5 ms·

I don't know, I've been intrigued by plain text double-entry bookkeeping for a while, it looks like fun, but on the second thought I just don't see any real ben

I don't know, I've been intrigued by plain text double-entry bookkeeping for a while, it looks like fun, but on the second thought I just don't see any real benefit for a regular person (probably, most IT specialists don't qualify). You get your salary, you set aside 20-75% to pay the bills, some amount you know from experience you need for groceries and other recurring expenses (like public transport and household goods) and if you happen to have anything left it goes to savings. If you're privileged, you'll also have some petty cash left for occasional lunch/night out. When you need to spend some significant unplanned sum you take it out of savings, if you have any. If not, you eat less or go into debt. What's there to track, how much you've spent on potatoes and underwear this month versus the previous? That was the scenario for a disciplined citizen. Most just pay the bills (not necessary all of them) and then just spend what's left on their debit card until there's nothing left. It usually happens before the next salary, of course. No accounting software would help there. UPD: I'm not sure it was the right place to spill my negativity, I fully understand the benefits of being organized with your finances.

pabl8k 6y ago
Once I had a well-paying job, inverting this was the best thing I did for myself financially: setting up a 50% direct deposit to a high yield savings account (and eventually investing) and only considering the remainder spendable for my day-to-day expenses.
gen220 6y ago
The benefit is mostly for scenarios with a couple more degrees of freedom than what you describe. If you share your finances with N people (family) or N companies (free-lancer/consultant, etc), the path of least resistance to financial sanity is a well-maintained ledger. If you see this stuff coming in your future, your future self will thank your present self for getting started when things were easier to track. It's also a single source of truth for your entire financial existence. You can use it to track your asset allocation. Which some people in the bracket you describe care a lot about. Of course, you can pay people to do all of this stuff for you. (Accountant, Investment Broker, etc). But there are well-documented costs to these solutions. Basically, you have to trust them a lot, and if you don't speak their language you can't verify their choices. Edit: to be clear, I'm not saying that maintaining a ledger is the right choice for everyone. It's a trade-off, like anything else, I just wanted to explicitly observe the variables that were at play in my decision. YMMV
- uryga 6y ago
  > If you share your finances with N people (family) or N companies (free-lancer/consultant, etc), the path of least resistance to financial sanity is a well-maintained ledger. that was it for me! i started using hledger because of: - tracking irregular payments from a bunch of sources, often outstanding for a while - tracking how much somebody owes me / i owe them - being pretty much cash-only for a long while (long story). with cash, if you don't track the expenses manually, you wake up at the end of the month with a whole bunch of money gone and no idea what happened to it - not knowing how much money i actually have available because it's spread across my wallet / bank account / paypal / piggy bank hledger really helped me not go crazy with all of this! PS. another unexpected benefit - tracking expenses can also help with ambient worries like "ugh i spend too much on takeout food". like, if you track it, at the end of the month you can look at how much you spent on it and conclude that it's actually reasonable (within your budget) and stop feeling guilty about it!
  - gen220 6y ago
    Everything you described is a great gateway drug for GNUPlot :) Inspired by your example, here's our rolling monthly sums of food expenses, COVID marked [1]. You can see where we moved (temporarily) to a place with lower food costs, and stopped eating out. But there's also a dip around the holidays, because we spend a lot of that time with family and our food expenses go down proportionally. That dip happens to be consistent YoY, but we don't realize it because we have other things on our mind. It's just great fun to have this stuff at your fingerprints. [1]: https://imgur.com/a/8wb6YLn https://imgur.com/a/8wb6YLn
    - uryga 6y ago
      i haven't used gnuplot before, what's your setup for getting these? a monthly-cumulative plot is exactly what i'm missing from hledger-web.
      - gen220 6y ago
        I’d never used it before using it for ledger, either! It’s kind of tricky. I have an AWK script that reads a ledger report to compute the X and Y-value pairs. These are written to a temp file that is read by GNUPlot. It’s a bit of work to get setup, but I’m able to copy paste the idea around my reports. I’ve also found the GNUPlot manual to be very easy to read! I’m away from my laptop now, but I’ll add a gist tomorrow.
hollerith 6y ago
I've heard of some individuals giving a plain-text ledger to their tax preparer. (Keeping a ledger does not necessarily mean tracking every personal expense.)
- ZoomZoomZoom 6y ago
  I'm currently in a part of the world where the government nurtures fiscal immaturity and just takes its share directly from employers salary fund. Some specific taxes come as bills too. Not much to prepare, unless you're an self-employed/entrepreneur, so it definitely skews my perception in this regard.
jdlshore 6y ago
I agree with your premise, but please "pay yourself first." [0] Instead of putting "whatever's left" in savings, decide how much you need to save to meet your goals, put that amount aside first, then use the remainder to pay bills. An envelope system [1] works well. If you don't have enough, reduce your expenses, not your savings. [0] https://www.investopedia.com/terms/p/payyourselffirst.asp https://www.investopedia.com/terms/p/payyourselffirst.asp [1] https://www.daveramsey.com/blog/envelope-system-explained https://www.daveramsey.com/blog/envelope-system-explained
- esoterica 6y ago
  I very strongly disagree with that method. There is a lot of natural variance in how much people spend in a month. Some months you spend $1k, some months you spend $10k. It doesn't make sense to use a fixed monthly budget at all. It also just encourages arbitrary gerrymandering of your expenses. If you want a PS5 but have no more room in your budget this month, you might decide to buy it next month instead. But then you'll just end up spending the exact same amount next month, so you've deprived yourself for one month for zero financial gain just because you're gaming the arbitrary constraints you impose on yourself.
  - BeetleB 6y ago
    Your scenario is not at odds with the parent's one. He's saying "Figure out how much I want to save for long term goals, and set that aside first" It doesn't preclude saving for long term expenses.
  - tachyonbeam 6y ago
    Depends. If you work as a software developer, odds are you make more than you need to live comfortably. In that scenario, it makes a lot of sense to be disciplined and put some amount of money aside first. I picked an amount to put into savings that still leaves me enough to not have to stress about groceries or going out once or twice. I basically always manage to hit my monthly budget, and save what I planned. If I wasn't putting money in savings first, I think I might end up spending a lot more than I should on tech gadgets and other things that I don't really need. My approach: 1. Put a reasonable amount in savings first, but make sure to leave yourself enough to enjoy life, because you can't be completely sure you'll be alive in 1, 5, 10 or 20 years. 2. Spent on monthly expenses without stressing about savings, because some fun money is also part of your budget. 3. If there's any money left over when you get your next paycheck, send that into savings as well.
tim333 6y ago
Double-entry bookkeeping is mostly for keeping business accounts. If you want some maybe try running a small business on the side?
hiq 6y ago
Like everything you will eventually end up with diminishing returns. E.g. I doubt many people track potatoes vs carrots, or underwear vs socks.* But: 1) Once you've automated most the of the steps, it takes, say, 1h per month to have everything up to date, so basically nothing. 2) Compared to no tracking, you can often end up finding money another party owes you. At that point, the 1h per month is financially worth it. 3) How little can you spend if times are tough? Any theoretical budget will pale in comparison with actual tracking of past expenses. Once you know this, you know how many months of spending you have in cash, meaning you can invest the rest in the long-term. 4) How much will you spend in 5 / 10 / 20 years? Why? You can better estimate this with accounting. 5) Let's say you spend $x on hobby A and $y on activity B. Does that reflect how much you like A and B? If not, maybe change it? *: still... how diminished is your salary if you start a job that requires that you wear a suit everyday? Is it still better than the other offer you rejected? Maybe you made a mistake? This is way
- hiq 6y ago
  ...way easier to assess once you have such tracking in place.
csomar 6y ago
There are two possibilities: 1. There are people who like to create complex analysis/structure around their lives. I don't say they are unnecessarily complicating their lives, because that's part of their personality. So, yes, you are correct. An double-entry ledger doesn't add much insights. 2. After $200k/year income and $1m+ wealth, and if your wealth is very diversified (inherently complex), then I can see the value in it. ie: An engineer with $200k has less complexity than a freelance with $200k/year. At a certain point the freelance will benefit from an accountant, but maybe he's running some stuff in the dark economy or something.
BeetleB 6y ago
> When you need to spend some significant unplanned sum you take it out of savings, if you have any. If not, you eat less or go into debt. Doing detailed accounting helps prevent you from that "go into debt" scenario. Typical long term things people forget to save for: - Their next car - Car Repairs - House repairs - New roof for house Etc. With detailed accounting, you can set money aside for these things, and then when you suddenly decide to go on a vacation, you know how much money you need to leave aside in your savings to cover the above.
jldugger 6y ago
I've been using GNUCash since 2007, while in grad school earning... grad school wages. It worked out well for me earning IT specialist wages now, and I don't think the regular joe will need/use plaintext accounting specifically. But the idea of double-entry bookkeeping can be useful still. 1. Accurate visualization. As you suggest, a great number of people pay most attention to their checking account balance. Making student loan payments on time can feel like just paying 'bills'. But it's actually a split between interest and principal, and in a sense, you are accumulating wealth by paying down principal in a way that just looking at the debit card balance will not. Similarly, racking up CC debt can feel cheap when making minimum payments. 2. Improved forecasting. Before GNUCash I largely worked the same way as you describe. Keeping a mental tally of bills outstanding and checking my balance via the automated phone system to judge what I can spend. Now I have scheduled transactions for those bills recorded 90d in advance, and can see at a glance my Minimum Future Balance. It's nearly the same thing, but with way less acid reflux from stress. And I can schedule in all the random annual expenses -- vehicle registration, vacations (when permitted), annual subscriptions -- just once and the system remembers for me. Plus I have a more granular archive of expenses to estimate and budget around. 3. Expense Analysis. Most people track one asset: checking acct, and maybe liabilities. Double entry accounting makes it feasible to transition from that to treating expenses and income as equally important. Probably the canonical example is car insurance; most insurers offer a six month premium, or a monthly payment with a surcharge. If you focus on checking acct balance, you go for the monthly payment with smaller upfront. If you want to reduce your annual expense you pick the six month option, dipping into savings briefly if required. On the income side, you'd be surprised how many people don't even bother to get the employer 401k match, even though you can often carry a CC balance (a very worst case scenario) and come out ahead. 4. (advanced) Portfolio balancing. If you're fortunate enough to fund a retirement plan, tracking your portfolio and asset allocation can be tricky across Roth IRA, 401k, etc. An annual rebalancing, formalizing the 'sell high, buy low' formula, is equally tricky when none of your accounts synchronize. A double entry system makes this and other retirement planning steps feasible.
vptr 6y ago
I used ledger for a year. I was able to script conversion of my transactions to ledger format. It was good to see where my money goes. But like you said, I don't care much about budgeting or tracking my personal expenses. As SWE (not to brag) I make enough money to not think about these things. I'm also pretty frugal person, so majority of my expenses are just food. Now, I also have a small LLC. And I used to track my business income/expenses. It's useful, but also, I don't have that much volume to really care about ledger it's just too much work right now. Last year I did taxes with ledger, it was PITA to import everything. This year I just dumped my transactions into google sheets and setup pivot table, which accomplished exactly what I needed for tax return.

pabl8k 6y ago

Once I had a well-paying job, inverting this was the best thing I did for myself financially: setting up a 50% direct deposit to a high yield savings account (and eventually investing) and only considering the remainder spendable for my day-to-day expenses.

gen220 6y ago

The benefit is mostly for scenarios with a couple more degrees of freedom than what you describe. If you share your finances with N people (family) or N companies (free-lancer/consultant, etc), the path of least resistance to financial sanity is a well-maintained ledger. If you see this stuff coming in your future, your future self will thank your present self for getting started when things were easier to track. It's also a single source of truth for your entire financial existence. You can use it to track your asset allocation. Which some people in the bracket you describe care a lot about. Of course, you can pay people to do all of this stuff for you. (Accountant, Investment Broker, etc). But there are well-documented costs to these solutions. Basically, you have to trust them a lot, and if you don't speak their language you can't verify their choices. Edit: to be clear, I'm not saying that maintaining a ledger is the right choice for everyone. It's a trade-off, like anything else, I just wanted to explicitly observe the variables that were at play in my decision. YMMV

uryga 6y ago
> If you share your finances with N people (family) or N companies (free-lancer/consultant, etc), the path of least resistance to financial sanity is a well-maintained ledger. that was it for me! i started using hledger because of: - tracking irregular payments from a bunch of sources, often outstanding for a while - tracking how much somebody owes me / i owe them - being pretty much cash-only for a long while (long story). with cash, if you don't track the expenses manually, you wake up at the end of the month with a whole bunch of money gone and no idea what happened to it - not knowing how much money i actually have available because it's spread across my wallet / bank account / paypal / piggy bank hledger really helped me not go crazy with all of this! PS. another unexpected benefit - tracking expenses can also help with ambient worries like "ugh i spend too much on takeout food". like, if you track it, at the end of the month you can look at how much you spent on it and conclude that it's actually reasonable (within your budget) and stop feeling guilty about it!
- gen220 6y ago
  Everything you described is a great gateway drug for GNUPlot :) Inspired by your example, here's our rolling monthly sums of food expenses, COVID marked [1]. You can see where we moved (temporarily) to a place with lower food costs, and stopped eating out. But there's also a dip around the holidays, because we spend a lot of that time with family and our food expenses go down proportionally. That dip happens to be consistent YoY, but we don't realize it because we have other things on our mind. It's just great fun to have this stuff at your fingerprints. [1]: https://imgur.com/a/8wb6YLn https://imgur.com/a/8wb6YLn
  - uryga 6y ago
    i haven't used gnuplot before, what's your setup for getting these? a monthly-cumulative plot is exactly what i'm missing from hledger-web.
    - gen220 6y ago
      I’d never used it before using it for ledger, either! It’s kind of tricky. I have an AWK script that reads a ledger report to compute the X and Y-value pairs. These are written to a temp file that is read by GNUPlot. It’s a bit of work to get setup, but I’m able to copy paste the idea around my reports. I’ve also found the GNUPlot manual to be very easy to read! I’m away from my laptop now, but I’ll add a gist tomorrow.

hollerith 6y ago

I've heard of some individuals giving a plain-text ledger to their tax preparer. (Keeping a ledger does not necessarily mean tracking every personal expense.)

ZoomZoomZoom 6y ago
I'm currently in a part of the world where the government nurtures fiscal immaturity and just takes its share directly from employers salary fund. Some specific taxes come as bills too. Not much to prepare, unless you're an self-employed/entrepreneur, so it definitely skews my perception in this regard.

jdlshore 6y ago

I agree with your premise, but please "pay yourself first." [0] Instead of putting "whatever's left" in savings, decide how much you need to save to meet your goals, put that amount aside first, then use the remainder to pay bills. An envelope system [1] works well. If you don't have enough, reduce your expenses, not your savings. [0] https://www.investopedia.com/terms/p/payyourselffirst.asp https://www.investopedia.com/terms/p/payyourselffirst.asp [1] https://www.daveramsey.com/blog/envelope-system-explained https://www.daveramsey.com/blog/envelope-system-explained

esoterica 6y ago
I very strongly disagree with that method. There is a lot of natural variance in how much people spend in a month. Some months you spend $1k, some months you spend $10k. It doesn't make sense to use a fixed monthly budget at all. It also just encourages arbitrary gerrymandering of your expenses. If you want a PS5 but have no more room in your budget this month, you might decide to buy it next month instead. But then you'll just end up spending the exact same amount next month, so you've deprived yourself for one month for zero financial gain just because you're gaming the arbitrary constraints you impose on yourself.
- BeetleB 6y ago
  Your scenario is not at odds with the parent's one. He's saying "Figure out how much I want to save for long term goals, and set that aside first" It doesn't preclude saving for long term expenses.
- tachyonbeam 6y ago
  Depends. If you work as a software developer, odds are you make more than you need to live comfortably. In that scenario, it makes a lot of sense to be disciplined and put some amount of money aside first. I picked an amount to put into savings that still leaves me enough to not have to stress about groceries or going out once or twice. I basically always manage to hit my monthly budget, and save what I planned. If I wasn't putting money in savings first, I think I might end up spending a lot more than I should on tech gadgets and other things that I don't really need. My approach: 1. Put a reasonable amount in savings first, but make sure to leave yourself enough to enjoy life, because you can't be completely sure you'll be alive in 1, 5, 10 or 20 years. 2. Spent on monthly expenses without stressing about savings, because some fun money is also part of your budget. 3. If there's any money left over when you get your next paycheck, send that into savings as well.

tim333 6y ago

Double-entry bookkeeping is mostly for keeping business accounts. If you want some maybe try running a small business on the side?

hiq 6y ago

Like everything you will eventually end up with diminishing returns. E.g. I doubt many people track potatoes vs carrots, or underwear vs socks.* But: 1) Once you've automated most the of the steps, it takes, say, 1h per month to have everything up to date, so basically nothing. 2) Compared to no tracking, you can often end up finding money another party owes you. At that point, the 1h per month is financially worth it. 3) How little can you spend if times are tough? Any theoretical budget will pale in comparison with actual tracking of past expenses. Once you know this, you know how many months of spending you have in cash, meaning you can invest the rest in the long-term. 4) How much will you spend in 5 / 10 / 20 years? Why? You can better estimate this with accounting. 5) Let's say you spend $x on hobby A and $y on activity B. Does that reflect how much you like A and B? If not, maybe change it? *: still... how diminished is your salary if you start a job that requires that you wear a suit everyday? Is it still better than the other offer you rejected? Maybe you made a mistake? This is way

hiq 6y ago
...way easier to assess once you have such tracking in place.

csomar 6y ago

There are two possibilities: 1. There are people who like to create complex analysis/structure around their lives. I don't say they are unnecessarily complicating their lives, because that's part of their personality. So, yes, you are correct. An double-entry ledger doesn't add much insights. 2. After $200k/year income and $1m+ wealth, and if your wealth is very diversified (inherently complex), then I can see the value in it. ie: An engineer with $200k has less complexity than a freelance with $200k/year. At a certain point the freelance will benefit from an accountant, but maybe he's running some stuff in the dark economy or something.

BeetleB 6y ago

> When you need to spend some significant unplanned sum you take it out of savings, if you have any. If not, you eat less or go into debt. Doing detailed accounting helps prevent you from that "go into debt" scenario. Typical long term things people forget to save for: - Their next car - Car Repairs - House repairs - New roof for house Etc. With detailed accounting, you can set money aside for these things, and then when you suddenly decide to go on a vacation, you know how much money you need to leave aside in your savings to cover the above.

jldugger 6y ago

I've been using GNUCash since 2007, while in grad school earning... grad school wages. It worked out well for me earning IT specialist wages now, and I don't think the regular joe will need/use plaintext accounting specifically. But the idea of double-entry bookkeeping can be useful still. 1. Accurate visualization. As you suggest, a great number of people pay most attention to their checking account balance. Making student loan payments on time can feel like just paying 'bills'. But it's actually a split between interest and principal, and in a sense, you are accumulating wealth by paying down principal in a way that just looking at the debit card balance will not. Similarly, racking up CC debt can feel cheap when making minimum payments. 2. Improved forecasting. Before GNUCash I largely worked the same way as you describe. Keeping a mental tally of bills outstanding and checking my balance via the automated phone system to judge what I can spend. Now I have scheduled transactions for those bills recorded 90d in advance, and can see at a glance my Minimum Future Balance. It's nearly the same thing, but with way less acid reflux from stress. And I can schedule in all the random annual expenses -- vehicle registration, vacations (when permitted), annual subscriptions -- just once and the system remembers for me. Plus I have a more granular archive of expenses to estimate and budget around. 3. Expense Analysis. Most people track one asset: checking acct, and maybe liabilities. Double entry accounting makes it feasible to transition from that to treating expenses and income as equally important. Probably the canonical example is car insurance; most insurers offer a six month premium, or a monthly payment with a surcharge. If you focus on checking acct balance, you go for the monthly payment with smaller upfront. If you want to reduce your annual expense you pick the six month option, dipping into savings briefly if required. On the income side, you'd be surprised how many people don't even bother to get the employer 401k match, even though you can often carry a CC balance (a very worst case scenario) and come out ahead. 4. (advanced) Portfolio balancing. If you're fortunate enough to fund a retirement plan, tracking your portfolio and asset allocation can be tricky across Roth IRA, 401k, etc. An annual rebalancing, formalizing the 'sell high, buy low' formula, is equally tricky when none of your accounts synchronize. A double entry system makes this and other retirement planning steps feasible.

vptr 6y ago

I used ledger for a year. I was able to script conversion of my transactions to ledger format. It was good to see where my money goes. But like you said, I don't care much about budgeting or tracking my personal expenses. As SWE (not to brag) I make enough money to not think about these things. I'm also pretty frugal person, so majority of my expenses are just food. Now, I also have a small LLC. And I used to track my business income/expenses. It's useful, but also, I don't have that much volume to really care about ledger it's just too much work right now. Last year I did taxes with ledger, it was PITA to import everything. This year I just dumped my transactions into google sheets and setup pivot table, which accomplished exactly what I needed for tax return.