Keeping Track of Expenses Electronically

With the holidays coming it’s more important than ever to track your expenses. In our household we use Quicken (one of many financial softwares available) and Excel to keep current on our balances and expenses.

Quicken came with our iMac and so that has been the default program of choice. I feel Quicken has been vital in helping us stay on track financially and make ourselves accountable to our goals. Here are some of the ways that our household uses Quicken:

Balance checkbook
Every time we pay cash or use our debit card I take the receipts and enter in the amount into the register on Quicken. I then enter what category each purchase fits under (i.e. gas, groceries, utilities). I can even break up purchases into more than one category if needed. I also enter deposits on the register and assign those categories as well.

Download bank transactions
I can download activity from all of my checking, savings and credit card accounts to Quicken to reconcile my checkbooks. This is helpful as I find that I forget to enter in a few transactions each month.

Schedule payments
Quicken has a calendar feature that I use for all scheduled deposits, bills, etc. This way I know when each bill is due each month and roughly how much is in each bank account for a certain day. If I know a big payment is coming I can use the “pay it now” feature to deduct the amount from my account so I know what’s left in the account, after the big expense.

Track expenses and categories
Using Quicken I can put together reports of how much I have spent in certain categories. I can customize these reports for the current month, year to date, or other timeline that I need to look at. Quicken also allows you to create categories to personalize your reports.

Forecast cash flow
Using this feature I can choose certain accounts, and based on expenses and deposits listed in my calendar, Quicken will estimate how much money will be in chosen accounts on certain dates.

Obtain overall picture of financial resources
Because we have many different checking, savings, credit and cash accounts it is very helpful to see them all in one place. In the accounts list view I can see how much we have versus how much we owe on our student loan and credit card. Because I am very wary of debt this feature helps ensure that we have enough in our checking account each month to pay off our credit card balance.

Budget
With the importance of budgets this feature should have been listed first but I personally have had some issues with our Quicken and the budget feature. Because of this we use Excel to make our budgets. Perhaps when we create our 2009 budget, we will give Quicken another chance.

As you can see Quicken is a major cornerstone of our financial tracking system. I didn’t use all of Quicken’s features at first but added more features as I grew more comfortable with the program.

There are two areas that I feel Quicken lags behind on and where I utilize Excel:

Budget
Since we cannot use this feature in Quicken very effectively, I have moved our budget over to Excel. If you have never set up a budget before there are some great spreadsheets online to help you accomplish this. However, I would start by keeping it simple. Make a list of all major expenses or categories and then estimate a total for each. After tracking your expenses for a couple of months, modify your budget to be more realistic with your spending.

Basic math for planning unexpected income and expenses
Another way that we utilize Excel is by breaking down unexpected income (like bonuses) or rearranging our budget to fit in unexpected expenses. As an example, my husband received a bonus from work last week and we used Excel to figure out how much was left for savings after tithing, paying down the student loan, purchasing a family gift and paying for new brake pads and another medical bill. As a side note, usually I’m a big fan of putting bonuses into savings first, but this month had unexpected expenses and unfortunately savings got the last end of the deal, but was not forgotten!

The Simple Life: The Night Before

I have found one simple trick that helps my mornings run a little smoother and lets me accomplish more during the day. That is to prepare for the morning rush the night before.

One way I am doing this is by making Tim’s lunch the night before. This gives me time to unload the dishwasher and quickly pick up the house before Tim leaves for work and while our son is eating breakfast in his high chair. It also saves us money because we are less tempted to say, “Oh we forgot your lunch, why don’t you just go out today.” Although Tim does have a budgeted amount to spend on lunches with co-workers 3-4 times per month, any more than this really eats into our budget.

I also prepare for laundry day the night before. Since our apartment doesn’t have washer/dryer hookups we have to do our laundry at the laundry facility in our complex which is 2-3 blocks away. I have found that by having the laundry sorted, the coins and detergent gathered, and retrieving all the odd washcloths and rags laundry goes so much smoother. I am able to start the laundry before Tim leaves for work which makes it much easier to finish with my toddler.

If I know that I am making pancakes or hashbrowns for breakfast I often whip up the pancake batter or microwave the potatoes the night before to speed up the baking process. This helps me feed my family healthy meals even when everyone’s rushing around.

Even though we don’t have school age children, I know how crazy getting children ready for school is. You can help them by laying out their clothes and backpack the night before. This way they aren’t looking for lost shoes while the bus drives away. Encourage older children to prepare for school the night before.

Even though I am not as good at this habit as I have been in the past, I know the days go by much easier if I have prepared the night before.

The Simple Life: Always Keep Your Gas Tank Half Full

My parents have been telling me for years to keep my gas tank half full and within the past few months (beginning when gas became really expensive) my husband and I took their advice. You really never know how a simple habit like keeping your gas tank half full simplifies your life until you run into a sticky situation where you run out of gas at an inconvenient time and place.

This habit has been easy for us to maintain because we’re within five minutes of many gas stations. But for those who live farther, a little time and planning can help you keep your tank filled. Even with keeping our tank half full we only fill up about once a week since we don’t do that much driving.

In addition, if an emergency were ever to arise where gas was scarce we know we can get by for a few days. And if there was ever a catastrophe we would have enough gas for the hour-long drive to Tim’s parents. Since you never know when a catastrophe could occur, this simple habit could make a huge difference.

Weekly Menu

Here is our weekly dinner menu:

Monday: Leftovers
Tuesday: Stirfry
Wednesday: Tacos
Thursday: Leftovers
Friday: BBQ Chicken Pizza
Saturday: Spaghetti
Sunday: Tim’s cooking

Planning Your Meals Saves Time and Money

One of the biggest grocery budget busters is going to the store without a plan. We’ve all gone to the store to “buy a gallon of milk” and then are shocked when the total comes to $15 or more because we got a few extras. The little unexpected things that end up in your cart can seriously blow your budget!

One way to avoid overspending at the store is to plan out your meals and write down a list of items needed. Having a shopping list designed around your week’s menu saves time, money, and additional trips to the grocery store.

Here are some tips for making weekly menus work for you.

Start simple
Plan out a simple menu for one week’s worth of main dishes for dinners. Include any plans to dine out or eat leftovers.

Put in on the calendar
Once you have a week’s worth of dinner planned, put the plan on your family calendar. That way you can quickly glance at what’s for dinner and know if you need to make any special preparations like taking something out of the freezer.

Slowly add more menus
As you become more comfortable with planning out dinners and putting them on the calendar, slowly add side dishes in your planning. Then add lunch and breakfast plans and finally snacks. The more specific you make your menus the better prepared you will be at the store.

Plan around sales
The best way to slash your grocery budget is to buy things when they’re on sale and plan your meals around them. For example, if I find that lettuce and tomatoes are on sale, I’ll plan meals that use them for the week such as tacos, salads and so forth. This works best with perishable items as you should aim to slowly build up a supply of staples to have on hand and replenish when they go on sale.

Be flexible and do what works for you
The best plan will only work if you make it simple. If you do most of your grocery shopping every two weeks like me, plan a menu for two weeks or even one month. If one day you don’t feel like spaghetti, switch the menu with tomorrow’s dish since you should have all the items needed from your weekly shopping trip.

The most important thing is to have a plan and then stick with it. As you do this you will see your grocery bills decrease and free up more money to pay down debt or add to savings.

The Importance of Insurance and Savings

A few weeks ago I was struggling with our toddler to get his shirt on. I didn’t realize how close we were to our desk and before I knew it he smacked his face on the corner. He cut himself right above his eye and the gash looked bad. My husband came home to look at it during lunch and we decided he needed medical attention.

We took him to our pediatrician who took one glance and sent us straight to the pediatric emergency room next door. Our son ended up getting two stitches.

Although this wasn’t a pleasant experience for us it would have been much worse if we didn’t have two things: health insurance and savings.

We have been without health insurance before and it is very scary. We’re very thankful for a job with benefits, but even if Tim’s company didn’t provide insurance it’s important enough to us that we would pay for it ourselves. Medical emergencies can happen anytime and huge bills really put a crunch on your budget.

We also felt calm because we knew where the money to pay for this would come from: our emergency fund. We wouldn’t need to put the bill on a credit card or go on a payment plan with the hospital. We will be able to pay the bill in full, on time, without any interest.

The only affect this bill will have on our budget this month is that we can only put in about 1/4 of what we normally add to our savings because the rest we will use to pay the bill. We didn’t technically have to take anything from our savings because we haven’t yet deposited money to our savings account this month.

With the development of this bill we will be put back one month on our savings plan, but we know that this could have been much worse. I am truly grateful that we are in a position to have health insurance and emergency savings.

Starting Off

Our family is just starting off. We have been married almost three years. Within the last year we graduated from college last year and had our son. We have never carried credit card debt and–thanks to a car Tim’s parents gave him when he was in school–we have no auto debt. The only debt we carry is a small school loan that will be paid off within the next ten months. We also have two months worth of savings for emergencies which we are continually adding upon until we have six month’s of savings.

We track our expenses with Quicken and keep to a budget. We share one car. We rarely go out to eat and instead eat nutritious, home-cooked meals. We employ other frugal methods to help us keep saving and paying off our school loan. We have made sacrifices to live this lifestyle and it has been worth it.

Yet we know that we could do better in organizing our finances and reaching our goals more quickly. We need to finish obtaining life insurance and create a will. We also need to have a more solid cash flow. Over the next month we will look at our finances from this year and come up with our financial goals for 2009. I’m excited to have a game plan for the next year.

Debt Snowball

Debt is a shaky foundation for any household, especially one in which there is only one income. One of the first priorities to get your financial house in order is to get out of debt, especially consumer debt. Reduce spending wherever possible and then attack your debts one a time.

One of the best ways to attack debt is to create a debt snowball. This process is a focused way to attack your debts without affecting your cash flow. Here are the steps:

1. Put your debts in order by the lowest balance

2. Pay the minimum balance on each debt except the smallest one which you will attack with every penny you have

3. Continue this each month until the first debt is paid off

4. Once the first debt is paid off, apply the money  you paid on the first debt to attack the second debt and continue with the minimum balance on all other debts

5. Once each debt is paid off continue applying that money towards attacking the next debt and paying the minimum balance on the others until all the debts are paid off

Some financial experts advise using attacking your debts by paying off the loans with the highest interest rates first. This will reduce the interest a consumer pays. Others, such as Dave Ramsey, argue that by starting with the lowest balances one gains a psychological power of completion to motivate them to pay off other debts. The personal finance blog getrichslowly.org wrote an excellent article that discusses the merits of each version of the debt snowball.

No matter how much or little you are able to pay off at first, employing this method will give you the power to pay off your debts and gain more financial freedom.

Here is an example of the debt snowball in action. Let’s say that Jane has a credit card balance of $1,000, a car loan that’s $2,000 and a student loan that’s $2,200. She has cut all extra expenses so that she can use $1,000 to pay down her debt each month.

Month 1:
Credit card $800
Car payment $100 (minimum payment)
Student loan $100 (minimum payment)

Month 2:
Credit card $200
Car payment $700
Student loan $100

Month 3:
Car payment $900
Student loan $100

Month 4:
Car payment $300
Student loan $700

Month 5:
Student loan $1,000

Month 6:
Student loan $200

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