Debt-Proof Living, Part 1 - Tracking Your Spending

Over the next few weeks, I will be sharing with you the knowledge that I have learned from Mary Hunt's Debt-Proof Living to help get out of debt.

Part 1 - Tracking Your Spending

To help get out of debt, you either need to earn more money or spend less. Some people can easily take on a second or third job to earn extra money or work some extra shifts at their current job...but this isn't an option for everyone. So, the option for them is to spend less money. In order to do that, you need to know how you are spending money and where you are wasting it.

For one month, all you have to do is track your spending. Carry a little notebook or an index card with you every day and write down everything you buy. This includes cash, check, debit, or credit purchases. Write down everything, even the little things, such as buying your coffee, newspaper, muffin, etc. For monthly expenses (such as rent/mortgage, insurance, etc.), write it down on the day you pay it, whether it's the day you write the check or the day it leaves your account if paid electronically. If you withdrawl money from the ATM, don't write this down. Write it down as you actually spend the money. [*Each person in your family should do this as long as they are old enough. If not, the adults should write down how often they give the kids money and how much.]

Do not change your habits at this point. You are just trying to see how you normally spend your money. Don't cheat and not write down every little or big thing you pay for. You can't get out of debt if you are lying to yourself.

At the end of each week, combine similar expenses (groceries, gas, utilities, etc) so that you have a Weekly Spending Record. The weeks should be divided as follows:

• Week 1: Days 1 - 7
• Week 2: Days 8 - 14
• Week 3: Days 15 - 21
• Week 4: Days 22 - end of month (*will probably have more than 7 days)

At the end of the month, you will take your Weekly Spending Records and combine them into one Monthly Spending Record. This will show you how much you spend each month and how. Now compare this record to your monthly take-home pay...are you under? over? about even?

If you are over, you are using credit to bridge the gap between what you can afford and what you want. If you are under or about even, this doesn't automatically mean you are fine. There are still those expenses that occur infrequently or don't occur monthly that can push you into the over-spending category. These things include car maintenance, clothing, Christmas (and other gifts), vacations, medical expenses, etc. Because they don't occur monthly, we often forget about them...but we will discuss that subject more later.

Using your Monthly Spending Record, you should be able to find places where your money leaks out. One of the biggest places is food. Often you spend lots on groceries only to find yourself eating out at restaurants or fast food places. Or maybe you spend very little on groceries because you eat out most days. Or maybe you eat at home a lot, but you buy things that you won't eat or they go bad before you eat them. There are always ways to decrease your spending in any area...you just need to find out how and what works best for you.

Debt-Proof Living References:

1. Part 1 - Tracking Your Spending
2. Part 2 - 10-10-80
3. Part 3 - Contingency Fund
4. Part 4 - Debt Repayment
5. Part 5 - Freedom Account
6. Part 6 - Spending Plan
7. Part 7 - Savings Levels