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Old 09-25-2012, 07:34 PM   #21
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I know there are posters here who track all their expenses very closely. Im wondering how you do this? The expenses from credit cards or checks are no problem, but what about cash purchases? Do you keep a notebook with you at all times and record every time you get something from a vending machine or get a $5 sub at Subway? Do you have a spreadsheet that you fill in each day? Do you write down credit card purchases when you make the purchase or write them down when the statement comes?
Currently, I count ATM withdrawals as expenses and when I need more cash, I make another withdrawal, but this is not real accurate I may withdraw the money in September but not spend it until October. Its close enough, but I want to start tracking closer. Any suggestions will be appreciated.
I recommend that you track cash expenses as well as all others. I have been using Quicken for the past 15 years or so and another program before that. I don't write down expenditures because I use a companion program called PocketQuicken in my PDA that lets me enter them as they occur into the PDA and later upload directly into Quicken. PocketQuicken is no longer available however. Eventually i will have to switch back to carrying a little notebook. But you need to enter your credit card transactions manually so that you can do a reconciliation on the credit card account at the end of the month. Downloading transactions from banks, brokers, and credit card companies means that you no longer have an independent copy against which to reconcile the version from those companies.

Quicken is a much better program, for all its faults, than you are going to set up in a spreadsheet because it will track investments, loans, etc. We have many accounts of all types which I would not be able to keep track of with a spreadsheet. Quicken even has a primitive financial planner, which is not adequate, but can help get you focused on the long haul. That was the first planner that I used, although I have long since switched to professional level software.

It is some work to keep track of all the financial activity of your household, but once you commit to doing it, you will hardly notice. The benefit is that you know what is going on. For instance, we have multiple investment accounts. By keeping them all in Quicken we can focus our attention on our total return across all accounts, which is what is important, not how this or that specific investment performed, which is what you hear most investors talking about. Ask someone who is bragging about his Apple stock what his total return is for the last 1, 3, and 5 year periods and he will give you a blank look.
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Become a Habit
Old 09-25-2012, 07:39 PM   #22
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Become a Habit

I've tracked all expenditures to the penny for over 20 years, first in Money and now in Quicken. It really isn't that difficult to just record an expense the day it's made. The only exception I make is that, when I travel I count my cash when I leave and when I return, and simply record the difference as the cash cost of the trip. I find it reassuring to know where my money is going. Every year I make a spending "plan", not really a budget, and then periodically check how I stand against plan. I guess that's maybe the lawyer/CPA in me but I find it comforting and interesting.
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Old 09-25-2012, 09:27 PM   #23
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I track everything in Quicken, including cash. Receipts are nice for tracking cash. Memory is not as good. And sometimes I count what's in the wallet and charge the difference to "eating out". I only track dollars for cash. Pennies for everything else.
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Old 09-25-2012, 09:48 PM   #24
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I don't track cash expenses. Life is too short. 97% of our expenses are on credit cards or paid through check. When I withdraw cash from the ATM or if I put a group meal on a credit card and collect cash, I charge it to "Spending Money" but it is only 3% of our total expenses so not a huge deal in our case. Close enough.
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Old 09-25-2012, 09:51 PM   #25
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I use cc or automated debits for almost everything except "pocket money". Both DH and I get a set monthly "allowance". He tracks his to the penny. I don't because I know my habits and I know where my money goes. Its generally wine and entertainment and thats enough info for me. If I have anything leftover at the end of the month from my allowance it goes into "my kitty" that I can use to buy stuff at a future date.

The cc and auto debits get downloaded into a spreadsheet monthly and categorized.

Years ago I tracked every penny until I gained enough knowledge of how I spend my money to be comfortable enough to give it up. Once I retire I will track to the penny again until I become comfortable with my "post retirement spending habits". My guess is it will take 1 - 2 years for me to go back to the single "pocket money" category.
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Old 09-25-2012, 10:04 PM   #26
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We use cash, for day to day expenses (groceries, etc.) and we keep the receipts. All recurring expenses are paid through automated online banking. I track everything, down to the penny, in GnuCash daily (this way, it takes me 5 minutes at most, going through the receipts). Having a clear financial picture has helped us a lot with finding unnecessary money leaks. We now have a nice budget and money to buy things, when we need to. Haven't switched, yet, to modern smart phone thingies.

I originally started with Quicken. Then I learned to use Quikbooks (double entries). Then I switched to GnuCash which I've been using for 10 years.
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Old 09-25-2012, 10:04 PM   #27
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I track all expenses with receipts and enter manually into spreadsheet (which I prefer over automated tracking). If I don't get a receipt with my cash purchase, I usually send myself an email as a reminder.
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Old 09-25-2012, 10:12 PM   #28
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If I don't get a receipt with my cash purchase, I usually send myself an email as a reminder.
I like the email idea.
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Old 09-25-2012, 11:23 PM   #29
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Until this year I didn't do any of this. I decided this summer that I needed to have a much better handle on personal expenses. With chip cards for debit and credit, I use them almost exclusively now. I keep a $20 bill for emergency cash purchases. I downloaded the information from by accounts to Excel, where I was able to sort and analyze it. So far I have done this just once. I think annually will probably be enough for now. I cannot imagine taking the trouble to document each purchase in real time!
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Old 09-26-2012, 01:08 AM   #30
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I track all expenditures to the penny. Doesn't matter if it's by cash, cc, check, or whatever. I use cash wherever possible, as I feel it has a subconscious, psychological effect that helps curb overspending.

I record expenditures as purchases are made, so I record cc transactions on the day of purchase, rather than on the day the money leaves my account to pay my cc bill.

During each day, expenditures go into a tiny, pocket-sized notebook at home. While running around town I keep receipts which I then use to update my notebook when I get home. I take my notebook with me when I travel, usually leaving it in my room as I am out collecting receipts throughout the day. If I can't or don't get a receipt for a transaction, I have to remember it and the amount till I record it.

At the end of the day, the day's total expenditure goes into a spreadsheet which has one row per day and whose columns are: date, day's expenditure, year-to date expenditure, average daily expenditure year-to-date, and projected annual expenditure based on the current daily average.

I modeled the spreadsheet on the one Billy and Akaisha use and describe in their Adventurer's Guide to Early Retirement. I keep the spreadsheet on an online storage site so I can access it from anywhere, including other countries.
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Old 09-26-2012, 05:52 AM   #31
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I track all my expenses by category on an Excel spreadseet I built for budgeting purposes. Every time a write a check or spend cash, I enter it in the appropriate category. However, I try to purchase everything/pay all my bills on my American Express card to get the rewards points. (If you have a cash back card, you might want to do that.) It is also easier to track spending when using a card. When I get my Amex bill every month, I manually sort out the expenses by category, sum them and and put them in my spreadsheet. I keep totals by category, by month, as well as a running total by category for the year. I compare these figures to the monthly and yearly budgeted amounts for each category.
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Old 09-26-2012, 07:00 AM   #32
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We use an excell spreadsheet to track expenses. We have two major buckets. One bucket is for ordinary expenses and one we call capital expenses. The capital expenses are thing like new roof, car, furniture major home impovement etc . All expense line items are catagorized as either essential expenses or non essential expenses. As for cash we have one line in ordinary exp budget for cash and consider it as an essential expense for planning puposes but do not track what it is spent on as we use CC for most things and cash is less than 5% of annnual expenses. Over the years the total amount of cash spent each year has remained about the same.
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Old 09-26-2012, 07:47 AM   #33
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From time to time we'll track every penny of cash spending but we only do that about two or three times a year just to have a general idea of where the cash is going. For us it is too time-consuming to do that all the time though.

We also keep a spreadsheet listing regular expenses like utilities and all outstanding cc purchases so there are no surprises when the cc bills (all three of them) arrive. When the cc balances approach our allocated discretionary expenditures for the month cc spending stops. Like some others any spending over ~$100 gets at least some discussion just so "the left hand knows what the right hand is doing". And we use Quicken to keep everything balanced and to look at long-term trends.
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Old 09-26-2012, 08:10 AM   #34
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I think we tried to track expenses when the kids were little but it fell by the wayside pretty quickly. Tracking deficit order here.

I can see where the information would be interesting (especially finding out about the Victoria's Secret purchases) but at this point, for most of you successful FIREs, does it really change your behavior? Do you change your spending habits based on your tracking results, or do you change your budget to accommodate the results?
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Old 09-26-2012, 08:26 AM   #35
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I can't track the cash spending. Too much work and not enough motivation. It hasn't varied over the years and we have enough detail on the rest of our spending from credit card and bank statements.

This brings to mind something I saw a few years back. Waiting to get my hair cut, a customer approached the cashier to pay. She asked the amount due, gave a credit card and asked for only part of the amount to be charged, the remainder she paid in cash. After she left I asked the owner if she knew why. Her response - the lady's husband tracked her credit card spending but not the cash and wouldn't let her spend more than "x" amount on hair care.
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Old 09-26-2012, 09:00 AM   #36
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Ms G and I track every purchase in Quicken down to a .50 level. It is a lot easier when you only go to the Big City twice a month. We have been doing this since 1995, I can can say that knowing our spending level gave us the confidence to RE. Of course preRE and RE spending is as different as night and day.
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Old 09-26-2012, 09:13 AM   #37
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I think we tried to track expenses when the kids were little but it fell by the wayside pretty quickly. Tracking deficit order here.

I can see where the information would be interesting (especially finding out about the Victoria's Secret purchases) but at this point, for most of you successful FIREs, does it really change your behavior? Do you change your spending habits based on your tracking results, or do you change your budget to accommodate the results?
For me, I lean more towards changing my spending habits based on my results.

I'm more interested how well the actual amounts meet my budgeted at the end of the year than the details. The tracking serves as a guide during the year by keeping me honest. For example, if I see I'm spending $3K more on medical costs than planned, then perhaps I'll should cut down and not make a $3K purchase on something else this year.
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Old 09-26-2012, 09:18 AM   #38
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I find the variety of methods here refreshing. Some of us track every penny, all the time. Some of us don't track anything, saying "life is too short". Some of us track carefully for 1-2 months, then don't track again for awhile...just to do a "checkup".

All these ways are valid, IMO, if we think they help us. If you have enough income such that you are able to have a good lifestyle, save for the future, and spend on the basics without tracking expenses...I say good for you. If you track every penny daily and it helps you...I say good for you.

Interesting reading.
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Old 09-26-2012, 09:39 AM   #39
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I tracked all my expenses for several years pre & post retirement. Now I just monitor my spending and if it gets out of hand I cut back . I have a yearly budget that I never go over.
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Old 09-26-2012, 10:03 AM   #40
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I track my spending with the "Spend" app on my iPhone. I like it better than a spreadsheet as I do it as soon as the money is spent, no chance to forget. I immediately enter cash and debit card spending, I enter bills and cc payments when I pay them at the end of the month. The app lets you put the payments in categories and has useful time period and category graphs and statistics.
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