Pen and Papers: personal finance money management

Almost everybody these days has some sort of debt on their personal balance sheet. There are some who state that debt can be classified into good debts or bad debts. What constitutes a good debt and what constitutes a bad debt? The standard definition for good debt is debt that helps you to make more money, while bad debt is one that makes you poorer.

However, in my personal opinion, there is no such thing as good debt or bad debt. A debt is a debt, which means you owe somebody or some company money. Too much debt is never a good thing, be it good debt or bad debt. Good debt can turn into bad debt overnight. For example, a mortgage loan used to purchase a property which later crashed in value by 40%. Good debt was raised for an investment, but it turned into bad debt because now the house is worth less than the value of the housing loan you owe to the bank.

There are some books which term car loans as one of the bad debts. The financing costs of a car are indeed high, coupled with depreciation of the car and maintenance makes car ownership a very expensive affair. Now, that would be bad debt isn’t it? What if the car is the tool that helps you to make money, it’s a form of transport to get you to various work places. Perhaps the fact that you own a nice car helps to build confidence in your clients so you can close more sales. Would it still be bad debt? Or is it now good debt?

Another example is a credit card. It is often made out to be the worst debt to have, for good reason. The credit card balance left over time incurs the highest interest rate of over 20% per year. A credit card is a great utility for cashless transaction and allows you to enjoy one month of interest free payment if used in a disciplined manner. The reward points and cash back schemes are more incentives to use the credit card as a way of saving money. If you could save 3% for every dollar spent on the credit card, it definitely makes sense to swipe your daily expenses onto the card.

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OS X Lion isn't out yet, but it could be hitting the Mac App Store as soon as next week. For many Mac users, the decision on whether or not to upgrade to Lion is boiling down to one incompatible app -- Quicken for Mac. We've been hearing from our readers for several weeks that Quicken is the sticking point.

In this post, I'll discuss what your options are to control your personal finances with a Lion-compatible Mac app. You'll be glad to know that Intuit's flagship app isn't the only game in town.

Intuit sent out a note to "Valued Quicken Customers" over the last few days stating that Quicken for Mac 2005, 2006, and 2007 will not run on OS X Lion. Intuit offered some solutions that had TUAW readers steaming:

Move to Quicken Essentials for Mac

The slimmed-down, next-generation app will work on Lion, but it doesn't have all the features users of the standard Quicken are used to. Intuit is even offering a 50% discount, but points out that you need to make the move before you upgrade to Lion since the app won't import your old data under Lion...

Move to Mint.com

This is Intuit's replacement for the old Quicken Online, and it's a web-based personal finance site. However, there's no way to move your existing Quicken data to Mint.com. Great thinking there, Intuit.

Move to Quicken Deluxe... on Windows

Brilliant idea, Intuit, if you have a Windows machine handy. If you're in an all-Mac home, forget it. If you want to run Windows 7 under Boot Camp on your Mac just to run Quicken Deluxe, you have to get a license for Windows 7 ($188 for Windows 7 Home Premium Full Edition on Amazon) and Quicken Windows ($35 for Quicken Deluxe on Amazon). Running a virtual machine under Parallels or VMWare adds additional cost.

Why not take this time to move away from Quicken altogether? Here are my suggestions for other apps that will take your existing financial data into the world of Lion.

iBank 4

Probably the best solution for most Mac users moving to OS X Lion is iBank 4 (US$59.99). It's available on the Mac App Store, it imports files from Quicken for Mac or PC, and it even has a mobile companion (iBank Mobile, $4.99) for tracking expenses and monitoring account balances. Feeling anxious about moving your data from Quicken to iBank? Don't be -- they even have a set of online video tutorials to set your mind at ease.

Money 4

Another personal finance application that is Lion-ready is Money 4 from Jumsoft ($18.99). It imports and exports Quicken QIF files, handles recurring payments, and does portfolio management. Reviews of the current version aren't exactly glowing, but many of the comments appear to be from people who don't understand even the basics of accounting, so your mileage may vary.

iFinance for Mac

Here's another finance app with a mobile companion. iFinance for Mac ($29.99) also imports Quicken QIF files, and the universal iFinance Mobile app ($1.99) is a good way to capture expenses on the go.

MoneyWell

One of the more higher-rated Mac personal finance apps is MoneyWell ($49.99). It supports importing financial transactions directly from many banks and other financial institutions, and imports a number of the Quicken formats that have been developed and then abandoned over the years. Anyone who purchases the current 1.6.8 version from the Mac App Store receives a free upgrade to the upcoming (Summer 2011) 2.0 release.

Koku

The Mac app that gets the award for the brightest page in the Mac App Store has to be Koku ($29.99). If you can make it past the purple background, there's some great information in the description. Like many of the other apps, Koku imports Quicken files and can directly pull transactions from many banks. Koku provides a "smart tagging technology" to label your spending and income with phrases that are familiar to you.

PocketMoney

To say that longtime developer Hardy Macia of Catamount Software is an Apple fan is putting it lightly -- he developed apps for the Newton platform for many years, including the first iterations of PocketMoney ($19.99). Now the app is available for Mac and PC, but the emphasis is on the iOS version of the app. Mac users may find the Mac flavor lacking in some features, and Macia admits that the current version is primarily for syncing the iOS app to the desktop. Still, the app has most of the features that users will want in a personal finance app, including one that I found fascinating -- the ability to affix photos of receipts and checks to transactions.

Budget

An interesting take on personal finance and budgeting is Budget ($39.99) from Snowmint Creative Solutions. This app does away with the traditional ledger format of most accounting applications and replaces it with envelopes. Envelopes represent different accounts, and you move money between envelopes to show where money is coming from and going to. It imports OFX and QIF files, but does not support direct bank connections.

iCompta

Yet another ledger-like Mac app for keeping those dollars, pounds, francs, or euros in line, iCompta ($18.99) also features a $4.99 iOS companion named iCompta 2. Import of existing Quicken data is a given with most of these apps, and iCompta is no exception. It'll also grab your transactions from many banks.

Squirrel

The winner in the cute logo competition has to go to Squirrel ($24.99), which features a squirrel stashing gold coins in a safe. The app imports existing transactions with ease, lets you define scheduled transactions and budgets, and even brings the Apple concept of Smart Folders to Mac finance for filtering transactions. Squirrel also has an iPhone companion that is highly rated and appears to be very easy to use.

iCash SE

At the end of the list is a powerful accounting app that has been localized for a number of different languages, including Catalan, Chinese, Dutch, Czech, French, German, Italian, Japanese, Korean, Polish, Portuguese, Russian, Spanish, Swedish, and English. Like many of the other apps listed here, iCash SE ($49.99) doesn't use double-entry bookkeeping so it's fairly easy to use. While it doesn't appear that iCash SE supports import of bank transactions, you can definitely get your Quicken data into the app.

Conclusion

Well, that's it for our roundup of Lion-compatible apps, all of which are available today in the Mac App Store. Don't let anyone tell you that there's no personal accounting solution except for Quicken. I'd love to hear from Mac users who are fans of these or other finance apps, as I'm sure you have good feedback on what the high and low points are for many of these applications.

One thing is for sure -- if you're considering making the move to Lion in the very near future, taking care of your personal accounting software needs should be foremost in your mind.

Pen and Papers

Friday, 29 July 2011

personal finance money management