instead of banks.

Even before banks decided to make a profitable business of fleecing their customers, credit unions were always preferable to commercial banks. Savings rates are higher, checking is free, and service is infinitely better.

• I would have learned about investing early on.

If I’d had a clue about such things as mutual funds (no joke: before I walked from the marriage, I’d never heard of them), I wouldn’t have taken my husband’s private banker’s weird advice to invest a $40,000 inheritance in (hang onto your hats, folks!) one-week CDs! Yes. Forty grand sat in one-week CDs for over a year, until after I ran away, spent three awful months sleeping on the ground in the outback of Alaska and Canada, and finally made my way back to the city.

Yup. I could’ve invested the $21,600 of grocery money in instruments that earned compounding interest, too. Hmmm. Check out this handy-dandy little calculator. Assuming we went ahead and paid for my son’s education out of his father’s capacious salary and so I just kept on investing a hundred bucks a month for him at, say, 8 percent, today he would stand to inherit another $177,395.38.   Ah, coulda shoulda woulda!

Moving on…

• I would have learned and started to use Quicken the minute it came out.

Quicken is the answer to the innumerate English major’s dreams. Not having to add and subtract (something I can’t do reliably even with a calculator) made it possible to reconcile bank statements easily, without dampening sheets of paper with sweat or with tears. Consequently the program allowed me to take firm control of my financial life, in a way that wouldn’t have been possible when every encounter with money involved a daunting episode of math torture.

• I would have learned how to use Excel.

I still don’t know it well enough to free myself from Intuit, which, despite the glories of its Quicken program, rips off customers by issuing ever-more-bloated annual updates that won’t read data in formats more than three or four years old. Excel does everything I need Quicken to do, it doesn’t go out of date, and it functions across platforms.

• I probably would have spent less on my current home’s landscaping.

I’m pleased with the yard and glad to have it, but something acceptable could have been accomplished at lower cost. Specifically, I wouldn’t install such a large front patio (or possibly any front courtyard!), and I would have planted younger, less expensive trees.

• I would have opened a Roth IRA as soon as they became available and maxed out contributions every year.

Though we can add a substantial amount to our 403(b) above and beyond our mandatory retirement contributions, the university matches only 7 percent of our paychecks. IMHO, that makes these highly restrictive investment instruments less desirable than the after-tax Roth IRA, which accrues interest and dividends tax-free and can be passed to your heirs without encumbrance.

My not building Roth savings from the get-go is a function of late-blooming investment knowledge. Which takes us back to item 6: learn about investing early on.

What would you do differently if you could start from financial scratch again?

On this subject, check out Frugal Scholar’s conversation about the most successful things she and Mr. FS did with their finances.

Lessons learned from a computer crash

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First: Don’t believe a Mac is any more reliable than a PC. It’s not.

Second: Never believe what Apple’s sales staff tells you. When I bought the Mac, I specifically asked if the Quicken data the Apple Geniuses obligingly converted to Macintosh format could be converted back to PC format, in case I didn’t care for the platform. They said there would be no problem. That turns out not to be true. A Mac-compatible Quicken data file can not be converted to a PC-readable format. Thus, if you’ve faithfully backed up your Quicken data every time you enter transactions and you own only one Mac, after it crashes you may never be able to retrieve your data-especially if your version is out of date and a newer version of Quicken won’t read it. (Remember, this is one of Quicken’s devices to force consumers to keep buying new, unneeded software: if you decline to buy each bloated new version, when you go to buy a new computer and have to install the current version, you may find all your old data is unreadable.)

Third: However, you can save a Quicken file to PDF format. You can do this with transaction reports and with entire account registers. I don’t know if it’s a function of Acrobat Professional, which resides on all my terminals, or if Quicken will make PDFs on its own, but I think it’s the latter. The process is very easy: simply print to a PDF.

While a PDF of course has no functionality, it does at least save your data in a format readable on both platforms, and PDF files are extremely stable. As such, they provide a last-ditch back-up. If everything in Quicken crashes and for some reason (there certainly are reasons!) you can’t get back into your QDF files, you at least can get at the data so that you can re-enter it in a new version of the program or into Excel.

Fourth: The relationship between Intuit and Apple is tenuous, and Mac-compatible versions of Quicken for Mac are pale (often annoying) shadows of Quicken for PC. Although Intuit alleges that it will come out with a spectacular new Mac version so ground-breaking it must be rebranded “Quicken Financial Life for Mac,” believe it when you see it.

Consider using Excel for bookkeeping. This requires you to forego the swell online communication with your bank and investment brokers…but really. How necessary is that, in the large scheme of things?

Fifth: The capability to back up Quicken data files to MobileMe is dubious. For one thing, it’s unclear whether the file is stored with a .qdf extension, and so it’s equally unclear whether the file can be used to reconstruct lost data. Then there’s the alarming fact that one of Apple’s online support gurus told me flatly Quicken cannot be backed up to MobileMe. The store’s manager denies it, but given the contradictory tales that have come at me from all directions, I believe it’s smart to put that bit of intelligence somewhere other than in the circular file.

For this reason, all QDF files should be backed up to an external hard drive and also to a flash drive. If there’s any chance you will not have access to a second Mac loaded with Quicken, also back up your account registers in PDF format.

Sixth: iWeb’s blogging function is resident on your computer and only on your computer. Thus if your computer crashes, your blog is gone. Gone for good. Unless you’ve backed up the content of your site, it can’t be retrieved; the Genius who revealed this gem was unclear whether saved data can be imported into iWeb on a new computer. If you start anew on a fresh computer without having imported your old posts, even if you can access your blog site (a matter that appears to be questionable), the minute you publish a new entry you will erase all your blog’s archival content.

Never, ever do a blog on iWeb!

The value of reconciling your check accounts

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Saved from my own stupidity! Whew…

The credit union still sends paper statements, and so I still reconcile my accounts against the monthly statements. This is a function of mental laziness: I’ve never worked up enough energy to figure out how to reconcile against the online records.

But I do keep an eye on my accounts online, and this month I wondered why the CU’s bottom line was SO radically out of whack from Quicken’s. Alarmingly out of whack, one might even say.

Come to find out, I had failed to shred an $840 check I thought I’d voided, but instead had blithely sent it along to Vanguard…and then wrote and sent an identical check to replace it. Oops!

Meanwhile, believing the first check had been atomized, when my next extra-large paycheck arrived I wrote a third check to Vanguard in the same amount. Each of these payments was to transfer money from a second income stream into savings. So, where I thought I’d written checks for $1,680, I actually had arranged to transfer $2,520. This error would plunge my checking account to the bottom of a puddle of red ink the depth of Lake Tahoe!

Luckily, I had not yet mailed the last check. (And luckily, I had not taken Vanguard up on the opportunity to make electronic transfers from my checking account directly into mutual funds.) So, voiding and shredding the third check recovered the error.

If I hadn’t been in the habit of reconciling my bank accounts regularly, I wouldn’t have tumbled to that Senior Moment until it was too late to avert an overdraft.

Catching your own errors is just one good reason to reconcile your accounts at regular intervals. We all make mistakes-and even the bank sometimes enters errors in customers’ accounts (Johnson Bank once credited me for $10,000 deposited for someone else!). It also will allow you to catch fraudulent transactions. Personal finance software such as Quicken or MS Money hugely simplifies this chore, or in the case of the arithmetically challenged (such as moi), makes it possible.

If you don’t use a program to keep track of your funds, you should reconcile your checkbook each month. The steps are as follows:

  • Compare your check register with the statement. In your check register, subtract any charges (checks, ATM withdrawals, automatic payments, bank fees) appearing on the statement that you haven’t already deducted from your balance. Write this figure down.
  • Still in your check register, add any new inflows, such as deposits, automatic paycheck deposits, and interest or dividends. Add these to the amount you got in step 1.
  • Now enter any deposits made after the statement’s ending date. Add these to the total you obtained in step 2. Write this total down.
  • Next, in your register, check off each check that the statement shows as as having cleared the bank. On a separate piece of paper, list the check numbers and check amounts. When your list is complete, add the check amounts to obtain a total.
  • Subtract the total you got in step 4 from the figure you got in step 3. The result should equal your check register balance.

If it doesn’t, the first thing you should do is check all your arithmetic. If that doesn’t reveal the error, then you get to compare each figure in the statement and the check register, very very carefully. Over and over and over again.

Programs like Quicken, as you can see, circumvent a great deal of agony, first by doing the math for you and second by making it relatively easy to spot errors. If you’re reading this blog, you probably already use financial software. But lest you wonder why your mom or your weird cousin Bob has never reconciled a checkbook, ever, and figures the account is out of money when the checks run out, it may be that she or he is math-challenged. There is simply no way I could reconcile my bank accounts manually — it’s flat out of the question. I’ve tried. After I finished tearing out all my hair, I just gave up. If SDXB hadn’t insisted that I try Quicken, I would have no idea what is going on with any of my accounts.

What a mitzvah! The cheapest PCs out there will run Quicken, Money, or downloaded freeware. It’s well worth encouraging the arithmetically puzzled and the computer-bamboozled to learn how to use such a program, even if they never do anything else with a computer.

1 Comment left on iWeb site

Mrs. Accountability

Clicked through from the 156th Carnival of Personal Finance to read about your expensive doggies – hubby and I have one that we love so much, hope nothing expensive ever happens, we’ll go in the poorhouse for him.I agree with your reconciling checking accounts post – I read on a blog not too long ago that the person never did reconciliations, and why they didn’t think it was necessary to do so.I would be a bundle of nerves!The blog writer said they watch their account online regularly, so felt comfortable to not reconcile.I have reconciled my accounts for over 25 years with both paper statements and online statements, and have found enough errors that I would not be comfortable giving up this monthly chore.I read your “Life’s a Killer” story, awesome how you handled your stress situation.I also participated in the 156th CoPF (my 3rd entry) with my free Gas Calculator (MS Excel format).I really like your writing style, adding you to my reader.Nice to meet you!

Monday, June 9, 2008 – 07:01 AM