Knowing how much and where you spend when tracking expenses
Trouble Tracking Expenses
My Story: A Different Way to Budget
An Easy Budgeting Trick
My Story: Budget Diet
Trouble Tracking Expenses
I need help with budgeting. I can't seem to keep track of what we spend and the last two months have ended up with huge overdraft fees. I absolutely hate doing the bills. It seems to take a huge amount of time, and I put it off until the last minute. Sometimes I have to pay fees due to not paying on time. I need some advice.
Break Tracking Expenses Down into Smaller Bites
I used to hate doing the bills too. Now it's just annoying. It was overwhelming to do it once a month, balancing the checkbook and setting everything up. So every Friday I sit for 10 to 20 minutes and do one week's worth of bills. I bring the checkbook up to date by using the online banking to balance the checkbook. Then I pay or set up payments for the next week and I'm done. It's much less overwhelming and easier to do by breaking it down into smaller bites, and if there is an error or it's getting tight, I'm able to be right on top of it.
Track Monthly "Must Pays"
When I had no choice but to work my way out of debt, I made a list of all of my monthly debts to include tithing. I didn't include saving at that time but eventually did include it. My list included total due, monthly due, when due, how much paid, when paid, and how paid. I compared the total of all of my "must pays" to my monthly paycheck. Then I knew how much extra I had for adding to the "must pays." I always paid more than the minimum. Soon I began actually paying off the smallest debts and having more to apply to the next ones.
It worked quite well for me. I could always see whether all the bills had come in and could write them all at once, but mail them only as they came due. I put a date on the back of the envelope telling me when to drop it in the mail.
Track Current and Forecast Future Bills
We have a very simple method of keeping track of our house bills, which has worked well for us over the past four years or so.
I keep a list in MS Excel of all of our recurring bills, including mortgage, cable, Internet, etc. This list also includes one "house" credit card, shared with my spouse, onto which goes all of our groceries/dry goods, pet-related expenses, etc. and is paid in full every month (we set a limit and track the total amount we're spending each week so that there are no surprises!). The tracking list of bills is a rolling list, meaning it contains the history of each month and the bills for that month. There are four columns, which include the month and year (e.g. December 09), the bill (e.g. Cable), the amount, and status, which is one of three values, namely "estimated," "confirmed" and "paid."
A month ahead of time, I put in values for all the upcoming bills in "estimated" status. Most of the bills are fixed amounts within a few dollars, so this is easy. For those that vary by season (e.g. the gas bill), I use a similar past month's bill as an estimate. As the bills come in throughout the month, I overwrite the estimated amount with the confirmed total (and put "confirmed" in the tracking column). After all bills come in and are listed as "confirmed" amounts, they are ready to be paid. I simply sum the total, transfer the amount from our personal accounts to a checking account that we use specifically for house expenses, and then pay the bills all at once. You can negotiate with companies that are billing you for a change in billing date, if yours are due on many different dates throughout the month.
The nice thing about tracking in this method is that I can track how our spending varies over time and more accurately forecast the upcoming months. Also, I only need to do the bills once a month, and since it coincides with the first of the month, it is easy to remember and take care of on time!
Online Banking Solves Bill Trouble
I have found online banking a huge time saver for me. Every Sunday I sit down and schedule bill payments for the upcoming week. We have one paycheck coming in weekly and one every other week. You can schedule a once a month sit down if you so wish.
Once you have scheduled your bill payments you will be able to see what you have left to spend for the week or month. This should help you track your spending much better.
Know Where Your Money Is Going
My computer is in the first room I pass through when I enter the house. If I've bought items with cash, the receipt goes on the desk. Any bills that came in that day's mail are opened at the desk. I open my Quicken program and sign in to my online bank account. I put the bills into the bank system for payment on a date that guarantees payment will be received on time. I stamp the bill with the date the payment is going to be made. Then I go to the Quicken program and enter these same bills and put a check mark on the bill. Only then do I put the bill in a file folder where it stays for a month until I see that it's been paid. (I have to do the bank part first and then enter the payment into Quicken because I've been known to do the reverse and forget to actually pay the bill.)
A budget is an account of how you spend your money. You can't take control of your money until you know where it's going now. Then you can take a look and see in what areas you can trim spending and you'll also see where you may need to increase funds because of how you wish to spend your money.
Remember a budget is like a diet. It's not a noose around your neck that forces you to live (or eat) in a way you don't enjoy. It's a plan that allows you to live (or eat) in a healthy way.
Bill Calendar Solves Trouble with Tracking Expenses
I have a calendar just for bills. I write down the due date of every bill as it comes in the mail, as well as any payments that are deducted automatically from my checking account. Every Saturday morning I sit down and see what is coming due during the next week and write checks to cover them. This procedure helps me make sure I mail payments on time and also gives me a chance to deposit or transfer money into the checking account to cover all the payments I will make in the next week. It also feels really good to cross off each payment from the calendar as it is made!
Joanne in Suffern, NY
Handle Every Paper Once
Some bills are the same every month. Those are ones you can probably set up for automatic payment with your bank or directly with the company.
Some bills, like the electricity for example, are different every month. Follow the rule of handling every paper once. When your mail arrives, immediately sit down at the computer and set up that month's payment through your bank or the company website. I keep a 13-month sorter "envelope" for bills once I have paid them. There is a slot for each month and extra slot for stamps and address labels for the rare bill that cannot be paid online. I keep my bills for one year. When it is time to add a bill for the first time that month, I throw out last year's bills.
Lastly, if you are having problems sticking to a budget, I suggest pulling cash for specific areas like groceries and leaving the credit cards at home. Keep the cash in envelopes designated for their purpose and seal them. They should only be opened when it is time to deal with that area.
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