Where Am I Now? – Part II: Nuts and Bolts

At this point, I’m doing pretty well. I’ve gotten a grip on my debt, organized a budget, and pared it down to the essentials plus a few goodies. But how do I keep track of all of this stuff? What tools do I use to save and spend?

Glad you asked. Basically I use five tools: Microsoft Excel, a checking account, a savings account, cash, and a debit card.

Microsoft Excel
The most important tool I use is a system of three Excel workbooks. The first workbook is my budget, which keeps track of my monthly income and expenses, as well as my total debt and my weekly meal plan. The second workbook keeps track of irregular spending like car maintenance, magazine subscriptions, gifts, etc. The third and final workbook is a price book, which helps me lower my grocery bill by keeping track of prices.

Checking Account
I use the same checking account I’ve had for years, and the bank has been pretty good to me overall. They don’t charge a monthly fee, and their online bill pay is easy to use. They do charge $35 overdraft fees, which I used to get dinged by a lot, but that hasn’t happened since my initial financial revolution, so it doesn’t bother me anymore. It’s not an interest bearing account so I’ll probably switch to ING’s Orange Checking in the future, but my right now credit is not good, so I’m sticking with my brick and mortar national bank.

Savings Account
I recently opened a savings account with ING Direct, which is what I use to store my emergency fund and my irregular spending accounts. All of the money is in the same account, but I use my handy Excel spreadsheet system to track how much of it is for each purpose. Right now I’m working on beefing up my emergency fund, so all of the interest goes there.

Cash
I use cash for regular daily/weekly spending. This includes groceries, gas, and personal items such as soap and shampoo. I get paid every two weeks, so each pay period I get the budgeted amount for each category in cash from the ATM. My wallet has several compartments, so each category has its own compartment. This forces me to watch my spending, because when the money is gone I have to wait until the next pay period to get more.

Debit Card
I use a debit card for irregular spending. This is the money that I’ve saved and tracked in the second Excel workbook. Whenever I spend money out of those categories, I use my debit card. At the end of the month I transfer the amount I saved for all of the categories that month from my checking to my savings, minus any money I spent out of those categories. The only time I alter this is if I buy something expensive (like a plane ticket) that costs more than the amount I saved for everything that month, in which case I would need to transfer from savings to checking to cover the difference.

And that’s it. Those five things keep me in tip top financial shape month after month. They’re so easy to use, sometimes I wonder why I didn’t start doing all of this sooner!

This post is part of my Financial Revolution Series, which is my personal financial story. Each post gives a piece of the story, detailing how I got into debt and how I turned things around.

Next time on TVG&M: The Odd Effects of Living on a Budget and Paying Down Debt