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I'm fairly new to this forum. I'm trying to get a better handle on my finances and am especially curious to see where all my money is going. I've got a few questions for this group:
(1) Where do you believe you could use more transparency with your finances? What tools do you use to get this transparency today to see where your money is going?
(2) Where do you think money is being wasted today, and how are you trying to reduce that waste?
Write out a budget before you spend the money, check your actual activities at the end of the month vs your budget and reconcile the differences. Adjust your budget or spending as necessary
Isn't the standard answer to this question 'blow & h**kers'?
so....i guess that's how i'll answer it....but on second thoughts, do i really consider that a "waste"?
We have 20+ accounts, but I feel like Mint + frequent check-ins gives us sufficient transparency on where everything is going. The two "black boxes" are probably Costco and Amazon spending.
All my spending goes through one primary credit card that auto-pays in full every month. I pretty much don't spend cash. In my personal finance spreadsheet, I keep a rolling 60 day forecast of everything that's going to hit my checking account. Utility bills, property taxes, insurance, etc. I have a very good handle on what I'm spending my money on and what my cash flow looks like for the next 30 days.
The only big ticket item for me that's a bit of a mystery most years is the boat yard bill. The fall bill is similar most years but the spring one isn't. It varies wildly from year to year. Last year, it had an engine rebuild. The year before, it had a ton of teak replaced. A new mainsail a couple years before that.
Thanks for the responses everyone. It sounds like folks use a combination of spreadsheets or Mint to get a sense of where their dollars are going. Are these tools enough for you / easy enough to use? I've found spreadsheets to be a pain to maintain -- how do you regularly stay on top of it?
And how do you address these "black box" spending items like Amazon, Costco, and the boat yard? Do you just have a budget / buffer for them?
Different philosophies. Mint's philosophy is to painlessly categorize everything for easy review so you can tell at a glance with no effort where you're spending money. Reality isn't quite there. It isn't perfect. Moreover, all that nicely categorized spending doesn't actually do anything if you never look at it.
YNAB took the other approach understanding that most people would never look at Mint data anyway unless they were forced to. Today there's a lot more automation as its what their userbase demanded. The YNAB approach of forcing you to manually account for every dollar in and out might be great for people that really need an intervention but once you go through it for a couple months it's too time consuming.
I used Mint. I paid attention to it for a while. Now I just ignore it. It's off in the background doing it's thing and I haven't even looked at it in months.
As long as we meet our annual savings objectives, we don't worry too much about discretionary spending (i.e. Amazon and Costco) unless it's a big ticket item.
@Malloric: Your description of the Mint vs. YNAB psychology makes a lot of sense. It sounds like Mint isn't that helpful for you anymore and YNAB is too much work. Do you use either of them now? Or a different product altogether?
@Mr. Zero: How do you identify your savings objectives and figure out what's "enough"?
I have a budget I strictly adhere to. My budget is lean. The biggest change I made was cooking my own meals and eating out less. I bring my breakfast and lunch to work. I started early this year and I am still going strong. I currently eat out two to three times a week. I would prefer one but it is not likely going to happen. The reduction has been significant.
I got rid of my gym membership and reduced my cell phone plan. The cost savings is minimal.
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