Why Do Tracking

Why do tracking and the benefits, again lost word file so no information  on links.

Transcript

Copy Transcript Copied

Charles McDonald: 0:04

Hello, I'm your host, Mr. Chuck. I'm a retired accountant turn truck driver, I reduce my debt in a relatively short period of time, debt reduction to achieve financial freedom takes commitment, confidence, determination. Why do tracking, tracking is step one and personal finances without tracking, nothing else will happen. So if you're struggling paycheck to paycheck, or if your bills special your debt, your credit cards and all your loan payments seem to be overwhelming, and you don't think you ever gonna get out from paying them. And you feel like you're working for the banker and not for yourself, you need to concentrate on your personal finances. And step one and getting everything under control is start tracking all your spending, this is important to do. First, you need to identify your problems. And by identifying your problem and setting some goals, then you can start your tracking so that you can solve your problems and meet your goals. You've been maybe not doing this for a long period of time. So we didn't think it was important. Maybe nobody ever told you you need to do these things. Or maybe you just didn't feel like doing it. Maybe you thought you made enough money where you didn't have to do it. But over time your debt grew, whether you purchase a home, a new car, or both. And then you got a little bit behind use your credit cards to help pay for things or buy things that you may be needed for that home. And you was unable to pay them off. And then the balance start growing. And now it seems like you can make the minimum payment and maybe a couple $100 more. But it seems to be a struggle. And it's you seemed like you're not making any advances and paying down your debt. It seemed like it keeps growing and growing and growing. And you don't know why. Get all your credit card statements out. Or go online and look them up. And the first thing you got to do is the name of the card. What's the interest rate your pan? What's the balance? And what's the due date? The unpaid balance and what when is it do you have to know when your bills become due so you can have enough money to pay for them. That's what tracking helps to achieve. I have two articles in my show notes if you wish to take a look at them, I'm gonna refer to the first one is benefits of tracking your spending habits. The benefits of tracking your spending habits, tracking spending habits of several advantages can help you achieve financial stability. And here are some benefits. Identifying unnecessary expenses. Are you paying for something that you're no longer using? Are you paying for something twice? For the same thing? There's a TV commercial out there where the question was, what's the dumbest thing you ever did? And the response was, I paid for something twice a month for three years as a waste of money I think I figured out was like 500 bucks 360 bucks you wasted away. But why do that you work hard for your money. goals here is to keep as much money in your own pocket as possible, so that you can do the things you want to do and not the things you have to do like pay your bills. Tracking expense helps you identify areas where you're spending too much money. It allows you to identify expenses that can be cut back, such as dining out too frequently or buying expensive clothes. For example, if you see that you spent a significant amount of money on takeout food, you can start cooking at home more often and save some money. That's just one. There's multiple areas where you can save money, promoting better financial planning and budgeting. By tracking your spending you get a clearer picture of financial situation. This helps you create a budget and plans your finances better. When you have a clearer idea of how much money you have coming in and going out. You can allocate your funds better pay off debt and save for future expenses. So, now tracking may not do all that. But it's gonna help you do all that. So it's step one, where is your money coming from? And where is your money going? If you can answer those two questions, you should be answer one, you should know where it's coming from. But if you're not sure where all your money has gone by, you know, you're paying rent, you're paying utilities. But how much of that is your monthly income, you probably don't have any idea. He might make a guess maybe it'll be accurate, maybe not help you achieve financial goals tracking expenses to help achieve your financial goals. For instance, if you have goals to buy a new car, you can track expenses cut back on unnecessary expenses, to save money for your purchase. While you should always be cutting back on unnecessary spending, gaining better control over your finances, tracking expenses gives you better control your finances, you can monitor your spending and judge your budget accordingly. For instance, if you see that you're spending too much entertainment, you can cut back on those expenses and save money for other things. detecting and preventing fraud, this is important, it really helped me do this a lot. Tracking your expenses can help you detect any fraudulent activity on your accounts. By reviewing your bank statements and credit cards regularly, you can spot any unauthorized transaction and report them immediately. That's why I want to post my tracking as often as possible, you know, twice a week. That way, I can see the new activity out there, I remember what I did, and there's something pops up that I didn't do and don't remember, I can investigate it and find something I didn't do, I can report it to fraud and they can block it That's especially important on credit cards, he may use a credit card to buy things online. So you want to have one credit card that you use to buy things online and you want to try to pay it off every month, then you use different credit cards for like going shopping at a store so you know where the fraud may be coming from. So if it's online stuff, and then that credit card has fraudulent activity, you know, and happened on somebody online got you information. So you can shut down that card and get a new card Spain of but I've done it multiple times. And it helps defer the fraud. If you use a different credit card to go to the store and buy things and if something happens, you can proudly pinpoint the store where a happen, it's probably an employee at that store. And then you can report that to management. And then they can look into it. At least give them an idea something's going on with a certain person, or a certain department or whatever the case would be. I had that problem with Dollar General or one of those stores, methods of tracking spending habits, we can do pen and paper, you can do apps, I would prefer to do it on your computer at home. And then if your app you're using has a feature to put on your smartphone do both automated tracking through bank and credit cards another way to track expenses automated tracking, many banks and credit card can offer tracking services that allow you to see all your transactions transactions from one place. I'm not really sure what they're talking about being go online and look at your statement for last 30 days. I don't know if that's a tracking service, I wouldn't pay him anything to do it. You can do it cheaper on your own. And you want to have it online and you want to do it. Or you manually enter the information and to the app. Now you notice I just mentioned you can do pen and paper. I don't think anybody's gonna do that nowadays. There's so many apps out there that you can use, there's apps out there can you can just do your tracking. And there's apps out there that does tracking and the budget and sign your money and do all kinds of stuff. Do what you can afford. Start out cheap and learn how to use it and when once you learn how to use it, it becomes easier and easier. Okay, gotta set goals. Okay, keep track of all expenses, no matter how small, you have to track everything. Every penny that goes into and out of your checking account, every penny that you charge on a credit card, and multiple credit cards and every penny that goes in to a charge on a loan. If you miss a loan payment and they charge you a late payment fee. You got to enter that you have to track it because it affects your balance and how your money is applied. They collect their fees and their interest first before they apply it to your principal, that's important to know. Because if you're always late, you may not be making much principal payment, and you may not be making any principal payment on that loan. If you're always late or two, three months behind, you're never gonna pay it off, because they're just charging you fees and interests, and they're just collecting their money, and they're glad to have you as a customer. I think in the United States that there's really no limits on tracking, it's the only limit is you have to force yourself to do it, you have to set a time, or either once a week or every couple nights, you'd set yourself down and do it. If you don't want to look up your bank account, you can keep receipts as you spend money, and then you can enter it every couple of days, that if you don't want to collect receipts, and then you can go online and look at your checking account and enter it and your app. I say manually enter everything in your app, because you become more aware of money, where your money is going and when it's due. And over time, you'll be able to know the things that most people don't know. It's important in your be aware of money coming in money going out what's due what's due when your monthly bills, your quarterly bills, your semi annual bills and your yearly bills. And you'll have it down, and you'll be able to set money aside, pay those bills as they come up. And you that is the first big step in getting your person's personal finances under control, being able to know what's coming up and what's due and pay him on time every month, month in and month out. That will help your credit score if you have a low credit score, that will help your credit score over a period of time. The more you do that, the better you'll get. And as you're doing your tracking, you might notice you paid for some particular service twice in the same month. That's a good time to look at. Why am I doing it and can I cancel one of these cancel the oldest one and get rid of it. If you don't use any of it at all anymore, cancel on both. He shouldn't be paying for the same thing twice. Whether it's a gym membership, or a subscription service for anti virus or whatever the case. In fact, I just got myself anti flyers from a melt malware application or software that's absolutely free and only had to pay for it, you got to put it with some ad speaking all these bypasses. Well, that's what I always do. But it scans my computer every day. And it tells me if I got any virus or malware and if I do, it takes care of it and it's free. That's a good thing to do. If you're looking for something like that, you can save some money. There you go, there's a way to save some money. And other benefits of tracking. Better financial, avoid overspending faster, faster financial goals, reduce stress, when you know what's going on in your finances, you're gonna have a lot less stress, because you're gonna know you'll be able to meet your obligations. And better planning, planning ahead, create a budget and stick to it. Set a regular cadence for tracking. I say every week, or at least every pay period, if you get paid weekly, then you have to enter everything weekly. At the fairly minimum, the more you do it, the faster it becomes, the faster becomes, the less time it's going to take you and the more often you're going to want to do it. You'll get better reports, though with the more updated information that you have. Anything that's more than a couple of weeks old is old information. And if you don't know what's in your checking account today, if you hadn't posted anything for two or three weeks, you ain't gonna have an idea. Gonna have to go online to your bank to have an idea on how long you've been doing. And how's that been working for you? Probably not too well, because you just look this last month much money I have today. I have no clue what bills are coming due. But I want to buy this here and I have enough to pay for it. And then the next day you find Oh, I got rent. Do I got utilities? Do I have no money? That's what we're trying to avoid. You're trying to become more aware of all your financial obligations, and how much money you have, compared to your obligations that you have to pay for. That is the benefit of tracking. Another benefit of tracking is and helps you, with getting reports to set up your budget, your budget is what I can call your control center, it's where you can look at a glance of where you're mining, how much it's gonna cost you, based on the previous month, how much it's gonna cost you. And then where are you in the current month compared to your Control Center to control numbers is your budget at column. I call that to control numbers. And that you can adjust as you go through life. And you get a better average, especially for groceries, dining out gasoline, things that's up and down, you may do more, some weeks in less than another week, and the prices go up and down, like for gasoline, and things like that. That's your control center. That is the number you're trying to stay under Oregon assume that the previous month were we overspent in every category. And we're trying to keep it at or below those numbers. And why are you doing that you're doing that. So you can save a little bit of money and start to your emergency fund, set some money aside in savings account, and that's your emergency fund. So that if something bad would happen, I'm not gonna have to use your credit card to pay for that event. That's what it's all about. Tracking so you know what's coming in and what's going out when things are due Wow, much you can afford money, I can set aside money I can have in reserve. All that's important. And managing your personal finances. And tracking is the very beginning to start of that process. I'll be back in one moment with my final thoughts. But if you're interested in getting any information that I talk about, whether it's the software that I personally use to get my debt under control, I have links in my show notes where you can find all that information. I have links in my show notes for spreadsheets, I guess links in my show For show notes. For other places that do the same thing to help people get out of their debt. Happy draft.org shop financial, which is a software I use. I have links to for the articles that I used to do these episodes, everything's in my show notes. So if you go to my show notes, you can find a lot of information. And if you would like to subscribe, make a donation to help me keep this goal one, then I would really appreciate that. Also, in this process of getting your personal finances under control, you got to identify your spat bad spending habits. And by tracking that you can identify where you're spending too much money, whether it's for clothing, dining out, hobbies, whatever the case would be, that tracking is gonna help you identify some of your problems. And once you know what your problems are, then you can fix them. And by identify where your money is gone, it's gonna help you. I know I repeated this multiple times, but it's very important because if you're living paycheck to paycheck, you have a lot of debt. Not sure why all that happened. Maybe you have a good reason for maybe a know why has happened and you just can't get out from under it. It's half to get your spending under control. Before you do any more spending, you have to get your debt paid down. And if you can get that high interest debt paid off, that's gonna free a lot more cash up to that you can save for your emergency fund, so you're not forced to use her credit card when something bad or unforeseen happens. And then you'll have more of your own money available to buy the things you want to buy, where you can save your money up and have a A larger down payment for a home, which will make that mortgage a lot easier down the road, and more manageable, which will make your life much easier as your life continues on. Whether it's buying your first home, a second car, having children, everything costs money, the price of everything is almost always going up. So in order to meet your future financial obligations, while you have to make more money, and pay raises are always a lot slower from work than the cost of living in the future. And today, cost of living is always gonna raise faster in your paycheck. That is almost a fact. And if you realize that, then haven't set aside more money before you make a bigger purchase. So you can finance less so as your budget is not as tight. You're gonna be better off down the road, whether it's five years or 10 years. Whether you have one child or three children. You'll be better off in the long run. You'll have a happier, less stressful life, and you'll be glad you did. So