Track All Your Spending

The third step in this plan is to track all your spending.

The reason for this is simple. You can pay off your debts, without a student consolidation loan or mortgage refinancing, on your current income, but you have to be somewhat frugal.

Therefore you need to track all your spending and see exactly where your money goes.

My first thought when we did this was, “But we honestly have no extra money.”

After having a second look at my lifestyle I found this to be untrue.

In addition to those stressed out evenings I would spend with my friends, I would also decide I didn’t want to make dinner, or I just wanted a certain restaurant. So we would spend money on going out to eat, or ordering takeout.

That can really add up. We would normally spend at least $20/week on eating out. Often more. We would stop at the Chinese place for lunch once a week, then Friday night would have a special dinner. Maybe Saturday night hamburgers too while we were out and about.

Even reducing our spending by $20/week gave us $80/mo. extra to put toward debt.

What I finally had to realize was that I was in debt. Living as if I had all the money in the world did not make it so. I had to live like I was in debt.

I am not saying your can never eat out again. Or indulge in whatever it is that interests you, but remember your goal. Many places where people spend extra money is on the movies, clothing, etc.

You need to set up a system for tracking your spending. List everything. Maybe use a financial accounting software to track all your spending. Or a basic accounting plan will work with a pencil and paper.

First list all the areas where you spend your money.

  • House Maintenance
  • Insurance
  • Food
  • Car
  • Clothing
  • Medical
  • Recreation

Then break these down to into sub categories.
Under Household you would find things like

  • Utilities
  • Yard Maintenance
  • Taxes

Under Food you might have

  • Eating out
  • Groceries
  • Kids soccer practice snacks

Under Recreation maybe

  • Camping
  • Kids Soccer uniform
  • Movies

You get the point. Make it a new habit to list everything you spend money on. Be specific.

Sit down every night, with your spouse, and track all your spending. Even cash items. Supposedly once you do something consequtively for 21 days it becomes a habit.

Acquiring this habit will not only be enlightening it will change your spending habits immediately. When you actually see where it all goes and are accountable to each other you will evaluate purchases more effectively.

It is time to be honest with yourself. It is easy to say. Gosh I just don’t have any extra money. But you will be surprised that you do.

When you start to track all your spending it will seem tedious but there are many programs out there to assist you. This will help you to discover exactly where you can save money to put toward debt.

This will lead into our next section of plugging those leaking money holes.

Go To Debt Step 4

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"A man in debt is so far a slave,"
Ralph Waldo Emerson.


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Suggested Reading

  • Millionaire Mind
  • Millionaire Next Door
  • Total Money Makeover
  • First Things First
  • Think and Grow Rich
  • Rich Dad Poor Dad
  • Cash Flow Quadrant
  • Maigc of Thinking Big
  • The Richest Man in Babylon
  • 6 Thinking Hats
  • How to Win friends and Influence People

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