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We’ve been trying to pay off our debt for way too long. Part of it is because we bought a $20k+ car two years ago with no down payment.
That’s really dumb, by the way. Don’t do that.
Plus, I had a mini-mortgage-sized student loan that’s now down to about $26k.
In an effort to increase accountability, I’m going to start sharing our monthly spending reports with you.
This month was a weird month. While it started out normal enough, the pandemic changed everything.
We bought extra groceries in case the world shut down, stocked up on pet food and supplies, and re-evaluated our financial goals in case one of us takes a hit in pay.
So far, so good.
Andrew is in IT for a food processing company, and I’m a freelancer specializing in personal finance.
Our jobs – so far – are okay. (Some people aren’t so lucky.)
What this report is about
I want to share some of our money-philosophies with you. Also, tips and tricks we’ve learned along the way that you can use to get your finances in tip-top shape.
I’ll explain why we only spend with debit cards, and cover how we track our expenses and how to read our spending report. I also want to keep you updated on our financial goals. We made a big shift this month with the economy crashing, so I’ve included that, too.
Finally, after all of that, you’ll see our spending report.
We share the categories of our expenses, the amount, and sometimes notes about where that money went.
Why we only spend with debit cards
1. It’s easier to stick to our budget. The money immediately gets taken from our checking account. We don’t have to wonder how much money we have and if we’re going over budget because our money goes in and out from one single place.
2. We don’t accumulate more debt. Andrew and I have tried to budget with credit cards. It always gets us in trouble. We haven’t re-programed our brains yet to understand that a credit card is the same as spending “real” money. We’ve tried the “use a credit card to earn rewards” game and we’re not disciplined enough for that.
3. Sometimes, we use credit cards. There are a few situations where we use credit cards. If we’re booking travel (which we won’t be doing for a while – thanks coronavirus), or making a one-time big purchase that we know we can pay off at the end of the month, we use our Chase Sapphire Preferred card to earn rewards. (We love our Chase card – find out how you can earn $750 in free travel rewards.)
How we keep track of our budget
I can’t tell you how many personal finance apps and programs we’ve tried over the years. EveryDollar, Mint, YNAB, Zeta (for couples), Quicken, Personal Capital… the list goes on.
And you know what works best?
A plain old boring spreadsheet.
I track our net worth, debt payoff progress, sinking funds goals, checkbook register, and our monthly budget on one simple Google sheet.
Automated is nice (and easier!). But the hands-on approach forces me to watch where our money is going.
We’re less likely to overspend when I track every expense manually.
A note about “missing” expenses
As you look through our spending report, you’ll notice a few things missing.
Like car insurance, a water bill, and sewer bill.
We live in a rural area that doesn’t have city water or sewer. Our water comes from a well in the ground near our home. And we have a septic system instead of city sewer.
We also pay in full whenever we can.
Take our car insurance, for instance. We get an enormous 11% discount if we pay for the full 6 months in full rather than making monthly payments.
Every month, I take a little bit of money and transfer it to a high-yield savings account (we use CIT Bank because it pays the highest interest that we’ve found).
Then, every 6 months, I pay our car insurance bill from that savings account.
(If we left it in our checking or even in a savings account at our credit union, I’m sure we’d spend it.)
Our financial goals
With the pandemic sweeping the globe, we’ve adjusted our financial goals.
We’re not hyper-focused on paying off debt any more.
We’ve also realized that the Dave Ramsey approach to personal finances is incredibly unrealistic.
When coronavirus shut everything down, we had $1,000 in our “baby emergency fund,” just like Dave says.
It’s a joke.
$1,000 is nothing compared to losing a job or battling a recession (it could happen!).
Here’s our revised financial goals in light of everything going on right now:
- Contribute 5% of our income to retirement each month
- Add $500 a month to our emergency fund
- Cut every unnecessary source of spending possible
Our March 2020 Spending Report
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Well, there you have it folks.
We need to work on our “out to eat” spending and our grocery expenses, too. Those are always our trouble categories. With the state of the economy, it’s more important than ever.
How is the pandemic affecting your finances?