Are you prepping for anything special come January?
I am!
A few blogs ago, I mentioned about starting the Total Money Makeover by Dave Ramsey. For the past 2 months I have been keeping track of where our money is going, what we spend it on, etc. I've researched Dave's plan several months ago and after taking lots of notes...never did anything to change our money habits. This time will be different! What was my wake up call? After tracking our money in November, I found out we actually spent a few hundred more than what we made. Yikes!!! Would I have noticed this if I didn't track my money??? NO, because we had enough money in our account to cover the extra money we spent. I didn't want this to become a habit or we would eventually have negative money in our accounts.
This is what my dinning room table looks like. It has my tools to help me get ahead in life...or ahead in my finances. I keep all my finance papers in a folder in the kitchen (easy access). I keep a small calculator and pencils in the kitchen too. I have 2 notebooks, one is designated for balancing my checkbook (seriously those registers they give you when you order checks are filled up in a matter of days) the other is my budgets, tracking my spending, making grocery lists, etc. I also have my debts (truck and jeep) written down and how much I have left on those along with all the Dave Ramsey sheets I copied from his book and printed off his website.
I want to explain how I track my expenses. To most this is common sense, but to some people who rely on what the ATM tells them how much money they have in their account...this will blow you away!
Everytime Nathan or I purchase something, I immediately write it down in our notebook (the one that balances the checkbook). After I do this, I write how much I spent on what in our tracking notebook. Example I spent $50 at Aldi's for groceries...I then wrote $50 under my Food/Hygiene/Meds column. After I write these down, I stick the receipt into a folder labeled receipts (I usually keep my receipts no matter what they're for, for a month...longer if they're for something important or if I have a warranty on an item).
The columns I use are labeled Utilities, Loans, Rent/Insurance, Food/hygiene/Meds, ATM/Cash/Fees, Eating Out/Snacks/Tobacco, Clothes/Alterations, Gas/Repairs, Credit Cards, Miscellaneous. Yours will probably be different.
After tracking for 2 months, I know about how much we spend in a certain area. Come January we're going to really crack down and try to spend less in the Eating out/snack/tobacco category (Nathan's biggest area) and the miscellaneous category. This will be challenging, especially since I'm making a 13 hour road trip to throw one of my best friend's a bachelorette party.
I would like to make an announcement. Yesterday I took money out of our savings and paid a huge chunk off of the truck. The truck will now be paid off in October 2011 instead of August 2012. We plan to take any extra money we get (tax returns) and put that towards the truck as well!
If you're reading this, you probably already know the 7 baby steps but I would like to list them just in case:
1. $1,ooo to start an Emergency Fund (done)
2. Pay off all debt using the Debt Snowball (started)
3. 3-6 months of expenses in savings
4. Invest 15% of household income into Roth IRAs & Pretax Retirement
5. College Funding for Children
6. Pay off your house early
7. Build wealth and give
I would love to hear your progress, tips you may have, or questions about anything. Maybe if we all encourage each other and hold each person accountable...we'll become millionaires and live like no one else :)
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