The value of your financial data

Free Money Finance was one of the first personal finance blogs I commented on.  This was in 2005, so nearly … TEN years ago?!  Yikes.

FMF is very successful, and I’ve had the pleasure of meeting him in real life.  I can attribute what I know of his success to a number of things, and one of those things is that he practices every bit the personal finance he writes about.

Seventeen years of year-by-year data

The post today showed the year-over-year change in his net worth.

What struck me with this table was not the (multiple) double-digit gains.  It was the length of the time period.  He’s used Quicken faithfully and has seventeen years of his financial transactions at his fingertips.

What a great asset that is!  A full financial picture for that long is incredibly useful both for accurate reporting come tax time — IRA contributions and other transactions need to be tracked more or less forever — as well as for seeing trends and changes over a good part of a lifetime.  It’s a financial baseline of epic proportions.

The cost of (re)collecting these data

The trick to pulling this all together is to process the data as they come in, in a timely manner.  At the point of the transaction, the financial institution or business is basically required to provide you with a record of the transaction free of charge.  It’s yours for your use, or non-use.

Further away from the time of the transaction, though, they’re not obligated to produce the record for you for free, or even at all.  There may be requirements imposed on them to keep records of financial transactions, as well as requirements as to how long they have to provide them to you if asked, but don’t count on them producing them after that.

A few examples where letting your data slip through your fingers can cost you:

  • IRA contributions.  My tax software asks for total contributions to IRAs.  As in, all of them.  If I don’t have all of them, then I can go back to the brokerage to get them — for a fee.  As in $10 per statement, possibly plus labor.  It’s not free, by any means.  But, there can be tax consequences to not having this information when it comes time to withdraw.
  • Bank statements.  Recovering paper statements are the same deal: it costs.  But even electronic statements are sometimes only available for a limited time.  It can be a few years’ worth, but that’s not “all of them.”
  • Individual bank and credit card transactions.  Slightly different from statements but containing the same information, the transactions are in a structured format suitable for importing directly into Quicken.  A friend of mine found this out the hard way.  Our credit union was moving over to a new back-end system, and they had announced for months that people needed to download their transactions, because they wouldn’t be kept after the cutover.  Well, my friend waited until the last minute, and they cut over a bit early, but there was nothing that could be done anyway.  Procrastination kills.  He didn’t lose all records, but he did have to enter a few hundred transactions by hand into his accounting software.
  • Receipts.  Much of what is deductible needs proof.  You either have the receipt, or you don’t.  For store purchases, there’s often no recovering a missing receipt.

Archiving — and even better, processing — your financial data is a good bargain.  I wish I had done it more regularly myself.

So … have you been doing this regularly?  Any times you wished, like me, that you had done more?  I’d love to hear about in the comments!

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John Wedding

Husband. Father. Web publisher. Musician. John has blogged at Mighty Bargain Hunter since 2005, helping people to recognize life's good deals.

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