tracking pennies making the abstract concrete

May 19th, 2008

Tracking Pennies: Making The Abstract Concrete

I will first off clearly state and admit that I like numbers. I may be what people refer to as a “numbers person”. Be that as it may, the idea of tracking every penny that came into and went out of our household was an intimidating one, to say the least. But what began out of desperation to make some sense of why we could never catch up has become an exercise in learning about how to treat money wisely, all because of a simple concept. Tracking our money makes the abstract concrete.

How many times have you made a rough estimate in your head of what you’ve spent that day, or that week, or that month, on a certain type of spending, and been completely wrong? Maybe it’s gasoline, maybe it’s food, maybe spending on clothes or items for the kids. If you are like me, you’ve done it hundreds of timesyou think you’ve only spent a little, but in actuality, you’ve spent a lot more than you thought. I used to not even keep track of how much I spent on gas – I figured it was unavoidable so I didn’t pay attention to how much I spent. Which makes no sense to me now, but at the time I just did it. It’s a wonder I never bounced a check.

In the past, right after my spouse got paid, and I paid the bills that I had allocated to that paycheck, I would feel one of two things. Either scared, because we had no money to speak of for the next two weeks, or elated, because we had more money than I thought we would. And if I was in the elated category, it somehow gave my brain a license to spend. I never thought I spent a lot, just a little here and a little there, saying yes to going out to eat once in a while or taking a trip to Target to check out the clearance buys, but it did add up, and I’d check our bank balance and go back to feeling like we wouldn’t make it to the next paycheck.

Enter budgeting and tracking our money down to the penny. Doing this, I made a discovery that frankly shocked me but won’t surprise anyone else – I spent a lot more on small miscellaneous purchases than I ever would have imagined. All those $10 here and $15 there added up to $100 or more each month. No wonder I never felt like we could get ahead at all. Tracking our spending has helped me make actual choices based on our priorities about how we spend our money instead of just spending now and thinking later.

On the flip side of that, tracking our spending has also shown me exactly how much we pay towards debt over time, and how much more we need to pay to be out of all non-mortgage debt. If someone had told me 11 months ago that I would spend $15,000 on something, in cash, by the following May, I would have laughed. But in actuality, that’s exactly what we’ve done. We’ve paid about $15,000 to debt since last June. I would never have thought we’d have $15,000 to spend on anything. That is a whole lot of money in my world. And yet, we’ve done it – and the scary part is, we still have over $20,000 to go until we’ve paid off all our non-mortgage debt! Yikes. That is a whole lot of debt and a huge amount of money. Keeping track of this has really made the abstract concrete and also shown me that once we are done paying off this debt, we really do have the means and ability to make our financial dreams a reality. I am really looking forward to being able to put that $15,000 (or more) a year to work for our future instead of our past.

Our finances used to be this abstract concept to me and all I knew was that we had very little to speak of. Through keeping track of our money, it has become a concrete thing that we can and actually are improving bit by bit, every day.

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14 Responses to “Tracking Pennies: Making The Abstract Concrete”

  1. Great points.. am linking this in my next round of link love :)

  2. You make a great point here. I agree completely – tracking allows you to frame spending in hard numbers and makes it much easier to change habits.

    Congrats on the huge debt reduction so far. That next $20K will be a piece of cake ;)

  3. Wow $15k, that could do some nice things for your savings. How long have you been tracking ever penny for? Seems like it would be a lot of work, but if you had it all in some spreadsheet in an orderly fashion, you could get some really good statistics from it over time. It would be cool and see how much money you have spent on a particular item over say the last 5 years. Keep up the work.

  4. You’ve been tagged.

  5. One thing I like about Quicken is that since I pay everything with cash, it’s quite specific about exactly how much I’ve spent so far this month. And like you, I’m into numbers.

  6. HOW do you do this? Do you use a program or an excel spreadsheet? I would love to see a post about HOW you track your expenses!

  7. paidtwice Says:

    May 19th, 2008 at 1:00 pm

    @Catherine – I will write a post about it, but basically I use the spreadsheet version of PearBudget :)

  8. I have decided that I will soon try an experiment where I write down every penny that I spend (and that my husband spends). Although we think we are pretty frugal, I think it will be interesting to find out whether we are still wasting money and where most of our money goes, so we can work on where to start cutting down our spending. I also think that the very exercise of writing it down will make me think harder before I make a purchase.

  9. I’m doing this too. I’ve actually made several attempts at it over the years because I want to follow the Your Money or Your Life program. (www.yourmoneyoryourlife.org) Used to be that I would just write everything down; these days I follow a slightly different tactic.

    First of all, I track everything in personal finance software. (I use GnuCash.) Then, if a transaction is electronic, there is already a record of it and I don’t have to write it down on paper, I just enter it into GnuCash every couple of days. If it’s a cash transaction with a receipt, I save the receipt and then plug that into GnuCash at some point. If there is no receipt, I have a little notebook I carry with me to write it down so I don’t have to remember it for GnuCash later.

    It was most annoying back when I simply wrote everything down, but now that I’ve streamlined it somewhat, it is SO much easier. The other thing you want to do, for those of you who haven’t tried it yet, is count up your money at the beginning of each month so you know you’re tracking correctly.

    It definitely makes money more real to me.

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