Reduce Debt Increase Wealth

Benefits of Tracking

August 27, 2023 MIsterchuck Season 4 Episode 180
Reduce Debt Increase Wealth
Benefits of Tracking
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Show Notes Transcript

Most do not keep track of spending, which is when problems can and will start. Too much debt is cause by spending too much money  and unaware of that problem.

Article Links: By Sharen Ross


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Hello, I'm your host, Mr. Chuck, I 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. Benefits of tracking, most do not keep track of spending, which is when problems can and will start. Too much debt is caused by spending too much money. And unaware of that problem. I have links in my show notes to three articles that you can refer to that before I get started, I'd like to recommend you go to happy, which I have a link in my show notes will take you right to where they have a spreadsheet. If you had problems in the past doing a budget, this is a different way to do it. And they figure out how much money you have available to spend. So if then if you can keep track of your spending, you know how much money you have available at that particular point in time. Before I get into the benefits of spending. I found this article that did a survey of 100 people who use spreadsheets, and they've used a did some tracking of their personal finances for at least three months. And this is what that survey came up with 93% agree you have a better insight into your spending habits. That is definitely a benefit. Not the second one was 80% agree, you have a better relationship with your spouse or partner. If you both are on the same page, and you are tracking, you know what's going on, and you both agree to it, yes, you're going to have a better overall relationship. When you don't have financial issues, you're going to have a better relationship. 79% agree you spend less impulsively or you spend less than possibly because you know you have bills coming due and you may not have enough money to cover it. So you're cutting back your spending. It's a good thing. Number 480 1% Agree, he'll be more confident about reaching your financial goals. Yes, you know what's going on in your finances, that's definitely gonna give you more confidence and reaching goals that you may or may not have set that for now. If you're struggling to pay down debt, one of your goals should be to pay off your credit cards, or pay off Hall your high interest loans, whatever they may be 75% agree you feel less anxiety about money. Yeah, you know what's going on, you know that you have bills do you know money is coming in? Yeah, you won't be as anxious. There's only a couple ways you can reduce your debt. And the first way is increase your income. But for most of us that's hard to do. Maybe get a second job, maybe do something on the side, whatever. If you can do that, that definitely gonna help once you get your spending under control, because you'll have more money to apply to your emergency fund. So it'll build faster, and you'll be able to apply more money to your debt at a sooner rate. So the benefits of tracking your spending habits, as the first one is identifying unnecessary expenses. If you're recording all your expenses on a regular basis, and you're looking at your bank account, and you're putting it in a separate program, and an app on your computer. This is why you do that. Because when you go to your bank account and look to see what your expenses what that came out, he had something might pop up there that was automatically deducted from your checking account that you forgot about. That's identifying unnecessary expenses. Tracking your expenses help you identify areas where you're spending too much money. It allows you to identify Spence's that can be cut back such as dining out too frequently, or buying expensive clothes. For example, if you see or spending a significant amount of money on takeout food, you You can start cooking at home more often and save money. The second benefit, promoting better financial planning am budgeting are how you're going to plan for something, or budget for something. If you don't know where your money is gone, or how much or your money is gone to any particular place, it's gonna be really difficult. By tracking your spending, you can get a clearer picture of your financial situation. This helps you create a budget and plan your finances better. When you have a clearer idea of how much money are coming in and going out, you can allocate your funds better pay off that and save for future expenses, then a third reason benefit helping to achieve financial goals. Tracking your expenses can help you achieve your financial goals. For instance, if you have a goal to buy a new car, you can track expenses and cut back on unnecessary expenses to save money for your purchases. And that's the same for reducing your debt. If you're tracking your spending, and you realize that you spent too much on a hobby, you can cut back because you know your what you're doing wrong, where your money has gone, where maybe it shouldn't be going. So you can then make changes to your spending, and then help reach your goals much better. For enabling better control of your finance course more control, the more you know what's going on in your financial life, the more control you have pretty simple, five detecting and preventing fraud. And that's important. That's one of the reasons I do it. If you track things that come in through your checking account, and through your credit cards, when a charge shows up that you didn't make or not familiar with, or your significant other. And you both are not sure what that expense was. Now I've done this, and forgotten where I might have spent some money a day or two later. And maybe the place where I spend the money was a different name, and then let the name is showing up. And then I kind of had to think about it for a while. And if the dollar amount matches what I thought I spent, then I know I'm good. But if I can't identify it, I contact her credit card, I say there's a charge on my account that I'm not sure about. And they research it, they might issue me you know, cancel that card and issue a new card. And the methods is, well pen and paper, I highly suggest you use your personal computer at home, either on a spreadsheet or download an app. There's a lot of them out there. Some do more than others, some cost more than others, like the one I'm using, which is count, I don't get any money or refer for refer unless I get nothing. But it's less than $10 a year. And if you don't use all the options in it, it's like $9.95 a year, it comes out as painless and it does a great job. And they already have your categories set up for you. So that's a lot of work you don't even have to think about or do. He just got to look through the category list and select the ones you want to use. Now they're in alphabetical order. And they're not in any particular order. As far as natural gas bill, electric bill being under Utilities that might just be natural gas, electricity, I might be all by itself, I would group those under the heading of utilities would be my master account. And then the electricity and natural gas trash collected. Water and Sewer would be sub accounts. If you know anything about it, you know what I'm talking about. If you get into it and you don't know what I'm talking about, once you get into it and start learning that you'll figure it out. It's really easy. Now once you start entering data, the data is only as good as how you enter it. So you have to be consistent when you're entering your data. When you go to a grocery store store and buy things. If 80% plus of it is for groceries, then you categorize that whole thing under groceries. If you go to the grocery store and you buy gasoline mean, make sure you split that out on our transportation, gasoline fuel or whatever you use it, or you'll mess up your grocery account as far as the dollar amounts. And that comes in important later on. Once you set up your control center control center as a budget, for those of you that hasn't listened to me, I referred to the budget as a control center, because it helps you control your finances. Tracking is your lifeline, it tells you everything that you're doing on a day to day basis. If you keep up your entry or data entry, it doesn't take long, if you do it once a week, five to 10 minutes, the penny how many transactions if you have a lot of transactions, do it twice a week, and they'll get quicker as you go. And the longer you use the program. Whenever you type a name of something in there, and it's gonna pop up the category, it's going to be right 90% of the time, he just changed the date, put in the dollar amount, and you're done. So it doesn't really take a whole lot. And once you got your information in there, you can generate reports that you can use all these things is a benefit for tracking, automatic tracking through banks and credit cards. Another way to track your expenses is through automated tracking out my bank doesn't do it. If they do they probably charge too much. And tips for effective tracking of spending habits. Set realistic financial goals, well be realistic on paying off your debt. That mean that's that's realistic, keep track of all expenses, no matter how small. If you charge something that costs 10 cents, you'd have to enter it because it's in your balance, how you're going to reconcile the balance. If you don't ever, ever enter everything that you're spending money on no matter the dollar amount. Categorize expenses for better analysis. Yes, it's already set up in most of these apps and track all of them. Review spending regularly and adjust accordingly. Reviewing your spending regularly helps you identify any changes and your spending habits. This helps you adjust your budget accordingly. To ensure that you stay on track with your financial goals. Granite there's some spending gonna do is the same every month, rent, mortgage, car payments, groceries, fuel for the automobile, utilities for the home, that's got to be consistent, hopefully close to the same amount. month in and month out. The things you have to watch out is spending for once things you want, but don't necessarily need. Like new clothes, you might be able to get by with the clothes you have, but you want something that looks nicer. You want something newer for whatever the case would be. So that would be a once. That is where you need to control your spending. You can also control your spending on how you eat you how you use your spend your money on your needs, you need food to eat, you can go to the grocery store and buy food and cook it at home yourself. Or you can go to a restaurant and dine out or you can go pick up carry out or you can order it online and have it delivered. Which of those options the cheapest the grocery store is going to be the cheapest. The most expensive is to have it delivered to your home already prepared. Because you got to pay for the food and you have to pay for the delivery cost nothing is free in life. So you need to cut back on the home delivery part of it and maybe dine out last have don't have anything delivered to your home. And if you want a pizza, go pick it up yourself. We're looking for ways to save money to reduce your spending. That is what tracking can help you by looking at your past history for the last 30 days of the items in your food category. For this example, you can see where your money was going They can now go forward, making an adjustment and your lifestyle, spending becomes a habit. Saving can become a habit. But a habit takes time to form and a habit is hard to break. So you have to focus. And that is a benefit of tracking. And he's I got one more article tells you of how keeping track expenses helped the budgeting sense it enables you allocate funds for essential items, such as rents, build grocery transportation, those are all what needs before spending on anything else by having a clearer picture of how much money is coming in, versus how much is going out, you're better equipped at making informed decisions. Okay, it's third arco, you can use software or apps, that's what I recommend, categories your spending, keep your receipts, instead of going online and looking something up for you have to go to your bank account, and which time out, you go to your credit card, which will tie me out if you keep the physical receipts and just enter the data from the paper receipts. So that you can get used to doing that I did that for years. And tracking is nothing more than keeping arrestor way back when I was in high school. And college, if you had a checking account, everybody kept a check register, if you're smart, the bank gave you a register when you start it. And then I thought I think when you bought checks, they would send a register with it. And you just keep filling out. And it was just a running balance of, of what was in your checking account. And when you bought something, you record the date, where you bought it, the dollar amount and maybe a memo, when you got a deposit, you record the money that was deposited. That's the only thing you're doing the same thing. But you're not doing this pencil and paper, you're doing it in the computer. And it's a whole lot easier. That's all this is, but you're doing a roster for your checking account for your savings account. And for every credit card. If you have loans that you pay on the regular basis, you're doing it for all those loans, even if the only thing you're looking at is a payment payment payment month in and month out. So when you look at it, you can glance through it and see if you missed the payment, you can glance at to see if you made a payment maybe one day late, whatever the case, you have your own written history of what's going on and your finances. There is an app that I kind of watched a YouTube every once in a while. It's a pretty good one. It's why you need a budget. Why and a B? It's a very good application, it does tracking, it does a budgeting and it does more than that. If you're interested, check it out. Why an A B, I get no referrals whatsoever from them. They don't even know I exist. Probably check it out. I think it's somewhat expensive, about $15 a year. But I had a listener contact me and said they were happy I mentioned it in my podcast, because they've been using it and they love it. So if you can't afford it, do it. If you have nothing to spare, then you have to do this stuff manually. If the only thing you can do is listen to a podcast, you don't have a computer, you don't have a spreadsheet, then you have to do it pencil and paper and get started right away. If you're doing it that way, that's gonna take a lot more time. But it's definitely worth the effort. No matter how you do it. I'll be back in one moment with my final thoughts. If you're interested and 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 and when 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 and yourself and an investment in your personal financial life. If you're interested send May an e mail at reduced debt increase And I'll send you the information about this online software that worked great for me. For those of you as a debt problem, for those of you who had goals set, and you reach your goals in your thinking, I no longer have to do tracking, I no longer have to keep my control center up to date, well, you will be wrong, you must continue to do this, even when you achieve all your goals, whether you're paying off debt, trying to achieve some type of saving goals, you must continue doing this the rest of your life, keeping track of your finances is number one, doing a control center will be number two, even when you achieve everything you think you need to achieve, you must continue doing this, or your spending will get out of control again. So to keep yourself under control at all times for the rest of your life. As long as you're doing your own finances, you must keep on tracking all your income, and all of your expenses, and then putting that into your control center each and every month going forward so that you can see where your finances are changing from time to time, if you don't continue to do this, you'll fall back into old habits, which is generally spending more money than you make. And that is the number one problem everybody in America or even worldwide has. So by tracking everything you do, through all your credit cards through your checking account, your savings account, wherever you are putting your money in and out of the need to be tracking all those accounts. Why? Because of the benefits it gives you. It keeps your spending under control, and identifies problems, and identifies if there's any fraud problems on any of your accounts. If somebody hacked into your credit card account, and start spending money that you don't know about, if you're tracking on a regular basis, you'll see it right away, he could put a stop to it, you can cancel that card and get a new card issue. It's a pain in the butt. But you work hard for your money, you need to keep track. And so you can keep as much of your money as possible. So the only way you can increase your wealth is by keeping track of your finances, knowing where every dollar goes. If you're using you need a budget app, why and a B, you can set goals, you can set up where your money is gonna go in the future. So you know you have enough money at all times to pay all your needs. As they come in. You can even set aside money for some of your ones. The less debt you have, the better off and life you've gone to be. No matter what is your situation, whether you lose your job. If you have a large enough emergency fund, you'll be able to go three or four months without having to miss a payment or use your credit cards to pay for your needs. So this is very important to continue on through out the rest of your life. If you do not want to do a budget, or if you've done a budget in the past and you could never seem to get it to work for you, then I recommend happy giraffe you can find the link in my show notes. And what that does, you put in your numbers from your tracking app, because now you know what, what your numbers really are and you're not making out numbers. And it will tell you how much you have to spend each and every week without ever running out of money. So the only thing you need to do is once you know that number is keep your spending under that amount each week and you should not have any more problems with debt or overspending. The other reason people get into debt is because they don't have a large enough Emergency Fund. Emergency Fund is nothing but a savings account where you put money that's easy, accessible. So if unforeseen event happens in your life, whether your car breaks down, or appliance goes out in your home, or somebody has a medical emergency, you have some money available to pay for that event without having to use credit. How much do you need? The experts say anywhere from three to six months of your expenses that may seem high, but over time, you can achieve those numbers. Now, once you have$5,000 or more in that savings account, you need to look for a high yield savings account or a money market account. They'll pay you a lot more interest in what your local bank is paying. Yep, that once you get to that point, you're in pretty good financial shape, you can move some of your money over to that account, earn more interest right now I have a money market that's paying 5.15% interest. I'm getting over $100 Each and every month, which is a lot more than what my local bank is paying. Keep focus on your spending. Keep focus on the money coming and if you can increase your income, it's things are gonna move a much faster and your savings account or grow. Thus your debt will be paid off much sooner and you'll be glad you did. So