Review Current Expenses

As we have gone through some of the basic requirements for our automated personal finance system (opening a bank account + setting up direct deposit with our employer), now we have to do some of the hard work. Figuring out what our monthly expenses look like. I know I know! This isn’t fun, but just remember that in the near future this will all be automated and you won’t have to worry about it! I promise.

Unfortunately, this exercise will also give us a grim look at the additional money we’ve flushed down the toilet in late fees, and/or minimum payments on loans/credit cards. I hope this opens your eyes and further motivates you in your personal finance journey!

Getting started

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First of all, write down all of your monthly expenses in your notepad or type it in your favorite word processing application.

This will allow you to note all of your active accounts (checking/savings, credit cards, loans (Student loans/Auto/Home), so we can get a better picture of where our money is going and being spent on. This is also a good opportunity to find your username/passwords for those accounts you have not logged in a while.

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Now what route do you want to take? Manual or Automatic?

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Automatic (Recommended)

Once you have made a list of all your monthly recurring payments sign up for your favorite money app such as mint.com, personalcapital.com, or any others out there.

Mint.com allows you to link all of your accounts that you would normally access online individually, such as your bank, student & auto loans, and other credit card portals. (You may use any other services if you desire, for simplicity I will use Mint.com for this example).

Once you setup your profile, you may simply click on  +Add Account

Select your bank, credit card, or financial institution and add your username/password to link it as seen below (Try to add as many as you can so you get a more accurate outlook of your expenses).

Once you link all of your accounts, you should see the site break down your costs on Cash & Credit Card debt.

On the Alerts homepage it might also show you the total interest you have been paying for your current credit card. Personally I had paid about $320 on credit card interest because I was paying the minimum amount for a card I didn’t use much (Not something to be proud about 😥).

Additionally, here’s where you’ll start seeing some spending trends that you might have not realized. For me, my coffee expenses stood out as I like trying various coffee shops around town.

You also have the ability to further break down your expenses and help us categorize these expenditures which will come handy in the next article Break down expenses.

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Manual

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If you don’t want to go the “automatic” route or mistrust mint.com or similar services, you may just log in to each of your student loan sites, credit card sites and manually look at your previous statements and look for the interest charges that you have incurred, and sum your total outstanding balances). This might take a bit longer, and ultimately you might end up logging in to each website you deal with anyways. It might be wise to export these and consolidate them in excel so you have a better way of seeing trends or being able to filter on terms such as interest fee, late fee, or any other fee’s to be able to spot them quicker.

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Conclusion

By the end of this exercise you should have done/observed the following

  1. Listed most if not all your services, lenders, subscriptions, etc.
  2. Allowed you to go through your transactions statements
  3. Made you realize you have paid fees in the form of late payments, overdraft fees, or interest fees (money you gave away).
  4. Trends that manifested themselves such as spending habits or that daily cup of coffee adding up.

The point of this exercise is to see the big picture. Look at how much money you are flushing down the drain each month because you are paying off the minimum amount! These tools also show you the combined debt in the form of credit card, student, or vehicle loans. Don’t be intimidated if you owe a large sum of money, we’ll be able to pay this off in the near future, I promise!

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E. Jimenez
E. Jimenez
1 year ago

Gran ayuda para entender mejor nuestras finanzas. Gracias por los consejos y recursos.

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