in2m-logo A jam-packed car full of gifts; holiday parties; traveling cross-country to visit loves ones – consumers spend more money in the three months before New Year’s than any other time of the year. In fact, retailers often make about half of their annual profit during this time, according to the National Retail Merchants’ Association.

Unfortunately, much of the buying will be done on credit. Many people get so carried away during the holiday spending season that they can’t dig themselves out for months or years. With the holidays quickly approaching, now is the time to think about how you will pay for gifts, decorations and everything that comes with the season.

Steven Smith, spending management expert and In2M CEO, recommends the following tips to achieving a debt-free holiday.

  • Create a holiday spending plan NOW. Create an envelope-based budgeting system to allocate funds for every holiday expense this season. Literally, assign each person or expense (entertaining, home decorations, special occasion attire, etc.) an envelope. This can be done with a cash-based envelope system or with an online budget system like Mvelopes ® Personal. Determine the amount you can afford to spend for that envelope and write it on the envelope. If you must go over the amount allocated to the envelope, you are faced with the choice to take funds from another envelope or rethink that expense.
  • Shop for bargains, and shop early. The Internet has lots of great deals. And many of the best deals to be had in the stores are before the shopping season kicks off.
  • Don’t wander off track. Emotions sometimes get in the way of good judgment when shopping for loved ones and friends. While it’s terrific you want to give only the best, stick with the amount allocated to each “envelope” for those on your gift list.
  • Get creative with gift giving. Many times, the best gifts are the ones that require little or no money. Whether it’s baked goods, a grandchild’s one-of-a-kind art piece or simply an IOU certificate for a house cleaning there are many opportunities to save money during the holidays without sacrificing anyone on your list.
  • Use credit cards wisely. There is no quicker way to ruin your holiday spirit than to realize you have to pay for all those purchases over the next six months to a year. Credit Cards should only be used when you know that you can fully pay them off during the next month, with money that is already set aside for this purpose. Otherwise, when you calculate the finance charges, you practically double the cost of each item.

Steven B. Smith is chairman, president and chief executive officer of In2M Corporation, a financial software and services company and the developer of Mvelopes Personal – an online budgeting system. For the past fifteen years, he has been actively involved in assisting and educating people in personal and small business financial management. Smith holds a finance degree from the University of Utah.

Get on the Program to Financial Fitness

Spending less than you earn is the key to creating stability and long-term financial fitness. While many people create a budget or spending plan at some point, few stick to it for the long haul.

“Everyone needs to develop a spending plan, regardless of their income level,” says financial services executive Steven B. Smith, author of Money for Life Success Planner: The 12-Week Companion to Achieve Financial Fitness ($17.95 Dearborn Trade Publishing, 2004).

To help consumers get on the road to financial fitness by way of spending management, Smith developed the Money for Life Success Planner based on the envelope budgeting method detailed in his previous book, Money for Life, Budgeting Success and Financial Fitness in Just 12 Weeks! By helping readers understand and evaluate their financial situation, and then set spending objectives, Smith’s week-by-week roadmap of worksheets, reports, and milestones helps people of all income levels to:

  • Live comfortably while spending less
  • Understand the true impact of every spending decision
  • Successfully use credit cards without increasing debt
  • Stop accumulating debt, while successfully planning for debt elimination
  • Save for emergencies, future purchases, and long-term financial goals

Each section of the Money for Life Success Planner contains an overview of objectives, references to the related sections of Money for Life, and personal insights from people who have found success using the envelope budgeting method, along with the other Money for Life principles.

“Readers will be amazed how many significant, positive changes can be made in just a few short weeks,” said Smith. “While there is no easy path to financial security, Money for Life is an educational resource, and the Success Planner is the implementation guide. Together these two books put readers on their way to becoming financially fit and securing long-term financial freedom.”

Steven B. Smith is chairman, president and chief executive officer of In2M Corporation, a financial software and services company that he co-founded. For the past fifteen years, he has been actively involved in assisting and educating people in personal and small business financial management. Before starting In2M, Smith served as a senior member of the executive team at Megahertz Corporation. He also helped found two additional successful ventures, Floppy Copy and DeltaValve. Smith holds a finance degree from the University of Utah.

Money for Life Success Planner: The 12-Week Companion to Achieve Financial Fitness($17.95, 160 pages, paperback, ISBN: 0-7931-9515-2) is available at neighborhood and online booksellers or by calling 800-245-2665.


mvelopes-logoIf the surveys and pundits are to be believed, many Americans are failing to plan for retirement, living with hefty credit card debt, and worrying whether they have enough in their checking accounts to pay for this month’s bills.

One culprit: Many don’t have in place the basic building block of a sound financial plan – a budget. Enter the latest versions of old- guard personal finance software programs, Intuit’s Quicken 2005 and Microsoft Money 2005, as well as a relative newcomer to the category called Mvelopes, an online budgeting subscription service.

These newly released software programs are designed to help you get a handle on your personal financial DNA income and expenses, and assets and liabilities. By tracking your expenses and income, you’ll start to see how you spend your money so you can craft a budget.

Quicken, the granddaddy of personal financial software, today claims 16 million users (though it’s difficult to determine how many are still using the software), representing a 70.3 percent share of the personal finance software market, according to market-research firm NPD Techworld. Microsoft’s Money accounts for 24.7 percent based on unit sales for the one-year period ending in September.

So how do you know if you’re ready to adopt a personal finance software program? Consider your personality. These programs work best for people who track their income and expenses and balance their checkbook every month, not those who make annual resolutions to become ultra-organized.

Consider your spending habits. These programs work best if you don’t use a lot of cash and paper checks. The programs can download such information from your bank account, but you will have to type in individual expenses and split ATM receipts into different expense categories.

Assuming you want to try these programs, which one is the right one?

“It’s really a matter of personal preference,” said Holden Lewis, an analyst with One bank customer service representative who tried to help me download a year’s worth of transactions into Quicken and Money for purposes of this review said the best one is really a function of which one you used first.

“If you started out with Quicken, then you probably won’t like Money, and if you started out with Money you probably won’t like Quicken,” a Citizens Bank telephone representative told me.

For first-time users, however, the decision turns on cost and features. Quicken and Money programs come in a variety of models. Quicken’s and Money’s basic models (about $30 each), for instance, are a take on the original Model T. They allow you to balance your checkbook, pay your bills online (either through your bank or, for a fee, through an online bill-paying service), and create and manage your budget.

By contrast, the fancy versions for both Quicken and Money (about $80 each) allow you to do all that as well as search for ways to reduce your debt, track your net worth, find tax deductions, analyze your investment portfolio, explore ways to minimize capital gains, and plan for college, retirement, or a new home. Plus, those programs have links to their website that feature tips on investing, taxes, and retirement planning.

Despite claims by Microsoft that you will never have to type again, the hardest part even for the ultra-organized is getting started. In fact, as I found out, it may not be worth setting up these programs if you don’t have the time and patience to use them on a regular basis.

Prepping alone can give you flashbacks to tax time. To get started, you’ll need all your bills, receipts, investment statements, and canceled checks in one place.

Getting started also requires that you synch up the programs to your bank, credit card, and investment accounts. Therein lies yet another hard part.

As part of an effort to review the Money Premium 2005 and Quicken Premier 2005, I tried to synch the programs to accounts and wasted at least four hours talking to customer service representatives about user names, passwords, and error messages.

In the end, I was able to download my Citizens Bank account information, but it took several attempts, and worse yet I could only download portions of my account history at a time, not the entire year-to-date record of withdrawals and deposits.

After I imported all the transactions into the software program, I was still faced with typing all the “unassigned” income and “unassigned” expenses (amounting to 80 percent of total spending) into the proper categories, such as groceries, insurance, housing, or automobile.

Both programs have preassigned categories to make sure you’re categorizing your expenses correctly, but it’s not always intuitive what goes where.

Categorizing correctly is important because when it comes time to generate reports that show where your money went, the report is only as good as the information you entered.

If you get past the exasperation of setting up these programs, odds are good that you’ll be able to get control of your money. For instance, I quickly learned how much our family spent on fuel at the local gas station and groceries.

I also can view my entire retirement portfolio in one place and learn daily the size of my nest egg; these programs can link directly to investment account sites. Plus, the Money program connected me to Morningstar’s retirement planner, which can tell me if I am on track to meet my goals.

Now if all you need is a simple budgeting system, Mvelopes is one to consider. The Web-based system takes a page from the old days when people used just cash and would stuff the amount they planned to spend in envelopes marked savings, utilities, or mortgage.

Unlike Quicken or Money, there’s no software to download. You create a budget online, track your spending online, compare your spending to the plan, and should you choose, make adjustments. There’s no need to synch up multiple accounts, though you do need to electronically move money from one account into an “electronic” envelope that contains the money for this or that bill.

The program, which can be found at, connects with 4,000 banks, offers a bill-pay service, and allows you to track your assets and liabilities. The main drawback to this system, which has a companion book and planner called “Money for Life,” is its cost.

The annual subscription is $119.40, making it at least $40 more expensive than high-end versions of Quicken and Money.

But Mvelopes is selling convenience, bragging that it only takes 18 minutes to set it up. Also, the categories of spending are quite intuitive and easy to use.

Will it stop you from overspending? The short answer is yes, so long as you use the program the way it’s designed and react to your overspending ways.