Hello, I'm your host, Mr. Chuck, 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. What is tracking? What is tracking for personal finance? How is it done to help with spending problems? And why should you do tracking? Tracking is the basics of your personal financial life. If you're not doing tracking, that's probably one of the primary reasons why you may have some spending problems or debt problems, which is the result of spending more than what you make. So what is it tracking is nothing but the operation of recording all your income and all your expenditures that come in and out of your savings account, your checking account and your credit card accounts. It says a matter of data identifying by category where your money is going and where your money came from. Most 99% of the income is going to be from your job, or from your self employment, a side hustle or from a casual sale, something Grodd sales, those type of things, but spending as a bigger problem, tracking where your money goes. So you know how much it's going to wear is important and to get in your personal finances under control. And then knowing the dollar amount that you need to pay each and every month to meet your needs, that you have needs. And you have one needs is what you need to pay in order to live. Simply put housing, everything related to housing, whether you're renting or buying a home. It's the monthly payment, your mortgage payment, your real estate taxes, your insurance, maintenance, utilities. And I also include my cell phone, because in the old days, you used to have a landline for your phone. So I'm staying with that philosophy. So your cell phone, charge should be under housing, general category. And then you have transportation, and then you have food, then you have pan all your debt, your credit card bills and savings. Those should all be your needs. There may be some more for you, depending on your situation. But those are the main categories. Anything else you pay is a once whether it's entertainment, streaming TV, cable TV, buying those packages for sports, whether it's football, basketball, baseball, whatever sports you like to watch, if you got to pay extra for that, for whatever channels that you want to particularly watch, that's all considered a need. So that is something that you pay for, after all your wants are taken care of. I'm assuming if you're listening to this podcast, you probably have some type of debt problem. So the first step in that is identifying the problem, you have too much debt. Or maybe you're thinking my income is not because I'm spending more than what I make be have figured that part out. But it's not how much you make, that you can control. It is because of the job and what you do to make a living. But what you need to control is the spending of your money. He work hard to earn your money. It's hard to get takes a long time. But it's so easy to get rid of it to buy something you don't really need. And then you get in to a debt problem, thanks to credit cards. So you identified a problem, how you fixed a problem of you have too much debt in order to fix that. You need to reduce your spending. So we need to know how much every month do I pay for my needs, housing, transportation, food, credit card bills, and a little bit of savings in theory, and how much I have left after that and order to keep your spending under control so you don't overspend on your wants, and then that causes a problem for your paying for your needs. So that's why you're gone to track. And here's the 10 reasons why you should track your expenses from the professionals. Do you track your expenses on a daily basis on for many people, the idea of logging every transaction into a personal budget sounds like the world's most boring and significant task. But truthfully, there's a number of critical benefits. So why should you track your expenses, and short the main reason you should track your expenses is identify and eliminate wasteful spending habits, and your financial life. However, consistently, tracking your expenses will help you maintain control of your finances, and promote better financial habits like saving and investing. Honestly, there's quite a few benefits that keep track of your spending behavior. Maintaining financial control is the first one. If it comes to personal finances, being out of control is not something anyone would strive for. There's nothing financially worse than feeling like you don't have any idea what's going on with your money. The good news is when you make an effort to record every financial transaction you make, you are essentially taking the reins on everything and everything, anything and everything involving your money. At any one time, you'll know exactly how much money is sitting in your bank account, and how much you can spend. And in other words, when you track your expenses, you take complete control of your finances. Number two, holding yourself accountable. If you have any plans on saving, investing, getting out of debt or building wealth, what is holding you accountable. I mean, we can all set financial goals and have financial dreams. But if you're not tracking your expenses, there's nothing to hold you accountable to make you when you make a bad financial decision. Tracking your expenses hold you accountable for your future financial goals. And in the long run, that can be the difference between broke and wealthy. Tracking your financial progress. In addition to holding yourself accountable tracking your expenses on a day to day basis, helps you see your progress on the road to financial goals. Sure, there may be times you need to answer yourself for a bad financial decision. But keeping track of your positive progress is just as important. Think about if you have a goal of saving 25,000 In a year, and you track your expenses every day, you can celebrate the little wins along the way. For example, if you're for go, an expensive dinner out and instead cook food at home tracking expenses help you see the impact of that decision in regards to your savings goal. Additionally, tracking your progress helps keep you motivated on the way to your goals. Whether you're wanting to save 25,000 or you're trying to pay off 25,000 of debt, it doesn't matter. It's the same thing, you're doing the same thing. And if you pay off the first credit card of 5000. And if you're tracking it and you know that happened, you reached a milestone in you can spend little money not much to celebrate keeping your finances organized throughout my life, my dad had a saying it's easier to keep clean than to make clean. What he means is that in any area of life, it is easier to stay organized than it is to organize a man it's a messy financial situation. And this sand has guided me throughout my life. In short, this organized finances lead to financial problems. Whereas if you spend five minutes logging expenses and looking at your bank account every day, you're much less likely to let anything slip through the cracks. That's keeping control of your financial now that's not me personally, that's the author of this particular article and proven your financial security. If you go weeks or worst month without checking your bank account and logging your expenses into a budget, your risk and financial financial security. What if somebody steals your debit card information and start spending your money? That's not a situation you want to find out the hard way. And what I had is some way got my credit card information and was buying stuff in the Netherlands. I don't know how they were doing it. But I saw these charges they didn't make I contested it. They got blocked and I didn't have to pay for it. There's nothing worse than paying for somebody else's purchase on your credit card. So if you look at your credit card statement weekly, and you know what charges you make, and then you'll see the chart As you didn't make and you can contest it in, you know, your credit card information got in the wrong hands and you can take steps to stop it, reducing your financial stress, ignorance and personal finances anything but bliss. I mean, we've all seen those people who just don't seem to know or care about their spending habits. They throw every single purchase on a different credit card, finance brand new cars that they can't afford, and that burn under a mountain of financial stress. All this can be avoided in two simple steps, living on a budget and tracking your expense daily. You cannot do a budget if you're not tracking your spending, if you don't know how much things cost, or how much you're spending. Yeah, maybe you know what your mortgage payment is. But what is your electric bill? What's your natural gas bill? What's your water and sewer bill? What's your trash bill? Do you know those numbers? If you track, those numbers will come clear. What's your internet costs, what's your cell phone costs, getting to know the dollar amounts that you're spending is port and that's more important than reducing your spending, you got to know where your money is going. You got to know how much is coming in, and how much is going out. That's why looking at your bank statement once a week and knowing what your balances will keep you out of trouble. You won't go to the grocery store and try to buy $500 worth of food and you only have $300 in your checking account. It gets denied at the cash register. If that's a problem you've had, it's probably because you are not tracking your expenses. And also tracking helps you find more ways to save money. One of the best parts about tracking expenses that you're likely to find wasteful expenses you can eliminate. For example, on multiple occasions, we had friends tell us that they start digitally tracking their expenses. They discovered they were paying for online subscriptions they forgotten about. And that's just one example. And in addition to unused subscriptions, you're probably find other areas of financial way so you can eliminate when you do so it opened up the opportunity to redirect the money into savings or toward your debt. And my experience, my wife and I are altered consistent about tracking our expenses daily, we save at least one to $200 more than the months when we are a little lazy. So what he's trying to say there is when they track and keep aware of their spending, they tend to reduce their spending. One area that I just discovered is I cleaned out my garage. I know this doesn't make much sense. But it cleaned out my garage clean out my toolbox, I cleaned out the the closet in my garage, and I found duplicates of things that I bought in the past, like cleaning soap for the car, rubbing compounds, oils, I mean, I got enough stuff that instead of just running to the store and buying it that because I think I need it, I check my closet first use up what I have, before I buy anything else. Same thing with my weed control spray, I got multiple containers of that which I don't need. So it's a matter of not only tracking your spending, but know what you got in inventory in your garage, and things that you buy, maybe once a year, which makes sure you don't have that extra bottle that you bought and forgotten about them, which is reducing impulse spending. If you're gonna buy something that costs more than $100, you should think do you really need it? Do I need to buy it? There are a habit my case? Do I need to buy it or tried looked forward? See if I already have it? Oh, I already have it. I don't need to go to the store. I saved the trip. Not only did I save the money on that item I didn't have to buy I saved the gas and wear and tear on my car for I'm not going to the store avoiding debt. I don't think it's a secret that there's I hear that to be the budget. We're not fans of debt. That's just the name of the website that I'm referring to be the budget. To be honest, I never met anyone that loves paying an interest or making monthly debt payments. Sure they love the car they financed with an expensive bag they put on a credit card. But if you ask them if they love making payments on it, I can almost guarantee they'll say no. For that reason tracking your expenses can be a powerful motivator to steer clear of that. When you're on not when you're in debt and not tracking your day to day expenses. It's easy to let them on a date you're paying each month slip through the cracks on notice. But once you start tracking every dollar that leaves your bank account, it will start to add up the debt payments, and it can be eye opening. And that's one of the first steps of getting out of debt is get all your credit card statements together, because you got to know who you owe, what's the monthly minimum payment, when's the due date, what's the rate of interest, at least those four things for all your debt, and put that in order, he should have credit cards in one pile, car loans and a pile, Home Loans and a pile, personal loans and a pile, payday loan and a pile. Because if you have a debt problem, you need to know which debt you're gonna pay down first, which debt to get rid of first, while the one with the highest rate of interest is probably the best one to get rid of first, and 10 keeps you focused. Every time you sign in your bank account and start logging your expenses. If it only takes a couple of minutes, you're making a conscious choice to focus on the well being of your financial situation. And this small consistent action can lead to powerful results. Think about if your focus your energy every day, for the next year on saving more money, how much do you think he could say? If you're focused on getting out of debt? How much do you think you could pay it all off? Tracking expenses seem like an insignificant task, but is a daily trigger for you to refocus on your goals and keep getting better. So those are the reasons why you should be tracking. But how do you track that article didn't mention anything about how you track your expenses? Well, you can do it mainly pencil on paper and write everything down. That's better than nothing. But I say if you have a computer at home, let's use it. He spend the money for it, instead of playing games on it. Get yourself an application or an app that you can enter your information in. And it's gotten to be able to generate a report that you can use to curate your first budget. And you can use to update your budget every month thereafter. Now you don't have to pay a bunch of money. There are apps out there that will do tracking, it'll do your budgeting, and it does a whole lot of other stuff. But it's 14 or $15 a month. There's apps out there that maybe 20 or $30 a month, and there's apps out there that are free. Use what you can afford. If you got a debt problem, you don't want to be paying a monthly fee for anything, the app I use. And what you're looking for is something to record, which used to be called a check register. Before computers, people would go in open a bank account your checking account, that give you a register, you'd write in what your first deposit was. And that's your balance. And then every time you wrote a check, or used the ATM, or used your debit card, you subtracted then when you made another deposit, you add add it, that's called a check register, he can do that for your checking account, he can do a register for your savings account, he can do a register for your credit cards, these apps are set up so when you set them up, you tell it's a checking account, you tell it's a savings account, you tell it's a credit card, so when you enter things in there and knows how to treat it, whenever you and enter something in your checking account. And when you pay something, it's gonna subtract it. If you charge something on a credit card, when you enter that in there, it's gonna add it to it, but it's gonna be a negative balance. Because you owe the money on a credit card. When you make a payment, that's gonna be a positive balance because you reduce the balance. So they're all set up to take care of that for you. Also, they're set up with all the categories in there. So you don't have to invent your own categories. He does look at the list and use what's there. He got to be consistent on the categories you use. But they make that easy because once you go in and say enter your mortgage payment the first time okay, you put in who you're paying, you put in $1 amount, you talent category, mortgage loan, mortgage payment, and the dollar amount. The next time you type in that Same name is gonna pop up in the category, it's gonna be there for you. Same thing with your natural gas, your water and sewer, your phone bill. All those things once you enter it the first time, the second time you enter it. Once you start typing in the name, it's kind of pop up, he slept on it and it was going to have the right category. What you need to be aware of, if you buy gas at the same place you do your grocery shopping, you need to split out gas as different. In my case I shop at Kroger and occasionally I get Kroger, Kroger, fuel or gasoline. So when I get the gas, I named that Kroger fuel. And when I just get groceries, I just say Kroger. So when I start typing in Kroger, they both pop up, I select the one that I did groceries is Kroger, put the dollar amount, change the date, I'm all done, he can take this one step farther. Everything that you pay every each and every month, such as your mortgage payment, your utilities, car payments, you pay them every month, once a month, you can set that up as being a re occurring entry. And you can set it up to appear in a list three to five days before you actually pay it. That way one is gone, you got to be aware it's coming up and it's going to be due. And you can make sure you have money to cover it, which you should always be worried about that. And if it changed, like utilities might change from winter to summer, you can you know that set amount and the reoccurring is always going to be the same. But you can always update that change to date and boom, you're done. Handling takes a few seconds to enter a transaction that way. And it will remind you, oops i Man I'm my electric bills come due I hadn't paid that yet. And you can go and pay it. Personally, I want in to my electric company, my natural gas company, my phone company, and I'm sure everybody's doing the same thing. And I set it up through their website to be an automatic payment. So they usually send me a notice before it's due, I know it's coming up and I noticed can pay and I don't have to do it, I just need to when it hits my bank account, go to that recurring entry from my list, change today, change the dollar amount, hit OK or hit enter and it's in my check register. So it's not that difficult. Once you do it for a while, once you learn the program that you're using. And the program I use is like less than $10. Here's like$9.95 a year, I don't do anything extra, I manually enter everything. I don't import things in from my checking account or import things in from the credit card statement, I manually enter. Because if you import it, you're losing the value of manually doing it. And you will lose track of your spending. Because it's doing it for you to manually do it, and you keep track of your spending. So that's what tracking is all about. I'll be back in one moment with my final thoughts are the articles I refer to in my episodes, have a link in my show notes. If you're interested in checking out the software that I personally use to get my demo control. It's in my show notes under shop financial, you need to copy and paste the link, and it'll take you to the website. Any questions you can just contact me through that particular website. If you value this podcast and I like to make a contribution, I had a contribution link in my show notes also, give whatever you feel is appropriate for the information I am providing. I thank everyone for listening to my podcast. As I said earlier, tracking is the first step into creating your budget. And why do I say that? Because once you've tracked for a minimum of 30 days, you're ready to create your first budget. And this is the easiest way I've figured out to do so. Now if you would just get a app that does budgeting and that's all it does. It's gonna ask you for numbers. Well what numbers you're gonna use where you got to go in your checking account and you're gonna Okay well my know my mortgage. I know my car payment. I know I don't really know, you know, things change my utility bills are all over the place, I don't know what number to put in, I just fudge a number, and you work on it forever in, you start putting your actual numbers in there and you're nowhere close and you give up and your budgeting is for the birds that don't work. I don't know what these people are talking about. But do it this way, do your tracking first is got the categories for you. Now the categories are gonna be in alphabetical order. So you might want to get your third first 30 days worth of information in there. And it's important and you're consistent on your categories, so that you can have good financial information down the road. So let's start, you get the app today, it's the middle of the month, do I start the beginning of this month, I start today, go forward, that we want to get our debt on the control, you need to do it sooner than later. Let's say I don't want to go for 30 days, because of the move on to the milliwatt. You know, it's kind of pick up most of everything. But let's start this way, go back one month. So if you're in the middle of a month, go back to the previous month, the first day of the month, you go and the first thing you should be entering is your checking account, if you want to start to get a hang of it, maybe your savings account. But if you don't have a savings account or very little activity, maybe you can get the opening balance in there, a couple deductions may be a deposit and get the hang of what's going on. But then you need to focus on your checking account first, then each and every credit card that you have a balance on. So we're going back to the first day of the previous month, you go into your online bank account, you go back 30 days, hopefully you can go back that far. If not go back as far as you can, that your online checking account will allow you I'm pretty sure you can go back 45 days, maybe not. And you start with what's the balance in your checking account, you got to start somewhere because it's not a new checking account. So you had a balance in there. So go back, put the balance in and call it opening balance ever enter after that every transactions that happened from the first of the previous month to the current date, all your deposits, all your deductions and dye would just go in order from what's on there. If you're in a Windows machine, you can drag it if you if you know how to split your screen, good for you. But he can drag your screen over and put it in one half and put your online account and the other half the screen. So ones on one side ones on the other. And you just go down the line and you manually enter everything. And you're checking your register or this app should look identical, pretty much dollar wide. Number wise to your checking account. If you don't know how to do the split screen do a Google thing on Windows splitscreen windows and the windows 11. A if you go up to the little square box and click on it, it will allow you to do is click those give you options of sizes and stuff to do split screen, it works great. And once I learned how to do that, I use it all the time, and enter everything in there from that date down. And when you get to the current date, whatever your balances in that checking account is should be the balance you have on your app. If the balance is different, you gotta go through and find it, find the air. That's the why that's how you know you have everything entered correctly. Remember, you can't fudge the number because it's good information in good information out bad information and crap information out and as not gonna do you much good. So let's reconcile your AP bank register to your online bank. From that point forward. You can do it as you want. Sometimes, if I write something and I know it's gonna come out three days from now, I enter it today, even though it may not clear the bank for a couple days or so. But I just keep changing the date until it clears the bank. I use the same day as the bank date that way everything lines up easier. If you have a business, you cannot do that the date you use is the date you write that check, because that's the date, you can take the deduction, not the date, it clears the bank for you, those of you that may be a business, who are changing your dates to match the bank, that's a no, no. And it could cost you some extra tax dollars by doing that, to this warning for that, once you get your checking account, and everything's all blind, do a report by category from the beginning of that month to the end of that month, do report by category and see what you get. Now it's gonna be in alphabetical order. But look down through those categories is there anything seemed kind of odd out of place too much, whatever. If so investigate it, maybe you made an entry error, maybe you post something wrong to a category. And it's being overstated. And another category is being understated. So look for those type errors. And once you get all that done, do each credit card exactly the same way. And once you have everything done, entered to the current date, we want to create a report from the previous month from the beginning to the end of the month. All accounts, all categories. That way, you can see exactly, and do it totals by category. And you can see how much you spent each month by category. Now when you set up your budget, we're going to put multiple categories together. So we're gonna have, and we're going to talk more about this later, but you got to have housing, and then within housing and have mortgage payment, utilities, etc, your printout that you get from your app is not going to match that once you get comfortable with everything, and maybe a couple months down the road, get comfortable. And once you get your budget set up, go in and set up the way you like it, your categories grouped together the way you want them. So this one and now if they were you might be you might be doing housing, and it might be one halfway down the page one on the second page. One is all over the place, and you might miss him or fruit and that kind of thing. group them together. By the same groupings, you have your budget, whether you need to come up with some type of name system where you name the categories, like h one, H for housing, then 12345, h one, H two, h three, T for transportation, t 12345. That way, every time you print out that they're gonna be grouped together the same way because they're grouped alphabetically. And then numerically, all the H's will be together, all the T's to be at or all the s will be gathered C for credit card, whatever the case, come up with a system for you. I did a system for me. But I wouldn't do it the same way twice. That's why I'm not telling you how to do it. I have older podcasts where I did make something that works for you, that's easy for you to remember. Because if you have to have a new vendor, or you went to a new store, and you did shopping, and you're shopping for, say household items is like s three, s three, Sam three, you can just type in S three and it pops right up and then or there it is and you put in your dollar amount, then the next time and always will be the same unless you change categories. That's all it's to it. It's important to keep aware of what's coming in and out of your personal finances. And this is the first major step you're making to get your debt under control.