Overspending: At The Root of Most Financial Problems

Overspending, in many ways, is what is at the root of most people’s financial problems. Essentially, they spend more money than they have and put the rest on credit. They build up debt until it reaches critical mass and then either cut back out of necessity, or use the equity in their home to pay it off and start the whole cycle again. Talk about mortgaging your future away.

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“We Have No Money”

When my wife and I were married, neither of us had ever created or used a budget or even balanced a checkbook, for that matter. We were both, as Dave Ramsey says, “Free Spirits.” When I joined Finicity, over three years ago, I was very impressed with and excited about our flagship product, Mvelopes. So I quickly became the “Nerd” in our marriage, when it came to finances, kind of by default. It is crazy to think about how far we have come in that amount of time. Everyone wants a quick fix, that magic pill that will make all of their problems disappear into the ether. But the truth is, no matter what your problems are, or whatever it is you want to change in your life, it’s NOT going to be resolved immediately or happen overnight. Change takes discipline and continuous effort. I like the way Ramsey puts it-change is a “process” not an “event.”

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Our new motto is “Nothing new–make do.”

Andrea and her family

Andrea and her family


Our latest success story comes from Andrea, who lives with her husband and three beautiful children (and two dogs) in Beaumont, California. Andrea and I had a wonderful conversation about life, family, the economic struggles occurring throughout the country—among other things—and she shared some amazing insight that I am confident will inspire and help other Mvelopes members. Andrea answered the following questions:

Q: How long have you been using Mvelopes?

A: Over a year. I’m not sure exactly how long we’ve used Mvelopes, but I know it’s been at least a year because we’ve been able to print a yearly report that contained all of our information for 2008.

Q: How has Mvelopes assisted you in living within your income?

A: Well, if there’s no money in the envelope, there’s no money to spend. It’s straightforward. At times, there are exceptions and I’ll have to move money from one envelope to another, but those times are rare. Also, some of our habits and family traditions have changed. My husband and I were both so surprised to see how much money we were spending eating out with the family, buying lunches, and taking daily trips to Starbucks. My husband now takes his lunch to work. As a family, we had a weekly tradition of going out for breakfast. We’d have breakfast burritos and donuts every Saturday morning. Now we eat breakfast at home and enjoy spending time together. My 9-year-old son makes his “famous egg sandwiches,” and we make donuts, too. Using Mvelopes helped to put a spotlight on the things that we think are important, and where our money is actually being spent. My kids are my priority and eating out isn’t. It’s definitely better for us to sit down as a family and enjoy meals at home.

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Partial Reset and Resolved Issues

We rolled out new code to all of our users today that contain the following new features and resolved issues.


Partial Reset option

Our customers have been asking for additional application reset options that will help them effectively start over without having to re-add all their accounts and recreate their spending and funding plans. With this new Partial Reset option, you will be able to do just that. Your envelope balances will be reset and your starting account balances will be adjusted automatically. All you will need to do is fund your envelopes and wait for new transactions to assign, and you will not lose your spending plan, funding plan, funding profiles or any of your custom envelopes like you would during a Full Reset of the application.

Partial Reset Option

Partial Reset Option


Unable to match pending account transfers/credit card payments created by Bill Pay

We recently included the ability for you to select the Account Transfers and Credit Card Payments envelopes from Bill Pay when creating a payment to display the transactions in the Pending Transactions register. However, users were getting an error when trying to match the opposite transaction created by Bill Pay to the downloaded transaction in the New Transactions register. This issue has been resolved with this release and you can now successfully match both sides of these types of transactions.

Bill Pay incorrectly showing “Confirmed” status for “Stale” accounts

When adding a new account in Bill Pay you are required to confirm it before being able to use it for making payments. If you wait too long to confirm it the status for that account gets marked as Stale in the system. This was being displayed as Confirmed in Bill Pay. This has been fixed and for these types of accounts you will now receive the correct account status which will direct you to the account confirmation form that you can print and mail in.

Back End System Maintenance

We have extensively re-factored our back end systems for calculating and maintaining envelope and account balances. You should now see a better load time of the application and better response to updated balances when assigning transactions.

“Can’t imagine life without it (Mvelopes Money Management)!”

Sara and Steve

Sara and Steve

Our latest success story comes from Sara. Sara and her husband, Steve, live in Santa Cruz, California. Before our telephone interview (which follows), Sara shared the following comments:

“We have been married for 30 years and have struggled with our finances for 29 of them. Budgeting has always been our issue. Last year, my sister introduced us to the Mvelopes budgeting system. We knew we needed to do something, as retirement is looming in the not-too-distant future. We had NO idea how this tool would change our lives and the way we looked at our finances. The Mvelopes budgeting system is really easy to start using, and even easier to maintain. With our budgeting plan, we actually feel like we have more money. We get to budget for things that are really important to us and let go of the things that are a financial burden. We no longer fear retirement, even in this rocky economy. Thanks, Finicity, for this wonderful product. Can’t imagine life without it!”

Q: How long have you been using Mvelopes?

A: I actually signed up for Mvelopes about a year ago, and we didn’t use it for awhile, but our financial situation changed and I needed to get a budgeting system going. So, technically, I have been using it for about 7-8 months.

Q: How has Mvelopes assisted you in living within your income?

A: I can track my spending on a daily basis. I know exactly how much I have in my envelopes, I know when I need to stop spending, or when I can spend a little more.

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Investment Tip – Stay Away From the Grocery Store

Since living within a budget is a good short-term and long-term investment, I’m always looking for tips to help me get a better return.

I have a good friend who has twin toddlers and a third one on the way. One day when I was visiting with him, he told me about how he and his wife do their grocery shopping. When they started using Mvelopes, they began to realize that they would have large swings in their grocery envelope. As they analyzed it, they realized they were making many stops at the grocery store to pick up items they ran out of. And each time they stopped, they always ended up buying more than just the things they needed.

Grocery Stores, can you please put the milk and eggs at the front of the store so we’re not tempted to buy other things?

As this happened more and more often, they began to exceed their grocery envelope. To fix this, they came up with a master list of items, both groceries and household items. At the beginning of each month, they started buying non-perishable items (enough for the whole month). It took a month or two for them to figure out the correct quantities, but once they got that figured out, they began to see results very fast. Now they’re saving both money and time.

Kyle Lloyd, Accounting

“Mvelopes has dramatically changed our financial outlook”

Stephen, Stephanie, and their adorable daughter

Stephen, Stephanie, and their adorable daughter

For our next success story, I had the privilege of speaking with Stephen and Stephanie from Harrisburg, Pennsylvania.  Although many of their comments were similar (in which case, I’ve just included Stephanie’s comments, since our conversation was more lengthy), it was certainly interesting to hear things from the wife’s and the husband’s perspective.

Prior to the telephone interview, Stephanie shared the following comments with us:

“When I found Mvelopes through a desperate Google search, I felt as though I had landed exactly the kind of financial management system we needed. In fact, in my mind, I had always visualized our financial categories as envelopes – perhaps this was because my grandmother always saved using envelopes marked for certain expenses.

Only two months using Mvelopes has dramatically changed our financial outlook. We discovered our problem was excessive withdrawals so we started limiting ourselves to a certain amount of withdrawals per pay check. We are on our way to saving for vacation, new windows and plenty of other upgrades that wouldn’t be possible without this financial management system. Thank you!”

During our telephone conversation, the following additional insights were shared.

Q:  How long have you been using Mvelopes?

Stephanie:  Just over one year (I believe we started using it January 1, 2008).

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“I Love Mvelopes!” Money Management System

Barbara and Geoff Enjoying Their Money

Barbara and Geoff Enjoying Their Money

Our latest success story comes from Barbara, who lives with her husband in rural Arizona. Barbara has this to say about her love for Mvelopes:

“I love Mvelopes! I discovered it on New Year’s Day last year (2008) and started my free trial right away. One of my intentions for the year was to build savings and manage my income more consciously. I was so excited about finding a system that would help me track expenditures using all the different tools (ATM, cash, credit cards, checks from several accounts, etc.). This was an answer to my prayers. I recommend it to anyone who would like to feel more peace about their finances.”

During a delightful conversation I recently had with Barbara, she provided the following additional comments:

Q: How long have you been using Mvelopes?

A: Just a little over a year.

Q: How has Mvelopes assisted you in living within your income?

A: That’s an interesting question, because I really didn’t feel that it was a challenge for me to live within my income-we had sufficient income for our needs. However, I found that I was spending everything I had each month, and not really doing much in the way of saving. Now I really think about purchases and ask myself, “What envelope would this come out of and do I have the funds to cover it?” and I find that my decisions for purchases and spending are quite different.

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My Daddy Uses Mvelopes!

I have to admit that I am a big fan of Financial Guru, Dave Ramsey. I recently went to one of his Total Money Makeover Live events and absolutely loved it! He has tremendous passion for teaching people how to get out of debt, get control of their finances and ultimately better their lives. My wife convinced me that we could move money from one of our discretionary envelopes to purchase a few of the children’s books they promoted at the event. Now, not only am I telling my friends and family about how Finicity helps us budget with the envelope method, but my 4-year-old daughter is too! Whenever she hears someone talking about money, she has to tell them that her Daddy uses Mvelopes.

One of the best results of this has been the transformation to our mornings! Leaving for work in the morning used to be a ritual of her whining and begging that I stay home and play all day with her. But now, thanks to Ramsey’s “Jr.” books, the morning dialogue with my daughter goes simply:

“Daddy, where are you going?”

“When you need money…” I say, “You gotta go to work!” she chimes in excitedly.

Then she gives me a kiss and a hug, and I’m off. Who knew that something like the “Envelope Method of Budgeting” would not only lead to financial control and freedom, but a whine-free morning!

Kristopher Higley, Designer

Give Deadbeats Credit …

“The only reason a great many American families don’t own an elephant is that they have never been offered an elephant for a dollar down and easy weekly payments.”

-Mad Magazine

Today we’re pressured from nearly all angles to sign up for easy credit so we can purchase everything from elephants to electronics. Need a new credit card? Just check your mailbox, or the nearest billboard, banner ad, TV commercial, newspaper ad, etc. In fact, I long ago opted out of receiving credit offers and I still get dozens weekly!

But really, how can you refuse? After all, you’re probably already pre-approved for a 0% introductory interest rate, low APR thereafter, 1-5% cash back on all purchases, acceptance in more than 150 countries, and a free Hannah Montana bobblehead (limit two per customer). And if you don’t like the default card they send, don’t worry, you can get blue, gold, green, platinum, or even upload your own image online! There will also be numerous other ways they distract you from caring about the contract terms you just signed.

Just remember, no matter what options you choose, the lender has a single goal in mind – to help you rack up as much debt as possible. And if you dare to pay off your credit card balance in full every month and avoid interest charges, you’re no good to them! They’ll consider you a deadbeat and talk trash about you in their company meetings (ok, I made that last part up – but it could happen). Why wouldn’t they want you to earn points, rewards, frequent flyer miles, gift cards, etc.-at no cost to you?

So, is there a silver lining to all this? Well, it just so happens that here at Finicity we offer personal financial software tools which enable you to make informed spending decisions by “pre-spending” your income before you go out and make your purchases. So whether you spend from cash or a debit/credit card, as long as you’re spending within your envelope balances you won’t overspend, period! So. spend within your income and join the ranks of successful “deadbeats” today!

For another interesting angle on credit cards, see this story from PBS: http://www.pbs.org/wgbh/pages/frontline/shows/credit/etc/synopsis.html

Nick Lashley, Customer Support Operations