Reduce Debt Increase Wealth

Spending Tracking

May 15, 2022 MIsterchuck Season 3 Episode 113
Reduce Debt Increase Wealth
Spending Tracking
Show Notes Transcript

Why tracking is important both to know how much debt is owe, and when due.  Tracking checking, credit cards, savings knowing what is due when and the amount in emergency fund. 

Article Links:

https://www.nerdwallet.com/article/finance/tracking-monthly-expenses By Courtney Neidel

https://files.consumerfinance.gov/f/documents/cfpb_your-money-your-goals_spending_tracker_2018-11_ADA.pdf

How to contact Misterchuck , for questions, comments, requests use this email address. Reducedebtincreasewealth@gmai.com

Charles McDonald:

Hello, I'm your host, Mr. Chuck, a retired accountant turn truck driver, I reduce my debt in a relatively short period of time, debt reduction, to achieve financial freedom takes commitment, confidence, determination. Spending, tracking, why tracking your spending is important both to know how much debt is owed. And when do tracking your checking, credit cards, savings, knowing what is due when and the amount you have in an emergency fund is all very important to know, at least on a weekly basis. And on a daily basis, if possible. Before I get started, I'm going to do a series of five episodes in the order I think is most important to get started on getting your debt under control. So if you're living paycheck to paycheck, or if your credit card debt, or all your debt you have is seems to be overwhelming. And it's taking up most of your income. So you don't have enough money to do what you want. Does that sound familiar? Do you feel like you're working for the bank, or the loan companies instead of for yourself? That's the way I felt when I was getting started. And it's all a mindset. So the first thing you got to do is identify the problem. How did you get in the situation that you're are today, if it's a, if you have five credit cards charged up to the max, what happened? How do you get there, you need to identify the problem, and then fix the problem. That's the very first step. And if you're listening to this podcast, you've already identified that you have a problem. Maybe you're overwhelmed and don't know how to get started, or how to fix the problem. I believe that by using my techniques that I talk about, that anybody at any level of income, can get their debt under control. And it's all a mindset, quit thinking about what you're gonna buy all the time, quit thinking about what you need to have. Quit thinking about what other people have. And take care of yourself. First. The very first thing you should be paying for are your needs. housing, transportation, food, clothes, to very basic, take care of your needs first. And the next item you should take care of after your needs are met is a savings account. Set up an emergency fund emergency fund is nothing but a savings account that you have at the same bank where you have your checking account. The reason you have an emergency account, so if something comes up, and you have to pay for something, you have at least part of the money there to pay for it. So you can quit creating new debt. Because that's the first step we have to take, quit creating new debt, get your spending under control, only span the money that you have coming. And it sounds so simple, but it's not easy. We've all gotten in the habit of having this credit, where we can use it upon the man and buy whatever we want, and then later pay for it. Well, now later has caught up with a lot of people. And now we're trying to pay for things that we purchased two years ago, three years ago, or maybe even longer. If that sounds familiar, then you're a good person candidate for listening to this podcast. I'm not trying to promote anything on this dating site a kind of a fact I guess. So. When I talk about tracking the very first step is Do you have to know how much money you have coming in, whether it's on a weekly, bi weekly, or monthly basis, however often you get paid, and how much money you need to pay out to meet your needs, whether it's rent or mortgage payment, whether it's an auto loan, or buying fare for local transportation, whatever it might be, that your needs for groceries and foods for dining out for clothes, he notice I'm not telling you to cut back here yet. Because we're not at that point, to identify where you're going to cut back. The very first thing we need to know is how much money you have coming in, how much money is going out how long I'm going to do this in this series. But it's not gonna take you that long. As you're doing step one, you could be identifying things that he can do and step three or four. It's not something that you have to do in order in do it all at the same time. And it'll go much faster than what it seems. I'm just trying to make it easier to understand by breaking it out step by step, you do not have to go step by step, you can do step three, at the same time you're doing step one, you can do step five, at the same time you're doing step one, I'm not gonna name what the steps are, but the very first thing is tracking your spending. What I what is that? In the olden days, it used to be called a check register. Nowadays, it's called a bank statement. It's called online banking. And just going online, and looking at what has cleared your account, or what he has spent money on is not good enough. Yes, you can look and see how much money you have remaining in your checking account. But then what are you gonna do, you're gonna spend it, have you met all your needs, yet, there may be needs coming up in the next pay cycle, that you don't have enough money to pay. So you need to make sure you save a little bit. So you have the money. And the next pay cycle to pay for your needs, is called planning ahead. Looking ahead, and knowing what is due, when it's due, and how much is due, is important to all of this process. The more you know, the more you understand. And the more you can end, identify these items, the better off you're going to be. So what is tracking, I would say it's a check register, whether you do it manually or not. Every time you write a check every time you pay something using your credit debit card, your checking debit card, you need to record that transaction, the date, who it's to a category, what it's for, and the dollar amount. These things are clearing instantly. Now when we use a debit card. So there's very rarely an outstanding item. It used to be when you wrote a check, you would mail it, and it might be outstanding for three or four days, meaning it has not cleared your checking account. So you need to record it and subtract it from your balance. So you didn't spend the same money twice. And that's where people got in trouble. They didn't track it. I use a program. It's fairly easy to use. I only use the basic, it's $9.99 a year. It's cheap, it's inexpensive, and it works great. It's on line, check register, basically, that you can keep track of your checking your savings, credit cards, multiple checking, it's multiple savings, multiple credit cards, unlimited, you can have reoccurring transaction. So if you pay rent on the third of the month to the same people to same amount, you can set that up as a re occurring transaction and it'll pop up. Only thing you need to do is maybe change the date on it, or maybe change the dollar amount. If your rent change. hit the check mark. And it's recorded. Simple and it's got all your information in there who it's to The date when it's for the category, etc. Count about has categories already set up, you just need to pick and choose. So when you're entering things, you need to be consistent on selecting categories. When you if you have a monthly rent, and make sure that every time you pay it, it's applied to the same category. By setting up the recurring entries, it does that for you makes it simple. Every time you buy gasoline for the car, make sure it's in the same category. When you go to the grocery store, and buy groceries for home, make sure you get it in the same category. That's the hardest part about tracking, and only takes a few minutes. Once you get the hang of it. Maybe once every week, when you enter your payroll your paycheck, then update all your spending, I would say if you're really struggling with that, you need to put in your spending every day, once a day, take a few minutes and enter it. And it'll be done. In the past I've talked about if you're just starting, and you never tracked anything. And you didn't use an app online app application, count about as a good one to get started with. Go back 30 days and manually enter all the transactions that were in your checking account, starting the first of the previous month. So if it's July, if you're in like July 6, go back to June 1 and enter all your transactions up to the current date. But once you got June 1 Through June 30. And and you got everything I said that's called reconciled. So that your entries in this program application match what your bank says happen to the penny. Once you got June done, you're ready to create a report by category. You can do a report detail that shows every transaction. And you can look through there and see hmm, maybe I don't need to be paying for this. Maybe I can do away with this item. How can I get rid of it? Maybe I can cancel it. I'm not using this, why am I still paying for it. And this is what happens when you start knowing where your money's going. And you're aware of where your money is going. He can start looking for places where money could be wasted. Not saying it is but it's a possibility. On that saying that you need to do away with that ending on the sand. It's a good way to identify areas where you may be overspending. So once you get a report by category, and I would recommend doing it from the first of the month to, you know, the whole month for June 1 to June 30th. And print yourself I'll report by category in look down through there, does anything look like maybe it's out of place, maybe you only have a small amount and one category. Go back and look at what that is. Maybe you selected the wrong category, you need to fix it. So what we're looking for is obvious Navy entry errs, or me when you first started, he thought this was the better category for that. And there's only one item there in you know that that could maybe be re category in somewhere else where you can get a better total. We don't want 1000 different categories. We want to Trump down maybe 10 to 15. So that when you do your budget, you have it under control that you know, you know you're consistent on putting the same type of spending in the same category so that you can know from month to month where your money is going, that you're spending increase that you're spending decrease and you have other consistent numbers to work with. That's the most important part about tracking. You got to do this for your checking account. All your credit cards if you have five credit cards that are maxed out or that you're currently using. You got to put in the Last 30 days for your credit card transactions for every single credit card. When you do your monthly category report, you want to include your checking account, and your credit cards. For the income part of it, you want to include your checking account, and your savings account. If you have money, maybe from your payroll being split on a direct deposit, and part of its going into checking, and part of its going into your savings, that's a good thing. In order to get your total income, you need to do both of them included in that report. And why is that important? It's important because the next step in this process, is setting up a budget. I'm not gonna talk about that in this episode, because I don't think it's important. Right now. We're focus in on tracking your spending, identify where your money is going, identify where your money is coming in. That's what this episode is all about. Again, this is a mindset, he wants you to identify where your problems are, and you need to take steps to fix them. I'll be back in one moment with my final thoughts. If you listen to this podcast on an app, please find rate and review and do so if you know somebody that may benefit from listening to this podcast, please reform to reduce that increase wealth.com. He can find it in any app or on Facebook. Easy to find. So once you've identified your problem, how did you get in this situation? Nerd wallet.com, I have an article in my show notes. Five steps to reduce your monthly spending. tracking your spending on a regular basis can give you an accurate picture of where your money is going, and where you'd like it to go instead, at some important one, check your account statements. pinpoint your money habits by taking inventory of all your accounts, including your checking and all credit cards that you have. Looking at your accounts will help you identify where you're spending. And we went one step farther than that we put it in pay app to track it. Category, your expenses, start grouping your expenses. Some credit cards automatically tag your purchases in categories like department stores or automotive, you could find that those impulse buys at Target are costing you a lot. Maybe you realize you're paying for reoccurring subscription services that you could do without use a budgeting or expense tracking app. That's what we talked about, count about someone I recommend $9.99 a year, it's online can log in from any computer and update your account. You don't have to download nothing. So it's doesn't take up any space on your personal computer. And then assess explore other expense trackers identify room for change, and what's next. And then I have another spending tracker tool, which from the government, it's a PDF in my show notes. And if you got to do something manually, it gives you ideas for categories and what to go into those categories. And then has a little print a picture of a printout, you could maybe print out and use if you want to do it manually on instead of doing it online. I don't recommend using a budget app that's part of your tracking app. And the reason is, if it automatically goes here, you're maybe not gonna use it, it's hard to get the numbers in there, it's out he got to do a report by category and then print that out and then go into the budget out and then put that in. It's not automatic. If it's automatic, you tend not to look at it. Maybe it may not be that accurate. It may be frustrating, frustrating to learn, and hard to use. And if those are the case, you're not gonna use it. So find something that works for you. So we're starting with this episode on Just focusing on an application that's easy to use. And that you can put your detail information in. That's what we're talking about all your spending, all your income, all your credit cards, all everything. And you'll be set and long sick gives you a report by category. And you can select the date range. Here, each pitch shape, I've created a spreadsheet, a budget template, it's a 12, month one. And they're all the same as got the categories broken down by housing, transportation, groceries, personal credit card debt, it's got all categories in there that you need. And once you get used to it, only thing you need to do is print out your report, I category for that particular month, good that month, that is your budget, he print out the category for the month of June totals, you go into your budget, and that's going to be your budget amounts for the month of July, following month, then in July, once a week, you're going to be in your tracking app, and you're going to be updated on a weekly basis, or at least every time you get paid. So if you get paid monthly, I guess they're gonna do it once a month. But we need to do it more often. Because that's going to be your sort of lie totals, and the end your budget, it's important to look at what's happening. What did you do last month? What are you doing this month? Are you spending more, or are you spending less, that's the reason for it. So you would do a report by Category total all your accounts for the first week of July. And you put that in your July actual then the second week you do from the first of July to the current date, and that your totals and you just update your July actuals. And that way, you can see what's going on, you know what you did in June, and that's your budget amount, you're looking at what you're doing currently, and Max your actual amount, the difference is a plus or minus. If you're spending less, your actual numbers will be lower than your budget in numbers. And when you get through the month of July, maybe you've saved an extra $100 because you spent $100 less. So now for August, your new budget amount is your totals for July. And you just keep doing that over and over and over. It's the same thing over and over and over in you're always looking at what's going on. So this spreadsheet is important to be updated. I'm gonna say weekly, every week, so that you can see where your money's going while you're spending it or before you spend it so that you can make informed decisions. Can I am? Can I afford to buy these new clothes this month? What other bills are becoming due in the near future? Do I need to leave some extra money in my savings in my checking account, so I can pay those bills. So we're gonna be talking more about that kind of stuff. And the next episode, which is going to be budgeting, how to do a budget, a more detailed approach, that for this episode, we need to focus on keeping track of everything and our finances. Every dollar that has come in, which includes interest on your savings, interest, detailed dividend income, everything, and then keep track of everything you're spending money on. So you need to first remember, cover your needs first, housing, transportation, food, clothing, then look at your wants. If you can afford to pay by something that you want and not really need, then you can go ahead and do it. But if you're struggling to pay down debt, your needs, your wants should be greatly reduced because your needs are to pay down the debt. So it would be housing transportation, food, clothing, debt, whether it's student loan debt, credit card debt, line of credit On your home of first or second first and second mortgage, car payments, car loans, personal loans, payday loans, our focus here is to get you under control, so that we can pay down debt. I know this is gonna come up in the near future is going to be a episode called debt reduction. But I think now is a good time to get started, part of your debt reduction plan is quit creating new debt, simply quit using credit cards, quit borrowing money. Number two, is make the minimum payment on all your debt, all your credit cards only make the minimum payment because we got to get a emergency fund established. And that's important. Getting an established emergency fund is more important than paying down that debt. If you're paying an extra 50 bucks a month, put that extra $50 A month and a savings account. Because you're gonna create a emergency fund, an emergency fund is there in case something happens and you need the money, he can pay for it without having to borrow money. And if all your credit cards are charged up to the limit, you probably have bad credit. And it may be difficult to borrow money to cover that emergency. So as you can see, I can't even I cannot even do this in the order that I originally planned. Tracking and spending. Yes, that's important. That's the first thing you need to do. The part two is then develop a budget. Part three is a debt reduction plan. Part four is saving and investing. Once you get your debt reduction under control, or while you're getting it under control, you need to be doing some saving and investing. And the final step out of debt now what now? What am I supposed to do? I'm out of debt. Well, first thing is don't go back there. You know how hard it is to get out of debt. So those are going to be my next episodes coming up. He can do them all at the same time. But if you just listen to this, and you're getting started, start tracking your spending, start tracking your income, and get an online app that can create a report that you can print out and review and maybe go back and change the categories and fine tune it. That's your assignment for this week. And next week coming up, we're going to talk about how to do a budget. I do have a budget template for a spreadsheet. If you send me your email, I will for a file to you so that you can use it. You can go to reduce debt increase wealth.com on Facebook, and you can find a video that I did on how to use it. And you can send me an instant message given me your email address, and I will email to you remember I still work full time I'm a truck driver. So I'm not always home and I have to be home to send that so may be a few days before I can email it back to you. So stay focused and get your tracking started today