More than six months ago, Eric Blow, a software engineer in Reston, Va., and his wife, Valerie, a chemist, faced the "ultimate spread" in student loans, credit card balances and other debt.
To cope, they sketched a rough budget on paper, but that didn't reveal where their money was going from month to month.
So Eric, 29, drafted a spreadsheet and began recording how he and Valerie, 28, were spending. It wasn't a cure-all, but it helped orient the couple.
"Without it," Eric says, "I would have no idea where we're making our mistakes."
Good record-keeping will make a significant difference in your ability to manage finances.
"Think about it," says Patrick Doland, president of Reason Financial Advisors Inc. in Northbrook, Ill. "If you hand over organized documents to your accountant, he's going to charge you less at tax time."
And with the Web now becoming the background against which we pay bills, balance accounts and invest, it makes sense to manage our financial records on the computer, too.
The ruling duo of financial-management software programs, Microsoft Money and Intuit's Quicken, are launching 2005 editions.
In the past, both programs alleviated the setup strains of record keeping but still required you to manually key in figures. For Eric and others, the dual task of balancing a checkbook and a computer program was not appealing.
But the latest editions now take advantage of the Web's resources, automatically updating your accounts--from 401(k) portfolios to credit cards--as you spend, save or invest.
How it works: Money and Quicken essentially pull data from your online accounts as frequently as you like (I selected daily updates). Your Quicken and Money data then adjust almost as quickly as your statements online.
Plus, Money 2005, which underwent the most significant face-lift in its 13-year history, goes one step further and categorizes transactions for you, providing a vivid pie chart of how much your cash flow goes toward, say, household costs.
Other features for both programs include bill payment calendars with handy links to your institution's Web site, monthly cash flow projections and debt pay-off scenarios.
But while this wide sweep of automation reduces your workload, the programs still are not effortless.
For instance, though Money 2005 now links to more than 5,000 institutions, it didn't have my hometown bank. To include that information, I had to manually type in and refresh the figures (Check here to see whether your bank is linked).
And my dinner at a Middle Eastern restaurant, which I charged to a credit card, was labeled "undetermined," requiring me to make adjustments.
Both Money and Quicken are offered with different levels of features. The basic versions provide help with budgeting and spending and cost around $20 to $30. More advanced packages allow you to track investments or prepare taxes for $40 to $60. (One drawback: Software upgrades are not free.)
But as Microsoft found in its research for the 2005 edition, most people want help with tracking account balances, bill payment and spending.
Adds Jim Blankenship, a certified financial planner in New Berlin, Ill.: "The investment component leads you to focus on the day-to-day activity of stocks, which, with market fluctuations, can drive you crazy."
At any rate, most personal computers bundle a basic version of Money or Quicken with other software, so check your machine first.
Consumers can buy Money 2005 in stores Sept. 21. A downloadable version with free trial will be available sometime after that date at www.microsoft.com/money.
Quicken is on sale now as a CD or download from www.quicken.com. Although there is no free trial, you can return it for a full refund within 60 days.
While you tinker, make sure to ask yourself what your goal is and whether the program fits those needs.
If unsure, you could always start with a spreadsheet or a more homespun tactic.
"The product itself is not as important as it is having a system," says Blankenship. "There's something very powerful for an individual to track cash flows or see their debt reduce from month to month."
This article originally appeared in the September 5, 2004 issue of the Chicago Tribune.