 September 2000
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 By Rick Johnson 
I hate to pay bills! It's not the fact that that I owe the money, I believe in paying my debts. It's just the repeated drudgery of getting the bill in the mail, opening it, deciding how much to pay, writing out the check, addressing the envelope, finding a stamp, and then remembering to mail the darn thing on time. Then we repeat the same routine month after month.
Computers have been handling money for a long time and are well suited for the job. Banks and other financial institutions have entrusted their entire accounting systems to sophisticated computer networks for decades. Your bank sends you a monthly paper statement. Your stockbroker or mutual fund company keeps all your transactions on computers but sends you a paper statement. Your credit card companies have sophisticated systems that can check your account in seconds from the store, but send you a printed itemized statement each month. For some time now, ways have been developing for the average person to access this personal financial information from all of these different computer systems and transferring this information to our personal computers. The data must be conveniently downloaded, since typing in by hand is out of the question. All of the information needs to be organized and processed into a useable format on our PCs. Of course, many are now using Internet banking. Just in the last few months almost every local bank I pass has a banner advertising, "Try Our Internet Banking". Internet technology is the network that brings it all together, but also Internet culture has advanced to the point where home PC users are willing to trust their money to a computer. More and more institutions are offering their customers personal financial information in a standardized, useable format. Internet technology and usability have also developed to the point that security is not a problem. I set out then, to computerize my personal finances. The more I thought about it however, I realized there were a few things to consider.
The Software Selecting money management software was the first step in organizing our money. While there are a few different products available, two popular packages are widely used, Quicken, and Microsoft Money. After reading several reviews, (http://www.zdnet.com/pcmag/stories/firstlooks/0,6763,2326323,00.html) I decided to go with Microsoft Money because of it's Internet capabilities and the way it seemed to bring almost every area of financial planning together in one package. You'll want to decide for yourself what would be the best software depending on your financial situation. After buying the package for a reasonable price of around $30 after rebate, I was quite impressed. Assets, expenses, investments, debts, and much more are integrated, bringing your finances together very nicely with reports and graphs. MS Money is so tightly tied to the Internet that it's sometimes hard to tell where the software ends and the Internet takes over. For example, click on a stock in your investment portfolio and you'll see a chart updated with the latest price via the Internet. Click further and you'll find you're on the Internet comparing similar investments, all without leaving Money. There are numerous help sections on topics such as buying a house, debt reduction, shopping financial services, and buying insurance. Of course, having all of your financial information organized can be a big help at tax time, and Money can help in several ways there too. By utilizing the Internet, our goal is to automate as much of our money management as possible by downloading the information directly into the software as an ongoing process. This will include all checking and credit card transactions as well as investment portfolio updates. Internet Banking Next, we needed to get set up with Internet Banking. Although there are many offering the service, I personally went with the local bank that I've been dealing with for years. I like the fact that I can still walk into the brick and mortar building in addition to implementing an online banking system. All Internet banking really involves is having access to the bank's computer. I can see all of my checking transactions and a running balance of my account. If I click on a check listing I can actually see a photocopy of the check I wrote. The best thing is seeing exactly which checks have cleared on a day-to-day basis. It seems my bank has outsourced this service, as I'm guessing most banks do. When I first signed up, I got a series of letters, each with a single username or password, for both Internet banking and bill paying. This, along with a secure connection, shows the bank is quite concerned with security, as it should be. While in MS Money, I access my account by clicking a link that spawns a browser to take me to my bank's web site. After logging in with my name and password, I can see my account information. Getting this information back to MS Money is a simple matter of a few clicks to download all transactions. The industry seems to have agreed on several common file formats that make these exchanges of information easy. Among these are .OFX and .QIF formats. Internet Bill Paying Tied closely to Internet banking is online bill paying. Again, there are many services available, in fact even Yahoo offers one. When I signed up for Internet Banking from my local bank, I also took the bill paying service that went along with it. As before, the data is simply downloaded back into MS Money on my PC. The convenience is incredible. You start by setting up a list of payees. This one-time chore requires looking up each address from an available list and deciding when, how much, and how often you wish each bill to be paid. By setting up reoccurring payments, your bills can be sent every month, on time, and without doing a thing. This particular service is reasonably priced at about $5/month for 25 transactions, and pays for itself with the savings from postage alone. Interestingly enough, even in this year 2000, many companies do not have electronic payment systems. No problem however, since the Internet bill paying service simply sends a check for you. Just schedule check payments with a little more time before the due date than electronic payments to be sure they arrive on time. Your bills still come in the mail as before and I can look to make sure my payment was received. Putting It Together Putting this all together takes a little effort. Organizing all of your financial information and entering it into your money management software initially takes some work. Then, organizing your expenses and assets into accounting categories is not a whole lot of fun either. Once you're done, though, you'll have a complete picture of your finances, perhaps better than you've ever had. I'm still working on improving the system. One problem is getting the software to identify the imported checking data. A hand written check has no way for the computer to list its payee. Its sometimes necessary to identify a few checks in MS Money to make sure they're listed in the right categories. Using a check card solves this problem by downloading a description with the data. Automatic bill paying also carries over this information into MS Money. The software even helps. For example, Money will ask you if this payment is for "Sears" and remembers the information the next time. The Future is Now Stop at the gas station and pay with your cash card. The transaction is automatically downloaded to your PC and placed in your expense category, Automobile/Gas. Run up a pie chart showing your expenses and how much you paid for gas, repairs, license, etc. Set up automatic bill paying to automatically pay your phone bills every month. MS Money keeps a running total of your phone payments with subcategories for long distance, cell phones, and your daughter's calling card bills. Take a business trip and pay for everything by credit card. Create expense categories for Business/Visa in your software and download all transactions from the credit card company web site. At the end of the year output all business expense data to tax preparation software. You save time and effort plus accurately account for every deduction. It's YOUR MONEY, why not get YOUR COMPUTER to help? This article is intended to offer information about computers and Internet Banking. It should not be considered as tax, financial planning, or investment advice. Rick Johnson is a web developer at Risdall Linnihan Advertising in New Brighton, MN. He can be reached at rick@risdall.com iBiz |