September 29, 2024 • 25 mins
What is tracking, how to do it what do you need to track personal finances.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Charles McDonald (00:03):
Chuck, hello, I'm your host. Mr. Chuck, a
retired accountant turned truckdriver, I reduced my debt in a
relatively short period of time.
Debt reduction to achievefinancial freedom takes
commitment, confidence,determination, tracking what is
tracking, how to do it and whatyou need to track personal
(00:25):
finances. This is step one ingetting your personal finances
under control. It doesn't matterif you're trying to pay off debt
or save money for down paymentsof a home or car or college
education or whatever your goalsare in life, you need to track
(00:48):
and personal finance monitoringis what it really is. You got to
know what's going on in yourpersonal financial life. If you
track you'll know your monthlybills when they're due and how
(01:11):
much they are. If you'rerenting, you know when your rent
due. You'll know when yourutilities are due, and whatever
expenses you pay on a monthlybasis, you'll know the dollar
amount, who you owe and how muchit is, which is very important,
(01:32):
because you have to know thiskind of information before you
go out and borrow a bunch ofmoney. That's how people get in
trouble. They don't know what'sgoing on in their personal
finances. They don't know whattheir monthly expenses are. They
may know, well, I pay $500 amonth rent. They're sitting
(01:56):
there trying to finance a car,and it's looking at 800 $900 a
month car payment. And they askthem how much you make and how
much you pay for rent orwhatever, maybe your mortgage or
rent. They don't ask you whatyour utilities are. They don't
ask you what your insurance kindof cost. They don't ask you what
(02:19):
you spend on food orentertainment or anything like
that. They don't really care.
They're just looking to make asale. But you have to know
everything that's going on inyour life before you make a big
financial decision on borrowingthat kind of money. How long is
(02:44):
the loan for? How is it going toaffect your monthly budget? If
you don't know what yourexpenses are, you don't have a
monthly budget. And how do youdo that? The step one in getting
your personal finances undercontrol is tracking. Before I
get into the mechanics of it, Iassume that everybody has some
(03:06):
type of computer. I'm nottalking about on your
smartphone. I'm talking about acomputer at home where you can
load in some software or do itonline. You don't even have to
download these this softwareanymore. You just go online and
log in and, well, there it is.
You don't have to worry aboutupdating it or anything like
(03:27):
that. You just got updating thesoftware. You just got to learn
how to use it and put yourinformation in there. And
they're very secure. Okay?
Personal Finance Tracking is asymptomatic process of
recording, monitoring andanalyzing financial transaction,
(03:48):
income and expenses, to gaininsight into one's financial
situation, identify air areasfor improvement and make
informed decisions aboutbudgeting, saving and investing
and also borrowing. EffectivePersonal Finance Tracking
(04:12):
involves recording transactions,accurate logging all financial
transaction, including incomeexpenses, deposits, withdrawals
and transfers from variousaccounts, says, bank accounts,
credit cards, loans andinvestment any place that you're
(04:32):
making a payment to or making,you know, like your checking
account, your savings account,your credit cards and your any
loans you're making payments tomaybe it's good to track that
monthly payment so you can lookat the detail and see what's
going on. How much are yougaining on paying that loan
(04:53):
down, and how many morepayments, or how many more years
do you have before that loanspaid off? And investments. Yes,
how much do you have in youremergency fund? How much you
have in your investments? What'syour goals? How you're doing,
those are the things. Is why yourecord your transactions,
(05:13):
categorying expenses, groupingtransactions into categories
such as housing, transportation,food, entertainment and savings,
to understand spending patternsand identify areas for
reduction. If you're spendingmore on entertainment than you
are for housing, you're you havea problem. You need to view
(05:37):
these things. You need to knowwhat percent of your income is
for housing, and housingincludes either rent or the
mortgage payment. If you'rebuying, it would be your real
estate, taxes, your insuranceand all your utilities and any
repairs or maintenance that youmay be doing, tracking net
worth, monitoring the totalvalue of assets, such as
(06:00):
savings, investments, property,minus liabilities, debts and
loans to gage overall financialhealth, you know your net worth,
everything you own less,everything you owe is the net
amount. So say you own a homethat's valued at 100 $500,000
(06:21):
and you owe 450,000 your networth would be $50,000 the
small, the less you owe, themore your net worth. That's why
this podcast is called reduceddebt, increased wealth. You
reduce your debt, your net worthgoing up, and that's the only
(06:42):
thing you do. You're going tohave a larger net worth. Course,
once you get your debt undercontrol, then you increase your
investments, and your net worthis going to grow, setting
financial goals, establishingSpecific, Measurable,
Achievable, Relevant and timebound goals, such as savings for
a down payment, paying off debt,or building an emergency fund.
(07:06):
Building an emergency fund andpaying off debt, you can do
those two goals at the sametime, and once you have those
things achieve increase in yoursavings for whatever you want to
use it for in the future wouldcome after that, analyze and
adjusting regularly reviewingfinancial data to identify
(07:27):
trends, patternings and areasfor improvement and make an
adjustment to budgeting,spending and saving habits
accordingly. Look at where yourmoney is going. Now. Are you
spending too much inentertainment. Where can you cut
back in entertainment to reducethat down, to get it in line
with what you should bespending? I'm not saying you
(07:50):
don't do entertainment.
I just say 90% of your incomeshould not be towards
entertainment. You need maybe10% it's a matter of control,
keeping your finances undercontrol, securing data, ensuring
the confidentiality and securityof financial information by
using reputable personal financetracking tools and following
(08:14):
best practices for passwordmanagement and data protection.
Personal Finance Tracking can bedone manually using a
spreadsheet or a paper basedsystem, or through digital tools
and apps such as budgetingsoftware, expense trackers and
financial management platforms,by adopting a consistent and
comprehensive approach topersonal finance tracking,
(08:36):
individuals can gain controlover their finance make informed
decision about spending andsaving, achieve financial
stability and security, worktowards long term financial
goals. Maybe your financial goalis nothing more than paying off
your debt. Maybe your financialgoals are a lot more than that,
(08:58):
but whatever it is you want todo in your life, you have to
track and once you start, youcan. You don't ever stop. You do
it as long as you can. Then whenyou're unable to do it, then you
have somebody else do it foryou. Knowing where your money is
coming from and where your moneyis going is the most important
(09:22):
thing you can do to keep yourfinancial life, your personal
life, whether you're married,dating or whatever, under
control so everything's happy.
Most married couples fight themost over money, whether it's
not having money or spending toomuch, or whatever the case. If
they were tracking theirexpenses and they would show
(09:45):
each other and sit down once amonth and review the data, this
is where you spend your money.
Can you cut back? Because hereare expenses that we have to
pay. We have. House. We got allthese expenses. We got two car
payments. We got we got to say,money. We got paid off this
(10:07):
debt. We need to cut back onspending. Where can you help me
by spending $100 less this nextmonth? It's working together and
finding a solution where you canget everything and keep
everything under control, sothat your personal life doesn't
(10:28):
get out of control. When I wasyounger, I did the approach that
probably everybody's stilldoing. I get a paycheck. I'd pay
whatever bills I had to paybetween that time and in my next
paycheck, I would have sayscertain amount of money I would
save for maybe groceries and gasfor the car, and I thought I had
(10:51):
on a control and maybe I had aone credit card or two credit
cards I owed on, and I wouldsave, I would make my $40
minimum payment, but I alsowould apply $50 extra, and then
before the next payday, I'd runout of money, and I would
struggle, and I would have tomaybe not pay somebody or get a
(11:16):
cash advance on my checkingaccount and pay those fees, and
it just kept getting worse andworse and worse. I could never
figure it out, because everytime I started to get ahead,
something bad happened, and Inever really had a significant
savings to handle whatever badwould happen, whether was I
(11:39):
needed tires for the car orbrakes for the car, whatever the
case, or if I was moving, I needdeposit for a down payment
before I got my deposit backfrom where I moved from, all
those type of things. And it wasdifficult, and I was always
struggling to pay my bills. ThenI and I was tracking some but I
(12:05):
nearly didn't do the budgetthing because the software
wasn't all that great, or Inever figured out how to use it.
And I would put numbers in therethat I'd just guess maybe I'd
look back the last 30 days, plugsome numbers, make some educated
and it was never really close.
So I never paid much attentionto it, but I still, you know,
(12:26):
knew what the balance was in mychecking account. I knew where
my money was kind of going.
That's about it. You need tohave this under control at all
times. Once I started my programto pay off my debt, where it was
a process of building up mysavings in my emergency fund and
(12:52):
keeping cash available in casesomething would happen, and quit
using credit, I was able toslowly start bringing, bringing
in my credit card debt and startpaying it down. And when
something bad would happen, Ihad the money to pay for most of
it, if not all of it, which keptme from using more credit, which
(13:17):
then once I got through that, Iwould rebuild up my emergency
fund, and I would continue onpaying down my debt. I paid off,
I believe it was like $135,000in three years, eight months. I
remember that to a team, andthat was car payments, that was
credit cards, that was my lineof credit on my home and my
(13:40):
first mortgage at the now, don'tsound like much, but I was only
making 35 to 50,000 a year. Mybest income year was maybe
60,000 so I was able to ring inmy debt by keeping my personal
finances under control, bytracking and then doing a
budget, and we're going moredetail on how to do a simple
(14:02):
budget, and then having a planto reduce and pay off my debt,
that's all it's gonna take. Buttracking is getting more detail
you. I want you to use an app.
If you do it manually, it's somuch work, you'll probably give
up on it. But if you use an app,you can generate reports, which
(14:27):
makes life much easier, and youcan generate reports that help
you to your monthly budget,which then you can see all the
numbers and all the in the majorcategories and how they relate
to your overall personalfinances. But once you start
(14:47):
using the app, I mean, I say usean app because it's going to
have categories pre set up whereyou just need to select the
categories you want to use. It'sgoing to have reports set up for
you, or it's going to have away. For you to do reports way
based on what you want, and it'sjust a matter of trial and error
to learn how to use it to getreports and information out of
(15:12):
the app that you want, but itdoesn't do you any good if you
don't put any information inthere. I did not and do not
recommend automaticallydownloading and connecting any
app to your bank account, onebecause you run the risk of them
stealing your data, hacking yourthe app, and then stealing your
(15:36):
bank information. But you haveto manually enter the
transactions, that's way youstart remembering where your
money is going. You know if,once you start entering it,
you'll be more aware of what'sgoing on in your personal
financial life. And that's thegoal here. If you automatically
(15:58):
do it, you might have hazardlygo through there and select some
categories, and it won't makesense. If you manually do it,
you'll see what's going on. Buthere's the good news. Once you
enter a transaction, say thename of your mortgage company
and the dollar amount and thedate it's that you paid it, the
(16:20):
next time you type in thatmortgage company, it's going to
pop up. You might have to putthe dollar amount in and change
the date, but it's going to havethe right category, the same
category that was selected thefirst time. The other option
when you enter it the firsttime, you can set that up as a
recur reoccurring entry that'sgonna pop up once a month on
(16:47):
about the same day. Now you canhave it pop up a couple days
earlier and always review it.
Don't have a post directly toyour checking account, because
that makes it hard for you toreconcile your balance. When I
say reconcile your balance, thebalance in this app for your
checking account should matchthe balance on your bank
(17:08):
account, on your online bankaccount, and that's true for
everything that you enter inthere, whether it's your
checking account, your savingsaccount or a credit card, all
your balances should alwaysmatch. If not either entered
something wrong, or you haven'tentered something or you maybe
entered something twice, that'show you make sure that you got
(17:30):
all the correct information inthere. Now, most of these apps
you'd be using, you might beable to go in to your category
list and rearrange it or groupthem so it's going to match how
you're going to set up yourbudget. Your budget is generally
(17:51):
set up by categories, transferor housing, transportation,
food, credit and savings,entertainment, maybe in other
insurance, you can go in to thecategory list on your tracking
app, group them together, likeyour housing, your mortgage
(18:14):
payment, your house insurance,your real estate taxes, all your
utilities, and you can begrouped under housing. So when
you do a report, you get one thetotal for housing, but you also
get all the detail by categorythat's related to that category
housing. Same thing with yourtransportation. Maybe you have
(18:40):
two cars and two car payments.
So you have car a, car B, youhave the car payment, the
insurance, gas and oil andmaintenance on car A, and the
same thing with car B. So nowwhen you do a report, you have
the total for transportation,but you also have the total for
(19:04):
car A, the total for car B, andthen a detail that goes along
with that. That's helpful,because if let's say that your
transportation category, you'recomparing month to month, and
all sudden, it's way high. Well,what happened? Maybe you
remembered your car broke down.
You had to get new tires, or hadto get in transmission replaced
(19:25):
or some major expense. Maybe youcan remember it, but maybe you
don't it can go in there you gomaintenance and parts a big
amount. Oh yeah, that's right,this car broke down and I had to
get it repaired. So it helps.
You know that was a one timething. I don't need to adjust my
(19:47):
budget for transportation upbecause I was on one time thing.
I went over my budget for thismonth. But that's not going to
happen for a while in thefuture, until another car
breaks. Down, or whatever thecase may be, but you see where
I'm getting at the more detailyou have, the more information
(20:07):
you have, you'll be able to getthe proper reports to do your
budget, which helps you identifyand keep track of your personal
finances. I'll be back in onemoment with my final thoughts
are the articles I refer to inmy episodes have a link in my
show notes. If you're interestedin checking out the software
(20:31):
that I personally use to get mydata control. It's in my show
notes under shop financial, youneed to copy and paste the link
and it'll take you to thewebsite. Any questions, you can
just contact me through thatparticular website. If you value
this podcast and would like tomake a contribution, I had a
(20:54):
contribution link in my shownotes. Also get whatever you
feel is appropriate for theinformation I am providing. I
thank everyone for listening tomy podcast. This episode was
talking about tracking why youtrack why you want to do it, and
kind of how you do it. You needto have an app to do it so it's
(21:18):
got a lot of the stuff set upfor you. You add your checking
account and whatever accountsthat you have, which will be
checking savings and all yourcredit cards that you currently
have a balance on, whether ornot you put your mortgage and
loans in at this time is not allthat important, but you can do
it if you want to, but you mightwant to do it in the future. The
(21:42):
idea here is to know where allyour money is coming from and
going to and how you paying forthings. Are you making monthly
charges on your credit card topay for monthly expenses such as
utilities or whatever? Are youable to pay it off, or maybe you
(22:02):
got behind. And then the secondthing is to generate reports to
help you understand and detailwhat's going on. And the
generating reports is going tohelp you with setting up and
maintaining a monthly budget.
That's why you need to track ifyou don't know what's going on
with your personal finances, butyou think you do, sit down
(22:28):
without even looking atanything, when's your rent due
or your mortgage payment due?
What's the date, what's thedollar amount, and who do you
pay? How much is your electricbill a month? How much is your
natural gas bill? How much isyour internet bill? How much is
(22:51):
any bill that you pay on aregular Can you sit down and
write down the dollar amountthat you pay? And this is a
change. It's the same everymonth, or does it change every
month? And how much does itchange? Does it in the
summertime, we know electricbill is going to go up because
of air conditioning. And inwinter time, we know electric
(23:13):
Bill's going to come down, butyour natural gas bill is going
to go up. If you have naturalgas. What's your car payments?
And when are they due, and whodo you pay them to? How much is
your insurance for your cars?
How much is the insurance foryour home? If you cannot sit
down and write those numbersdown, you need to be doing some
(23:35):
tracking, because you don't knowwhat's going on in your personal
financial life, and that is amust if you want to pay off your
debt, if you want to save moneyfor to meet your future goals,
you got to be tracking. If youwant to have any type of budget,
(23:56):
you have to be tracking. I'm notsaying get a app that's really
expensive. My app I use is lessthan $10 a year. There's
everything I need. I don't useit to do my budget. I do my
budget on a spreadsheet, but Ican generate reports from my app
(24:17):
to give me the numbers to put inthe spreadsheet, which makes it
easier and fast and doesn't takeany time at all. Once you get in
the habit of doing the moretransactions you have, the more
often you need to update yourapp, your four year tracking. So
net, whether you do it once aweek and it takes you 10
(24:40):
minutes, or you do every otherday, and it takes you two
minutes. You have to do it in Fto keep everything up to date on
a regular basis. And if you usethis app to see how much money
you have in your checkingaccount, you need to have it up
to date instead of going. Onlineto a bank account. You can look
(25:02):
at the app and know, I have $300I get paid tomorrow. I have I
gotta go to grocery store, andit's gonna be a $250 bill. I can
cover it. If that app is up todate, you can do that. If it's
not, you can get yourself insome trouble. We're trying to
save money here by not payingunnecessary bank fees, such as
(25:24):
overdraw fees, whatever thecase, ATM fees, we're trying to
minimize our spending so we canmaximize our savings, and by
tracking we'll help you achieveboth of those and you glad you
did so do?
Chuck, hello, I'm your host. Mr. Chuck, a
retired accountant turned truckdriver, I reduced my debt in a
relatively short period of time.
Debt reduction to achievefinancial freedom takes
commitment, confidence,determination, tracking what is
tracking, how to do it and whatyou need to track personal
(00:25):
finances. This is step one ingetting your personal finances
under control. It doesn't matterif you're trying to pay off debt
or save money for down paymentsof a home or car or college
education or whatever your goalsare in life, you need to track
(00:48):
and personal finance monitoringis what it really is. You got to
know what's going on in yourpersonal financial life. If you
track you'll know your monthlybills when they're due and how
(01:11):
much they are. If you'rerenting, you know when your rent
due. You'll know when yourutilities are due, and whatever
expenses you pay on a monthlybasis, you'll know the dollar
amount, who you owe and how muchit is, which is very important,
(01:32):
because you have to know thiskind of information before you
go out and borrow a bunch ofmoney. That's how people get in
trouble. They don't know what'sgoing on in their personal
finances. They don't know whattheir monthly expenses are. They
may know, well, I pay $500 amonth rent. They're sitting
(01:56):
there trying to finance a car,and it's looking at 800 $900 a
month car payment. And they askthem how much you make and how
much you pay for rent orwhatever, maybe your mortgage or
rent. They don't ask you whatyour utilities are. They don't
ask you what your insurance kindof cost. They don't ask you what
(02:19):
you spend on food orentertainment or anything like
that. They don't really care.
They're just looking to make asale. But you have to know
everything that's going on inyour life before you make a big
financial decision on borrowingthat kind of money. How long is
(02:44):
the loan for? How is it going toaffect your monthly budget? If
you don't know what yourexpenses are, you don't have a
monthly budget. And how do youdo that? The step one in getting
your personal finances undercontrol is tracking. Before I
get into the mechanics of it, Iassume that everybody has some
(03:06):
type of computer. I'm nottalking about on your
smartphone. I'm talking about acomputer at home where you can
load in some software or do itonline. You don't even have to
download these this softwareanymore. You just go online and
log in and, well, there it is.
You don't have to worry aboutupdating it or anything like
(03:27):
that. You just got updating thesoftware. You just got to learn
how to use it and put yourinformation in there. And
they're very secure. Okay?
Personal Finance Tracking is asymptomatic process of
recording, monitoring andanalyzing financial transaction,
(03:48):
income and expenses, to gaininsight into one's financial
situation, identify air areasfor improvement and make
informed decisions aboutbudgeting, saving and investing
and also borrowing. EffectivePersonal Finance Tracking
(04:12):
involves recording transactions,accurate logging all financial
transaction, including incomeexpenses, deposits, withdrawals
and transfers from variousaccounts, says, bank accounts,
credit cards, loans andinvestment any place that you're
(04:32):
making a payment to or making,you know, like your checking
account, your savings account,your credit cards and your any
loans you're making payments tomaybe it's good to track that
monthly payment so you can lookat the detail and see what's
going on. How much are yougaining on paying that loan
(04:53):
down, and how many morepayments, or how many more years
do you have before that loanspaid off? And investments. Yes,
how much do you have in youremergency fund? How much you
have in your investments? What'syour goals? How you're doing,
those are the things. Is why yourecord your transactions,
(05:13):
categorying expenses, groupingtransactions into categories
such as housing, transportation,food, entertainment and savings,
to understand spending patternsand identify areas for
reduction. If you're spendingmore on entertainment than you
are for housing, you're you havea problem. You need to view
(05:37):
these things. You need to knowwhat percent of your income is
for housing, and housingincludes either rent or the
mortgage payment. If you'rebuying, it would be your real
estate, taxes, your insuranceand all your utilities and any
repairs or maintenance that youmay be doing, tracking net
worth, monitoring the totalvalue of assets, such as
(06:00):
savings, investments, property,minus liabilities, debts and
loans to gage overall financialhealth, you know your net worth,
everything you own less,everything you owe is the net
amount. So say you own a homethat's valued at 100 $500,000
(06:21):
and you owe 450,000 your networth would be $50,000 the
small, the less you owe, themore your net worth. That's why
this podcast is called reduceddebt, increased wealth. You
reduce your debt, your net worthgoing up, and that's the only
(06:42):
thing you do. You're going tohave a larger net worth. Course,
once you get your debt undercontrol, then you increase your
investments, and your net worthis going to grow, setting
financial goals, establishingSpecific, Measurable,
Achievable, Relevant and timebound goals, such as savings for
a down payment, paying off debt,or building an emergency fund.
(07:06):
Building an emergency fund andpaying off debt, you can do
those two goals at the sametime, and once you have those
things achieve increase in yoursavings for whatever you want to
use it for in the future wouldcome after that, analyze and
adjusting regularly reviewingfinancial data to identify
(07:27):
trends, patternings and areasfor improvement and make an
adjustment to budgeting,spending and saving habits
accordingly. Look at where yourmoney is going. Now. Are you
spending too much inentertainment. Where can you cut
back in entertainment to reducethat down, to get it in line
with what you should bespending? I'm not saying you
(07:50):
don't do entertainment.
I just say 90% of your incomeshould not be towards
entertainment. You need maybe10% it's a matter of control,
keeping your finances undercontrol, securing data, ensuring
the confidentiality and securityof financial information by
using reputable personal financetracking tools and following
(08:14):
best practices for passwordmanagement and data protection.
Personal Finance Tracking can bedone manually using a
spreadsheet or a paper basedsystem, or through digital tools
and apps such as budgetingsoftware, expense trackers and
financial management platforms,by adopting a consistent and
comprehensive approach topersonal finance tracking,
(08:36):
individuals can gain controlover their finance make informed
decision about spending andsaving, achieve financial
stability and security, worktowards long term financial
goals. Maybe your financial goalis nothing more than paying off
your debt. Maybe your financialgoals are a lot more than that,
(08:58):
but whatever it is you want todo in your life, you have to
track and once you start, youcan. You don't ever stop. You do
it as long as you can. Then whenyou're unable to do it, then you
have somebody else do it foryou. Knowing where your money is
coming from and where your moneyis going is the most important
(09:22):
thing you can do to keep yourfinancial life, your personal
life, whether you're married,dating or whatever, under
control so everything's happy.
Most married couples fight themost over money, whether it's
not having money or spending toomuch, or whatever the case. If
they were tracking theirexpenses and they would show
(09:45):
each other and sit down once amonth and review the data, this
is where you spend your money.
Can you cut back? Because hereare expenses that we have to
pay. We have. House. We got allthese expenses. We got two car
payments. We got we got to say,money. We got paid off this
(10:07):
debt. We need to cut back onspending. Where can you help me
by spending $100 less this nextmonth? It's working together and
finding a solution where you canget everything and keep
everything under control, sothat your personal life doesn't
(10:28):
get out of control. When I wasyounger, I did the approach that
probably everybody's stilldoing. I get a paycheck. I'd pay
whatever bills I had to paybetween that time and in my next
paycheck, I would have sayscertain amount of money I would
save for maybe groceries and gasfor the car, and I thought I had
(10:51):
on a control and maybe I had aone credit card or two credit
cards I owed on, and I wouldsave, I would make my $40
minimum payment, but I alsowould apply $50 extra, and then
before the next payday, I'd runout of money, and I would
struggle, and I would have tomaybe not pay somebody or get a
(11:16):
cash advance on my checkingaccount and pay those fees, and
it just kept getting worse andworse and worse. I could never
figure it out, because everytime I started to get ahead,
something bad happened, and Inever really had a significant
savings to handle whatever badwould happen, whether was I
(11:39):
needed tires for the car orbrakes for the car, whatever the
case, or if I was moving, I needdeposit for a down payment
before I got my deposit backfrom where I moved from, all
those type of things. And it wasdifficult, and I was always
struggling to pay my bills. ThenI and I was tracking some but I
(12:05):
nearly didn't do the budgetthing because the software
wasn't all that great, or Inever figured out how to use it.
And I would put numbers in therethat I'd just guess maybe I'd
look back the last 30 days, plugsome numbers, make some educated
and it was never really close.
So I never paid much attentionto it, but I still, you know,
(12:26):
knew what the balance was in mychecking account. I knew where
my money was kind of going.
That's about it. You need tohave this under control at all
times. Once I started my programto pay off my debt, where it was
a process of building up mysavings in my emergency fund and
(12:52):
keeping cash available in casesomething would happen, and quit
using credit, I was able toslowly start bringing, bringing
in my credit card debt and startpaying it down. And when
something bad would happen, Ihad the money to pay for most of
it, if not all of it, which keptme from using more credit, which
(13:17):
then once I got through that, Iwould rebuild up my emergency
fund, and I would continue onpaying down my debt. I paid off,
I believe it was like $135,000in three years, eight months. I
remember that to a team, andthat was car payments, that was
credit cards, that was my lineof credit on my home and my
(13:40):
first mortgage at the now, don'tsound like much, but I was only
making 35 to 50,000 a year. Mybest income year was maybe
60,000 so I was able to ring inmy debt by keeping my personal
finances under control, bytracking and then doing a
budget, and we're going moredetail on how to do a simple
(14:02):
budget, and then having a planto reduce and pay off my debt,
that's all it's gonna take. Buttracking is getting more detail
you. I want you to use an app.
If you do it manually, it's somuch work, you'll probably give
up on it. But if you use an app,you can generate reports, which
(14:27):
makes life much easier, and youcan generate reports that help
you to your monthly budget,which then you can see all the
numbers and all the in the majorcategories and how they relate
to your overall personalfinances. But once you start
(14:47):
using the app, I mean, I say usean app because it's going to
have categories pre set up whereyou just need to select the
categories you want to use. It'sgoing to have reports set up for
you, or it's going to have away. For you to do reports way
based on what you want, and it'sjust a matter of trial and error
to learn how to use it to getreports and information out of
(15:12):
the app that you want, but itdoesn't do you any good if you
don't put any information inthere. I did not and do not
recommend automaticallydownloading and connecting any
app to your bank account, onebecause you run the risk of them
stealing your data, hacking yourthe app, and then stealing your
(15:36):
bank information. But you haveto manually enter the
transactions, that's way youstart remembering where your
money is going. You know if,once you start entering it,
you'll be more aware of what'sgoing on in your personal
financial life. And that's thegoal here. If you automatically
(15:58):
do it, you might have hazardlygo through there and select some
categories, and it won't makesense. If you manually do it,
you'll see what's going on. Buthere's the good news. Once you
enter a transaction, say thename of your mortgage company
and the dollar amount and thedate it's that you paid it, the
(16:20):
next time you type in thatmortgage company, it's going to
pop up. You might have to putthe dollar amount in and change
the date, but it's going to havethe right category, the same
category that was selected thefirst time. The other option
when you enter it the firsttime, you can set that up as a
recur reoccurring entry that'sgonna pop up once a month on
(16:47):
about the same day. Now you canhave it pop up a couple days
earlier and always review it.
Don't have a post directly toyour checking account, because
that makes it hard for you toreconcile your balance. When I
say reconcile your balance, thebalance in this app for your
checking account should matchthe balance on your bank
(17:08):
account, on your online bankaccount, and that's true for
everything that you enter inthere, whether it's your
checking account, your savingsaccount or a credit card, all
your balances should alwaysmatch. If not either entered
something wrong, or you haven'tentered something or you maybe
entered something twice, that'show you make sure that you got
(17:30):
all the correct information inthere. Now, most of these apps
you'd be using, you might beable to go in to your category
list and rearrange it or groupthem so it's going to match how
you're going to set up yourbudget. Your budget is generally
(17:51):
set up by categories, transferor housing, transportation,
food, credit and savings,entertainment, maybe in other
insurance, you can go in to thecategory list on your tracking
app, group them together, likeyour housing, your mortgage
(18:14):
payment, your house insurance,your real estate taxes, all your
utilities, and you can begrouped under housing. So when
you do a report, you get one thetotal for housing, but you also
get all the detail by categorythat's related to that category
housing. Same thing with yourtransportation. Maybe you have
(18:40):
two cars and two car payments.
So you have car a, car B, youhave the car payment, the
insurance, gas and oil andmaintenance on car A, and the
same thing with car B. So nowwhen you do a report, you have
the total for transportation,but you also have the total for
(19:04):
car A, the total for car B, andthen a detail that goes along
with that. That's helpful,because if let's say that your
transportation category, you'recomparing month to month, and
all sudden, it's way high. Well,what happened? Maybe you
remembered your car broke down.
You had to get new tires, or hadto get in transmission replaced
(19:25):
or some major expense. Maybe youcan remember it, but maybe you
don't it can go in there you gomaintenance and parts a big
amount. Oh yeah, that's right,this car broke down and I had to
get it repaired. So it helps.
You know that was a one timething. I don't need to adjust my
(19:47):
budget for transportation upbecause I was on one time thing.
I went over my budget for thismonth. But that's not going to
happen for a while in thefuture, until another car
breaks. Down, or whatever thecase may be, but you see where
I'm getting at the more detailyou have, the more information
(20:07):
you have, you'll be able to getthe proper reports to do your
budget, which helps you identifyand keep track of your personal
finances. I'll be back in onemoment with my final thoughts
are the articles I refer to inmy episodes have a link in my
show notes. If you're interestedin checking out the software
(20:31):
that I personally use to get mydata control. It's in my show
notes under shop financial, youneed to copy and paste the link
and it'll take you to thewebsite. Any questions, you can
just contact me through thatparticular website. If you value
this podcast and would like tomake a contribution, I had a
(20:54):
contribution link in my shownotes. Also get whatever you
feel is appropriate for theinformation I am providing. I
thank everyone for listening tomy podcast. This episode was
talking about tracking why youtrack why you want to do it, and
kind of how you do it. You needto have an app to do it so it's
(21:18):
got a lot of the stuff set upfor you. You add your checking
account and whatever accountsthat you have, which will be
checking savings and all yourcredit cards that you currently
have a balance on, whether ornot you put your mortgage and
loans in at this time is not allthat important, but you can do
it if you want to, but you mightwant to do it in the future. The
(21:42):
idea here is to know where allyour money is coming from and
going to and how you paying forthings. Are you making monthly
charges on your credit card topay for monthly expenses such as
utilities or whatever? Are youable to pay it off, or maybe you
(22:02):
got behind. And then the secondthing is to generate reports to
help you understand and detailwhat's going on. And the
generating reports is going tohelp you with setting up and
maintaining a monthly budget.
That's why you need to track ifyou don't know what's going on
with your personal finances, butyou think you do, sit down
(22:28):
without even looking atanything, when's your rent due
or your mortgage payment due?
What's the date, what's thedollar amount, and who do you
pay? How much is your electricbill a month? How much is your
natural gas bill? How much isyour internet bill? How much is
(22:51):
any bill that you pay on aregular Can you sit down and
write down the dollar amountthat you pay? And this is a
change. It's the same everymonth, or does it change every
month? And how much does itchange? Does it in the
summertime, we know electricbill is going to go up because
of air conditioning. And inwinter time, we know electric
(23:13):
Bill's going to come down, butyour natural gas bill is going
to go up. If you have naturalgas. What's your car payments?
And when are they due, and whodo you pay them to? How much is
your insurance for your cars?
How much is the insurance foryour home? If you cannot sit
down and write those numbersdown, you need to be doing some
(23:35):
tracking, because you don't knowwhat's going on in your personal
financial life, and that is amust if you want to pay off your
debt, if you want to save moneyfor to meet your future goals,
you got to be tracking. If youwant to have any type of budget,
(23:56):
you have to be tracking. I'm notsaying get a app that's really
expensive. My app I use is lessthan $10 a year. There's
everything I need. I don't useit to do my budget. I do my
budget on a spreadsheet, but Ican generate reports from my app
(24:17):
to give me the numbers to put inthe spreadsheet, which makes it
easier and fast and doesn't takeany time at all. Once you get in
the habit of doing the moretransactions you have, the more
often you need to update yourapp, your four year tracking. So
net, whether you do it once aweek and it takes you 10
(24:40):
minutes, or you do every otherday, and it takes you two
minutes. You have to do it in Fto keep everything up to date on
a regular basis. And if you usethis app to see how much money
you have in your checkingaccount, you need to have it up
to date instead of going. Onlineto a bank account. You can look
(25:02):
at the app and know, I have $300I get paid tomorrow. I have I
gotta go to grocery store, andit's gonna be a $250 bill. I can
cover it. If that app is up todate, you can do that. If it's
not, you can get yourself insome trouble. We're trying to
save money here by not payingunnecessary bank fees, such as
(25:24):
overdraw fees, whatever thecase, ATM fees, we're trying to
minimize our spending so we canmaximize our savings, and by
tracking we'll help you achieveboth of those and you glad you
did so do?
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