Tag: money management

Methods for Tracking Spending

Have you overdrawn your bank account recently?  Are you running up balances on your credit cards because you don’t have enough money to cover your monthly expenses? Do you find yourself wondering where all your money went? Do you want to save money for a memorable trip, yet find your savings balance decreasing rather than increasing?    If you answered yes to any of these questions, you need to create a budget and set financial goals.

Creating and sticking to a budget will allow you to stay out of debt and achieve your financial goals.  However, you need to know where your money is going before you can create a budget that will work for you. Start by tracking your spending for a few months.

Cell phone with spending app open

In times past, most people tracked their spending using a notepad and pen. I recently found a spiral notebook that my grandmother used to record her spending in 1956. She used a separate page for each month. She listed her take home income at the top of the page and carefully noted each expense. As a single woman, she brought home about $275 each month, so it was imperative that she managed her money well. This method still works well if you faithfully write down all your expenditures.

I am a big fan of spreadsheets. When my husband and I started our own home twenty-five years later, I used a pen and paper method, too. But, a few years later, when Lotus 1-2-3 (precursor of Excel) was introduced, I graduated to using a spreadsheet to track income. Today, I use Quicken to track and balance my bank accounts, and I use a spreadsheet to develop our budget. I balance my checkbook every week or two to be aware of my spending and how much money is in my accounts.

Other people use different methods. I have friends who use the envelope system. On each pay day, they cash their checks, put their budgeted savings into their savings account, and allocate the rest toward expenses. The money for each expense category goes went into a separate envelope. They pay cash for all expenses, and when the envelope is out of cash, they spend no more on that category for the remainder of the money.

Today there are many apps to help you track your spending. Some can be connected to your bank accounts and credit cards. Some apps simply track your spending, while others allow you to input spending parameters and are indeed budgeting tools. Apps benefit those who do not balance their checking accounts regularly. According to StatisticBrain.com, 79% of people rarely or never balance their checking accounts.

Some of the most popular spending apps currently are:

  1. Mint. This free app can sync to your bank accounts and credit cards. It allows you to set goals, track investments, and be reminded of when to pay bills. It will also alert you when you have exceeded your spending goals.
  2. YNAB (You Need a Budget)–This zero-based budgeting system lets users allocate all income into spending categories, debt reduction, and savings. It also lets users set goals. The downside is that after the free 34-day trial ends, you must enroll and pay a monthly or annual fee.
  3. Goodbudget. This system mimics the envelope method. The user assigns an amount to each “envelope.” This method does not connect to bank accounts or credit cards, so the amounts must be entered manually. This is a good version for those who do not want all of their accounts connected. There is a free version, but if you want to track more than a few categories, you may need to pay a fee.
  4. Every Dollar. This method is similar to my method of recording expenses in Quicken and using a spreadsheet to track totals. Like Goodbudget, it does not connect to bank accounts or credit cards. All expenses must be entered manually. It does allow the user to set reminders to pay a bill.

There are many other apps available that you might want to consider. Choose a method based on compatibility with your style and personality. Mint or YNAB might be a good choice if you want to connect all your accounts without entering expenditures manually. On the other hand, these systems may not be suitable for you if you worry about identity theft and the risks of having things too automatic. So, set aside a few hours to evaluate the options available and decide to start using one of them to track your expenditures.

If you need help to learn to manage your money and improve your credit, please check out some of my other blogs on Finances, Money Management, and Stewardship. My book Honoring God with Your Money is a great tool for financial money management.

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Pepperonis as Quarters

Pepperoni Pizzas
Photo by Polina Tankilevitch on Pexels.com

In a different phase of life, my husband and I bought a pizza franchise and opened a restaurant in the little town of Orange, VA.  Our good friend, and pizza mentor, Jerry told us that we should look at “pepperonis as quarters.”  An individual pepperoni probably costs a penny or less–I never did the math, but I got the point.  Wasting food costs me money, and small wastes add up quickly and take money out of my pocket.  Little things matter whether you are trying to make money in your business or trying to live within your means on a tight budget.

In my current job, I am a consultant in a small business development center.  I meet with people each week who would like to start businesses.  Many of these dreams will be derailed or postponed due to poor credit and/or lack of financial resources to get a business started.  Often these people have plenty of income, yet they have failed to live within their means.  Some of them have made big financial mistakes, such as buying a house that they cannot afford, but many are in trouble because they have failed to control small expenses.  They forget that lunches out and $4 cups of coffee can make a big dent in their budgets.

As a Christian, I am a steward of all that God has entrusted to me.  When someone mentions stewardship, money management is probably the first thought that comes to mind.  Stewardship, however, encompasses all phases of your life, including how you use your time and how you use your talents.  We can relate the “pepperonis as quarters”  adage to time and talents, as well as to money.  Saving a few moments here and there throughout your day can add up and allow you more time to play a game with your child, read a book for pleasure, relax with your spouse, or start a new project.  Honing your talents little by little can help you gain speed and proficiency.

I Corinthians 4:2 tells us, “Moreover it is required in stewards that one be found faithful.”  I hope that this word will encourage you to look for small ways to be a better steward of your time, talent, and money.

Your Credit Score is How Low!!!!

Are you one of the 16 percent of Americans whose credit score is so low that it is negatively impacting your life?  A very low credit score can make it nearly impossible to qualify for a home mortgage or a business loan.  You may be able to get a loan to purchase a car, but you will be assessed a high rate of interest.  Those with very low credit scores pay more for auto insurance than those with average or good scores.  If you are one of these people, it is important to take immediate steps to improve your credit score.  It will take some effort and time, but it is a very achievable goal.

Credit score ratings

I recently helped a man write a business plan and develop a cash flow forecast to open a restaurant.  He had many years of restaurant experience, along with some of his own money to invest, and other income to help support his family.  Everything looked good.  In our first meeting, I asked him his credit score, and he assured me it was in the mid-600’s.  A score in the mid-600’s considered to be Fair—not great but certainly high enough for him to qualify for the loan.  Unfortunately, he was quite wrong in his assessment. He applied for a loan and the banker pulled his credit report, which revealed a credit score of about 450. 

By any measure, a credit score of 450 is Bad.  In fact, a score of less than 579 is viewed as very poor credit.  The man was shocked and embarrassed by his low credit score.  He had qualified for a mortgage less than a year earlier, so it is likely that his credit rating was at least Fair at that time.  So, what happened?  I don’t know the answer, as he didn’t share his credit report with me. I did provide him with guidance in regard to reviewing his credit report to see if it contains errors, correcting any errors, and being diligent in managing his credit.  If you are in a similar situation, these steps can help you.

The first thing you need to do is review the report for errors. Any errors should be reported to credit report agency.  Most credit reports and scores are generated by Equifax, Experian, and TransUnion.  You should check your report with each agency at least once a year and report any errors that your find immediately.  Errors might include information for someone who is not you but has a similar name, incorrect information about loans that have been paid off, and credit that you applied for but did not accept.  You should also check for evidence of identity theft.

Here are links for filing disputes with each of the major credit report agencies:

Getting any errors corrected can have a significant impact on your credit score.  Unfortunately, it will take a little time for the agency to investigate your dispute and correct any misinformation.

If your score is low due to poor management of your finances, such as late payments, missed payments, and charge offs, you should follow these guidelines to better manage credit and improve your score:

  • Be sure to make at least the minimum payment on all accounts every month.
  • Make payments by the due date.  Late payments and skipped payments hurt your score.  The later the payment, the larger the negative impact on your score.
  • Don’t open any new credit accounts–don’t buy a car, don’t refinance your home, don’t apply for any new credit cards.  Every new account increases your available credit and lowers your score, at least temporarily.
  • Don’t close any older accounts.  If you recently opened accounts you don’t need, you might want to close them. But, keep open your oldest accounts. Length of credit history improves your score.
  • Keep your credit card balances at 50% or less of the amount of credit extended.

Within a few months, you should see an improvement in your credit score.

The man above will have to put his dreams of opening a restaurant on hold for a while.  It is too bad.  However, if he can get any errors corrected, and if he commits to taking the steps above to improve his credit, he may be able to qualify the loan he needs in 6 – 12 months.  It will take a real effort and determination on his part; however, if he keeps his goal in his sights, I believe he will reach his goal.

God desires that His people pay their bills on time, honor their commitments, and don’t allow money to rule their lives.  If you are struggling to manage your finances, seek Christian counsel and pray diligently for God’s guidance.  You will find additional information on creating budgets and managing your finances in many of my other blog posts by clicking on the Finances category on the right.

If you have money questions you would like me to answer, you may email me at susan.ball5@aol.com or write your question in the Comment section.  Those who email me will be signed up to receive my free quarterly newsletter with money management tips, encouraging stories, and Scripture inspirations.  For those desiring a better understanding of Biblical principles of money management, I have written a book Honoring God with Your Money. It is available on Amazon and from Barnes and Noble.

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