Reduce Debt Increase Wealth

Tracking for A Budget

March 12, 2023 MIsterchuck Season 4 Episode 156
Reduce Debt Increase Wealth
Tracking for A Budget
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Show Notes Transcript

How to set up tracking categories to be in same order of the budget. The tracking program has categories list different than the budget categories. I found a way to make these match to make budgeting easier. What is the number one thing keeping most people from building wealth. 


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Charles McDonald:

Hello, I'm your host, Mr. Chuck, I a retired accountant turned truck driver, I reduce my debt in a relatively short period of time, debt reduction, to achieve financial freedom takes commitment, confidence, determination. Tracking for a budget, how to set up tracking categories to be in same order of the budget. That tracking program has categories LIS different than the budget categories, I found a way to make these match to make budgeting easier. And what is the number one thing keeping most people from building wealth, which we're going to talk about later on in this episode, this a little tip at towards the end of the episode, I don't have any links on my show notes. But if you'd like to contact me, I have my email address and my show notes. If you have questions or have anything you want me to talk about, just send me an email on me may be able to make it into an episode sometime in the future. So what I'm talking about tracking, tracking is the lifeblood of your personal finance. It's a program or an app program, that you can enter your information and and I recommend you enter the information and and don't link it to your bank accounts. Because the purpose of tracking is for you to be aware of where your money is going, and where it's coming from. Now most people probably know where it's coming from, but you put in all your income, and you put in all your expenses, or all everything that you buy throughout the month, from month in and month out. Now, it's also your checking account, your savings account, and all your credit cards. Everything that you use to buy things where you're spending money is in this app. So you can see the detail of the money. And within the app, there's a section called categories. Because when you enter a transaction into your checking account, for instance, you know, you put the date, who it's to, and what it's for, well, what it's for is a category, the dollar amount. And you can write yourself a note, a memo, whatever. It's the same as in the olden days, we used to call the check register. But it's for everything is for all your credit cards. If you have a line of credit on your home, that you use on a regular basis, that should be included in there. So that you know where all your money is going. And you know where your all your money is coming from. So that's the general idea of an app. Now when I do a budget, I my budget is set up first income at the top, which is the same and your app, you get your income, you can set it up for your particular situation. I use paycheck for my my income from work, I have a government pension, that's not so skirty I have that in there I have so security in there. Right. You can also include rental income, any purchase returns where you're getting money back, bonus interest, dividend income, everything, income at the top. And that's pretty much going to be the same and your budget. So if you already have a tracking app, and you're setting up your budget the first time, make it the same order as your tracking app. Now what I'm talking about is you went you get some information in there at least 30 days worth of information. You go to reports, you do a transaction report by category, and you total it by income and expense. And you include every category and every account. So it'd be your checking account, all your savings accounts, all your checking account, your credit cards, so it gone to give you the total number of what you spent for each particular category. Now the problem is on my budget, I have it set up by needs first. So you got the income that's pretty much the same. Then I have housing transportation, food. After that, I have loans or credit cards, savings, those are all needs. Then after that I have once shopping, whether it's general merchandise or for a hobby, no, for my podcast, it's kind of like a business a treat bat, that's a once. And I have it separated out like that, and my budget. But one, I create every sports category report, it's not in the same order. So now when I'm going to enter in my budget, I'm going to housing while that's in two different places, I got housing in one place, and then I got my bills and utilities is in another place. So I'm always moving around. So what I wanted to do is group my categories in my tracking app to match or closer match my categories, and my budget spreadsheet. So that's the purpose of this. And the reason you do that is to make it easier for you to update your dollar amounts. Because if you're doing a budget, on the current month, every pay day, if you get paid every week, every pay day, I have to enter in all your income, and all your expenses that you've did for the particular week, get everything up to date, generate yourself a report by category. And then you put that in your budget for the actual amount for the current month. So he can look at what's going on, what's your budgeted column, what's your actual, it's a common to zero, or you're already over if you're in their second or third week, or you're over the category, what caused it, maybe you need to increase your budget dollar amount, because you don't quite have it right yet. Whatever the case. So in order to do that and be more efficient. If your reports line up closer together, it makes a whole lot easier. Okay, so when I'm looking at my and my app, I use Count It's easy to learn, easy to use, easy the update, easy to customize. And it's less than $10 a year. And it's inexpensive. So if you're struggling to pay off debt, and you need an app, and you want not spend a lot of money, this is one for you. counterbalance has when you open it up a category list. If you click on the little gear in the upper right hand corner where it says category list, over to the right click on that, it pops up a screen where you can add categories add transactions, you can add a Schedule C, you can add a Schedule E for those of you who are self employed, you can do edits, you can do bulk, bulk edits, you can bulk edit descriptions, you can do all kinds of stuff. And once you've been using it for a year, you can remove those categories that you don't use to get them out of the way to clean it up. But there's a lot of restrictions to that. So what I wanted to do is get this closer. So it's there's an alphabetic order. So it started out auto and transportation. Well Auto is a so it's at the top, but in my needs is my second major category called transportation. So the first thing I go do is you click on the wheel, where it says auto and transportation is a little wheel or gear, click on that, select Edit and under on this says parent category name it will say auto and Transportation District just change it to transportation. So now your name is matching up and it will move from a down to a T so is an alphabetic order. But then that moves it way down the list but it's the second item on my list. But my first IDing item is housing which it doesn't didn't have a category housing it says house. So I did the same thing I want to that category. I clicked on it. And I changed the name for the parents name to housing. Now it's matching the names are matching and had everything in there except for utilities. The utilities was up above under B's you because they named it bills and utility so it was a beast it was up high on the list. So how did I fix that? Well, the first thing I did was Under housing, I added a new category and called it utilities and made it a sub account, or made made it a sub account of housing. So housing is the parent utility is the sub, I did that. So I created a new category. And then I want up above where the detail. And the detail would be electric comm phone, internet, mobile phone, natural gas trash. So what I did, I went up to where it was, and I didn't add it. And I changed it from subcategory of bills and utilities. I changed it to subcategory of utilities. And then that moved it down as a subcategory of utilities, which was a subcategory of housing. So when that got that all done, I now I have housing, and it say it says furnishing, Home Improvements Home Insurance Services supply, this is a home, lawn and garden mortgage and rent. Now the for the purpose of this tracking, you don't care if the mortgage payment or the rent payment you make. So if you have a mortgage loan, you don't need to put in all the detail of the loan for this particular purpose. He does want to post the payment that you're making and property tax. If your mortgage payment has an escrow, and you're paying the principal and interest, you're paying real estate taxes, and you're paying homeowners insurance on one payment, just name it that and pay it off. Because the idea here is we want to see if you're paying the same amount month in and month out, we're budgeting for that amount. We don't care how much of it is principal, we don't care how much is insurance, or real estate tax or interest. We're just grouping it all together. And then under Utilities, we have electric home phone, we got all those. So when you post a payment or a transaction for say, when you're paying for your monthly electric bill, get utilities and you make sure it goes to electric, you don't post anything directly to the parent account. So you got electric is the subcategory of utilities. So utilities is the parents for electric home phone, internet, etc. I hope you get the jest. So we do that. So now it's still all in alphabetic order, but it's least grouped together in the same grouping as my spreadsheet. So I got utilities grouped together under housing. And I did the same thing with auto and or transportation. I made sure everything related to transportation got grouped to transportation, but it was still all over the place is still when I did a report. I still had stuff above it below. It wasn't exactly, it was grouped together nicely now, which is step one. Now how can I get this in order, the same order as my spreadsheet for my budget. And only thing you have to do is go in to your parent category called housing. Because you know, we have income that's first and that's at the top, that's where we want it. Housing is the second category. So we want that second. So what I did was going down found housing to the parent for the whole thing. I did an edit and under the name in front of housing, I put a one, I actually put a dash one, they could just put A one then for transportation, I put A two so forth and so on a three, a four for all my needs. And then my once I categories those as be so my first one and I did this in order on my spreadsheet, B one B two B three. Now when I print out a transaction record report by category, it comes out almost exactly like my spreadsheet. It is very close. Now I can go down through there enter my numbers. Now I'm not looking all over the place. I can just go from top to bottom, my report, enter and in my spreadsheet housing, I go to next tab transportation. I go to next Class, tab for food, next tab for credit cards, etc, down the line. So it's much easier to enter it. And this is important because the easier you make it on yourself, the better off you're gonna be, the more you're going to be doing it. And the more you do it, the more you know, the more you know, the better off you're gonna be. When I come back, I'm gonna tell you the number one thing that keeps most people from building wealth. I'll be back in one moment with my final thoughts. If you're interested in learning about an online software that helped myself get out of debt, it does tracking, budgeting, and keeps track of all your assets and all your debt. And even tells you how much in rent to transfer money into your savings account, and how much and when to transfer money to your debt, and which debts to pay off in order. First, it's not cheap. It's a one time payment. But it will definitely be an investment, something in yourself and an investment in your personal financial life. If you're interested, send me an email at reduced debt increase And I'll send you the information about this online software that worked great for me. Okay, I hope the beginning of this helped you. Most programs that you use for tracking, you can customize. And that's all I did was my category listing, I put my category list in closer order of where my budget spreadsheet was set up to same particular order. I have tabs, I have my budget spreadsheet, I have a tab for housing, a tab for transportation, you know all the different categories I have tabs for. So I can just click on the tab, my printout of my from my transaction from my tracking app is in similar order, I can go from top the bottom of my report, and are my numbers and everything's up to date, I can see what's going on. That's why I called the budget your control center, you can see what's going on as the month goes out throughout the month. And if you get off track, you can make an adjustment immediately, you can adjust your spending to get yourself back on track or to stay on track. That's the idea of staying on top of your personal finances. At the beginning, I saw I was gonna give you the number one thing, keeping most people from building wealth or keeping people living paycheck to paycheck when they really don't have to. But before that, there are some bad habits we all get into. And I'm guilty of this also. And the first bad habit that everybody must change is you pay yourself last. That is incorrect. Every pay day, you should set aside a percentage of your income into your savings account, you got to start paying yourself first 10% 5% 15, whatever it is, do it when you receive your money and it's deposit in your checking account transferred to your savings account in an easy way to do that is set up an automatic transfer. So it just happens. And once it's out of your checking account, you most likely will spend it. Remember, you can only make six withdrawals a month from your savings account. So if you put too much in there and they have to move it back, we can only do that six times or the bank is going to charge you a penalty. They're going to start charging you a fee to withdraw money from your savings. That's not the bank's rule. That's the FDIC is the federal rule for savings accounts. So quit doing that. The second thing is everybody we get too comfortable with having bad debt. Bad debt is credit cards. We get comfortable with having two or three credit cards that we're carrying a balance on, and that's bad news. That is keeping you poor. That's keeping you for living paycheck to paycheck, that is a bad thing. And if you're listening to this podcast, you probably already realize that and you're working on ways to get out from under it, I commend you, that's good thing is not necessary a spending problem, it could just be a habit, he just got used to having bad debt, and you just can't get used to it, you got to get rid of it. Another thing we do is we start saving too late in life saving life, I mean, investing, you got to start investing earlier in life. And I know if you're already 50 years old, you can't start any earlier. But if you haven't started yet, you need to start as as soon as possible. The earlier you start investing, the less amount of money you need to satisfy. And the more money you're gonna have 20 and 30 years down the road, because of compounding, you're gonna buy something, an investment at today's price, and guaranteed is gonna be cheaper today, than it is five per 10 years down the road and in the future. So if it goes, if it continuing going up in value and cost, what you have to pay for it, when you go to sell it, you'll have more money. Pretty simple. Plus, you can start reinvesting all the dividends and income that you get from your investment than that and compounds it and speeds up how much money you have. Here, those statements where somebody saved, I'd say $2 million for retirement. The reality of it, if they started young, they didn't save $2 million, they have to $9 for retirement, they might have saved 75,000 or 100,000, and compounding $2 million. That's why I say that you start unless II can do the dollar amount you can do for longer term, the more you're gonna have down the road. And there's plenty of people talking about this, that that is another thing that's keeping people from building wealth. And the number one item that's keeping most people from building wealth is probably most likely keeping them living paycheck to paycheck is having a brand new automobile, or a vehicle payment. I saw on YouTube for somebody walk around an office and ask everybody how much their car payment what was, it was like $1,300 $1,445$1,200.$ 1,250. Anything over$800 A month is way too much. I've said before, do not buy a brand new vehicle. I know today that use car prices are way up because there's a shortage of new automobile. So that's driving the price of used automobiles that eventually that will start leveling off and start coming down. So instead of paying $75,000 for a brand new vehicle with six months later, it's only going to be worth 55,000 And you're going to owe 60,000 on it. So you can't get out from under it because you owe more than what the vehicle worth. Now this this example only buy a used vehicle where you pay 40,000 for 40,000 are a whole lot less than 75,000. And you'll be able to pay off that loan sooner because it's less you can put a bigger down payment making your payment lower. So now you're only paying $600 A month instead of $1,400 a month. That's $800 more you have in your budget to save, pay your your needs and do a little bit of your once and get your keep your debt under control. I was surprised to hear that I think the nowadays and 2023 nurses early 2023 The average automobile loan is somewhere around seven to $1,800 which is way too much. I would shoot for mine a used vehicle A small one, let's it's easy on gasoline, that mean what's the purpose of escape from home to work, to home to store, the home tour, the don't leave a big expensive vehicle to do that. It's reality people don't spend all your income on a vehicle on ion that's gonna go down in value and gonna wear out and cost you money to maintain it. You need to save that money and put it somewhere where you can make money. And another item that people fail at is making them money work for them. Yet to put your money into a savings, II build it up. Once you get a month on money, that's liquid local bank. And once you exceed your dollar amount of that was, say 3000. Because you started out building up your margins from 1000. Now we have it up to three, but we have six that extra 4000 or three to 4000 you need to put in to a high yield savings, or find a money market account that's gonna pay a higher rate of mentors, Brandon is not going to be more than than the inflation the amount we're dealing with today. But 4% interest on money is a whole lot better than 1/10 of 1% or one half of 1% that you're getting at your local bank. So make your money work for you. Look for opportunities to be get your money working. The more your money works, the less you have to work up put it that way. I hope this cut this episode was helpful. Remember, I have my email address in my show notes. If you want to make comments or ask me a question or anything, send me an email. I'd be glad to respond. And if I get something that multiple people asked for the same thing, I'll do an episode on that subject.