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Eliminating Debt: Your Spending Log
By Molly's Brother | January 8, 2007
With the New Year arrives a New You. If you’re reading this post, you have a deep and sincere desire to control your finances and eliminate your credit card debt.
Eliminating credit card debt takes work, commitment, and perseverance. If you have a substantial amount of debt, it will not go away overnight (no matter how badly you’d like that to happen!).
Remember: It took time to create the credit card debt. Therefore, it is going to take some time to climb out of it.
Also remember: You can do it.
STEP ONE: Track Your Spending
So, you’re interested in having that money makeover. You’re interested in becoming that automatic millionaire. Dave Ramsey, Suze Orman, Jean Chaztky, and David Bach all have wonderful financial advice that may or may not pertain to your specific situation. (You can buy any of their books but clicking on their names above.) Each offers information that, at times, might be contradictory. One wants you to eliminate credit cards from your life, while the other wants you to use credit cards to your benefit.
Even though information differs among each, the one thing they all agree on is this simple fact: You can not get your spending under control if you do not have any idea where your money is going. You can not eliminate your debt if you don’t know how you got there in the first place.
In short, you need to track your spending.
When I first started to climb out of my debt a while back, I hesitated to track my spending. I wanted nothing to do with actually keeping track of where my money was going. Why? Because I’d have to face the fact that I was most likely wasting my money on nothing but crap.
Once I started to track my spending, I quickly saw the benefit in recording where my money was going. You, hopefully, will too. But you need to do it with a commitment that is almost religious in its zeal. If you are going to keep a spending log, you need to keep track of every single penny that you’re spending. Five dollars on parking? Write it down. Eight bucks on lunch? Put it in your book. Every time you pay a bill online, write a check to your phone company, or drop a nickel into a soda machine, write it down.
After tracking your spending for a month or so, you’ll be amazed. A clear picture emerges. For the first time in years, you understand where your money is going. You discover “trouble spots,” certain areas where you overspend.
By tracking your spending, a few things will happen:
- It will motivate you to cut back your spending.
- You will want to eliminate your trouble spots. You’ll cut back on buying lunches during the week. You’ll find ways to lower your cell phone bill.
- You’ll be able to create a monthly budget.
Many of you have written over the course of the past year, asking exactly what I keep track of in my spending log. I’ve actually downloaded a basic template of my spending log and published it here for you to purchase. I’ve written an introduction that includes general budget goals for you.
Topics: Debt, Spending Log |
January 8th, 2007 at 4:45 pm
I agree - tracking your expenses is a solid first step!
January 8th, 2007 at 10:02 pm
It is such a solid first step. When people seriously want to eliminate their debt, many times they don’t know where to start the process.
February 27th, 2007 at 10:41 pm
[…] We’re almost three weeks into the New Year and I haven’t yet reverted to my One Life to Live-watching, Dorito’s-eating ways. (I’ve come close a few times, but have held my focus. In short: I’ve gotten off my ass and gone to the gym.) […]
January 21st, 2008 at 6:10 pm
I will do it! I feel very inspired. And maybe I can get a two-subject notepad to keep track of what I eat, as well. Thank you for the inspirational blog.
January 21st, 2008 at 7:36 pm
Arelis–
I hope that you keep the momentum going! It’s such a liberating thing to get your finances under control.