Expense Tracking Your Way Out Of Debt

Not spending money is saving money.

Put another way, you don't "make" what you earn, you make what you keep.

That's why expense tracking is a critical part of properly managing your money. Whether you use a pencil and a notebook or home budget software with expense tracking features like Expense Tracker from Strativia, it's imperative to account for each and every bill you pay and purchase you make.

Always ask for a receipt if you don't get one and hold on to it in your wallet or purse until you've had a chance to enter it into your expense tracking notebook or home budget software. Only by seeing exactly where your money is going will you be able to take the reins on your debt and start finally properly managing your money.

And don't leave anything out - gum, cigarettes, trips to the vending machine at work, tolls, loaning a friend twenty bucks, ATM fees, the morning paper, that quick drink at happy hour before you came home, last night's Pay Per View movie- everything.

Teach the teenagers in your household to use your home budget software for their own expense tracking, especially if their money is coming from your pocket (say, in the form of an allowance). And if you find yourself at the end of the month paying for things your teenager should by all rights have paid for themselves out of their allowance, then starting them on an expense tracking program is even more important.

Just be aware that if you include your older children in the expense tracking conversation, they might have some opinions about how to "better" allocate those monthly expenses. Be prepared to have an open mind and listen to their input. You don't have to do everything they suggest (or anything they suggest, for that matter), but by taking their opinions seriously, you are acknowledging that they are an influential factor in the family's finances which encourages them to participate more actively and enthusiastically in managing money.

You may even be pleasantly surprised to find that your very likely more technically savvy child discovers relevance in and the useful application of one or more features of your expense tracking home budget software that you hadn't even considered.

After expense tracking for just a few months, you will invariably start to notice patterns in your spending - patterns you can then adjust to suit your circumstances and goals.

Now, as for your debt. If you're not in debt yet then this article will help you avoid it like the plague. If like most of us, however, you carry debt, then here's what to do. First, make sure you pay all your minimum payments towards whatever credit card bills, mortgage bills, car loans, school loans, etc. that you have. And pay them on time too.

Marring your credit is one of the worst things you can do in mismanaging your money. For as you miss payments or make payments late, your interest rate shoots up exorbitantly as does your minimum monthly payment, the result of which is a higher monthly expense with a much smaller portion of it paying down your "principal" and a much larger portion going towards interest or finance charges.

Secondly, incorporate into your home budget software a line item for paying yourself a small percentage (10% is best, 5% is okay, 1% is better than nothing) into an interest-bearing savings account. This will build up an emergency fund that you can use to avoid going further into debt in the unforeseeable future. Do this at the beginning of the month as soon as you get paid, because human nature has shown that if you don't do it right away, the days and their concomitant expenses will probably get away from you and you may wind up not doing any saving at all.

Thirdly, play around with the numbers in your home budget software until you've devised a way to have a surplus (however small) at the end of each month. Take this surplus and apply it towards the outstanding debt with the highest interest rate.

Only by careful expense tracking will you ever be able to devise a strategy that works and a strategy you can stick to. Managing your money to get out of debt and stay out of debt involves taking action at both the beginning of the month (building an emergency fund) and the end of the month (paying down higher interest debt).

Diligence is the biggest key factor in effectively tracking expenses. You must consistently record your each and every expense in one reliable place, either a notebook or the preferred method, a good home budget software tool with expense tracking features like Budget Forecaster and Expense Tracker by Strativia Software. Then all you have to do is fill in the blanks and the home budget software will help guide you towards more soundly managing your money with the greatest of ease.

Kenneth C. Kelly is the President of Strativia, a financial management software development and services company specializing in applications for personal and business use.  Strativia is the developer of Budget Forecaster, a sophisticated home budget and personal finance management software package.  Website: www.strativia.com. Contact: info@strativia.com.

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