Paying Down Debt – Part 4 – Tracking Spending

Acquiring credit reports and building savings are key elements to paying down debt and necessary before we can come to this point of tracking spending. Tracking spending and understanding the value associated
will provide you with the necessary information to implementing a budgetary recovery plan.

Resolving household finances requires you to account for spending and and also knowing what your outlays are for expenses. Where your income is going and what your level of debt is critical to setting expenditure limits on finances.

The initial step of beginning to tracking spending involves several important variables in getting to know your household expenditures. Listing credit card payments, grocery spending, utility costs, entertainment expense, bank account withdrawals are just a few examples of expenses or debt and some are required. It is important at this point that every effort is made to categorize expenses and achieve totals for them. Therefore, before it gets to involving your first priority should be you have placed all your debt expenses into categories.

Bank statements and online banking sites often provide your reporting tools for accomplishing categorizing your expenses. Also, there are spreadsheet applications available to you on your computer to assist you with creating a categorical expense sheet. They will provide you the necessary tools for collecting the data and also have an added benefit of allowing you to import banking information from your account website.

Organization is the keyword here in the process of tracking spending. Sometimes it is a challenge in accomplishing the organization portion of expensing debt but it is a necessity. Failure to approach household debt without first sorting out all your expenses will result in failure to effectively pay down any debt. Therefore, spend the time in organizing and create a check sheet for all your expenses. Once you have accomplished placing it under the correct category proceed to the next.

Categorizing expenses is not a difficult process when you have presorted your bills. From the presorted bills you an then easily formulate in your mind the category tittle for that expense. Do not panic if you find there is an expense without a receipt or a printed bank statement that is missing. Check with your banking institution and if you have not already registered for their online banking services, now would be a good time for accomplishing this task.

There is also another area of tracking expenses that is not an expense but does impact paying down debt and they are your investment accounts. Investment accounts are savings plans or retirement accounts in which you have set aside income from your household payments and expenditures. Not an expense but is a deduction from your household income and set aside from it. You will want to handle them the same as you have with your bank accounts and their statements. It is equally important that time is spent in accounting for income that is going out of the household for this purpose. Acquiring the figures from these accounts by looking at their statements is a figure you will need and will be covered in our next article. Therefore, make sure you have acquired the necessary information for this portion of your income.

The final area we need to cover is another item not considered an expense but does need to be tracked is charity. Any amount of which you have designated monthly or even on taxes as a charitable deduction is an outlay from your household income. You will need to employ a similar approach to handling the collection of information for this deduction. Check for any receipts you have saved or get with your charitable organization and see if they can electronically provide you this information. The charity category is a good one to use for this deduction and will be needed in your effort for tracking outlays from income.

Now that we have covered the various elements for tracking expenses there is one final step and can sometimes really frustrate most individuals when they reach this point. Does the bottom line total of all your categories add up to the total figure from all your accounts? If you have discovered an error do not despair. Technical errors or data entry error is not uncommon. Pull your banking, investment and charity statements and look at them closely. See if there is something that is missing and if necessary check each expensed or deductible item and see if they do appear in your categories.

Although you may or may not have an error or it does not appear there is not one from information you have on hand it will surface. You may have a duplicate entry or one that was simply overlooked. Getting a validated balance, properly categorizing expenses and deductions is the most difficult part of getting to know your household debt and in moving toward paying down debt. After you have accomplished this step you will have a method in place for accomplishing this task again. Likewise, you will discover improvements to your process which will benefit you in the future.

If you are still stuck and feel nothing appears correct or do not know where the error is in your work, it may be in your best interest to contact your financial institution or a financial advisor for assistance. Anyone personally familiar with your finances, has personal or professional experience with your household income will be able to resolve your problem.

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