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Where do you feel you could use more transparency with your finances? Where do you feel that money is being wasted?

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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?

Thanks!

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rated:
animohan said:   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.
 

  The best way to do this is to record everyone single expense for a period of time (at least a month). This includes vending machine purchase, gum, coffee etc. Use whatever means is convenient (e.g., pencil and paper, spreadsheet, on your phone) but make sure every expense is covered. It may help to categorize your expenses into a few broad categories for ease of tabulation. If you use a credit or debit card, you could look at the transactions online for some help. However, it may not necessarily have the granularity you need (what does the $94.78 in Targ3t represent?).

Record your "monthly bills" as well (e.g., cell phone, gas, cable, rent etc.). After 3-4 months you should have a reasonable answer to "where all my money is going"? Dont forget regular but less frequent bills (e.g., insurance premiums, property tax etc.)

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The only real method to address this is to meticulously track spending for a few months, then address any "surprises" you see in your analysis.  My biggest source of waste is on groceries--my wife spends too much on pre-cut fruit, organic items, fresh veggies that end up getting wasted (instead of canned or frozen), baby food in single serving pouches (1 serving of pureed carrots = $1...but it's convenient).  Recently, I asked her to pick up some chicken breasts--she bought individually packaged chicken breasts, rationalizing that we could just cook them as needed--I unpacked each one & cooked them all at once on the grill. We're not very good at meal planning either, and it's costly.

I eat lunches out at work too often.  It's laziness that causes me to eat out instead of packing lunch every day.

These money drains probably cost > $300/mo combined.

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Back to school already? Do your own homework.

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You need to keep track of income and expenses every month (along with any cash reserve balances). This can be easily kept track of by maintaining a spreadsheet. You need to breakdown input and output.

As for wasted money, my biggest loss is insurance and real estate taxes (outside of income tax). If I can find ways to reduce these expenses, my net worth would shoot up faster. Most of the other living expenses are small compared to these expenses.

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1. H&B. Definitely H&B.
2. I spend a lot on maintenance and personnel for my private jet stored in the hangar and on my 100 ft yacht and I use them about once a month. I suppose I can cut everyone loose and do no maintenance on the plane and yacht and just carry a parachute and lifevest instead. Don't even get me started on the 6 vacation homes I have that are sitting idle most of the year, or the 15 luxury cars that I have to maintain.

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1500-2000 a month on groceries and meals wasted.

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MilleniumBuc said:   1500-2000 a month on groceries and meals wasted.
  whats the alternative to eating

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rufflesinc said:   
MilleniumBuc said:   1500-2000 a month on groceries and meals wasted.
  whats the alternative to eating

  starving

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I eat out way too much. I also could live in a place with cheaper rent, but it's a nice building and it's close to work and I actually like walking to work now.

I've been tracking every single expense (down to interest earned in bank accounts that can be as little as $0.02 per month) since October. The numbers aren't pretty, but they could be even worse.

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animohan said:   Where do you believe you could use more transparency with your finances?Transparency? I don't think you are using this word correctly. If it's your money, it should not be hidden from you.
animohan said:   What tools do you use to get this transparency today to see where your money is going?Spreadsheets (LibreOffice Calc)!.

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Look at all your expenses and sort them is by impact but also how easy it is to lower them. E.g. changing your mortgage is easy if you find a lower rate but hard if you have to go house hunting for a smaller place. 

After you have done this go through all of them and look what can change. Are you driving an expensive car? What cell phone contract do you have? Do you really need cable or can you go OTA? How much do you spend going out, do you really need to eat out or just meet your friends for a drink afterwards. How much is spent on lunch at work, can you cook more in the evening and bring your own lunch.

I think a lot is also a mindset, look at things you do every day and ask if its a need or a want or just laziness. Then decide how much this is worth to you.

e.g. we cancelled cable but kept a cleaner for once a week. 

If you are the average person your #1 is probably rent or mortgage, #2 is probably car and so on.

To be specific:

1. tool: I used a spreadsheet with all expenses for a little while, this is not sustainable, was only to give me an idea where we are. Now I just use rough categories (e.g. groceries, rent, tv etc.) and also take yearly expenses (e.g. insurance) to the monthly matching amount. 

2. We looked through all our categories and are now on a level where I would not call the money wasted. Others might think different, e.g. our son goes to private school now but this was a willing decision. You should not really have 'waste' in your expenses. If you like a latte at Starbucks each morning and you do this 20x per month are those 80$ worth it to you (not for me but your decision might be different). 

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Very simple for me. If over the years I could've avoided stress spending. I'd be retired comfortably today. Where's that time machine?

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atikovi said:   Back to school already? Do your own homework.
  or OP is a journalist/writer

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As others have said, the first step is to find a way to carefully track every dollar spent over a period of time, at least 6 months or a year is best to capture more non-recurring things like property tax or Xmas presents or once-a-year vacation flights.

If you do essentially all your spending on a credit card (paid off in full each month of course), it is relatively easy to download a year's worth of expenses, some credit cards even help categorize it for you. Or plug them into a spreadsheet and categorize them yourself. (Of course, sometimes things like Costco or Walmart or Target can include different categories like food, toilet paper, toys, etc.)

Then make sure you get all non-CC spending too, start with monthly mortgage, taxes, insurance, utilities, cable, phone, etc. (some of these may be paid by check or ACH). Look through your bank statements for these kinds of payments and cash withdrawals. Track what you bought with your cash also (this may be harder if only looking once at the end of the year; if you use a lot of cash you'd have to track it manually somehow).

You can then put these into categories: mortgage/rent, insurance, car payment, car insurance, maintenance, cable, phone, groceries, dining out, pet-related, clothing, housework (maid, gardener, nanny), etc. Then go line by line and see if (a) you can reduce any of those (call around to shop your car insurance quote, find a cheaper cable or cell phone plan, etc.), or (b) what you can cut back on or do without -- do you really spend $1,000 per month at restaurants? Do you need the $200 cable package? Are you paying interest you could refinance or pay off? Can you reduce your energy usage?

I note that for me, it was easier & more powerful to focus on reducing the recurring monthly costs. That $200 cable bill will kill you over the long run, and taking 5 minutes to make a change (cancelling or finding a cheaper plan) will pay dividends every single month. Even seemingly small changes (saving $20/mo here and $30/mo there) will add up over time. Limiting the 1-time purchases ("Hey, I like that watch") is harder as it's an everyday battle, but there you can set a monthly budget and not let yourself exceed it.

rated:
animohan said:   (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?
Thanks!
 


I wish there was more transparency/explanations with the medical payments  coverage for both home and auto insurance involving minor or nuisance $ amounts.

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