Tuesday, May 7, 2013

Manage Your Money - Step# 8: Monitoring Your Non-regular Expenses

Hi, it's me again. It's time for another money management topic.

I used to be a control freak -- and maybe I still am -- when it comes to money. If after a few days I couldn't tell where did say my 13th month pay had gone, I would freak out. Finally, I decided to list all my non-regular, non-repetitive and unexpected expenses like repair bills, medical bills, birthday party bills, gifts, etc. in a spreadsheet called Non-regular Expenses. This is on top of the Regular Expenses spreadsheet I posted earlier. This way no expenses, regular or not, should escape my attention, so I thought.

At first it worked until I started to miss writing one expense item, then two, then three, and so on and so forth. In short, I couldn't keep up. You see, when I decided to incorporate the Non-regular Expense spreadsheet in my money management method, I forgot that I didn’t have the luxury of free time being a family man with five children, a wife and a full time job, all vying for my attention. So I decided to change strategy.

The first thing that came to my mind was to simplify my method of monitoring all my expenses to make it more sustainable. Later, after much thought, I realized that I could incorporate all of my non-regular expenses into an existing spreadsheet called ATM Transaction Monitoring sheet. I used this spreadsheet to track down all the money that went in and out of my ATM account.

So instead of maintaining two spreadsheets, the ATM Transaction Monitoring and the Non-Regular Expenses, I only need to update one spreadsheet which was more sustainable.

So I began working on it. The spreadsheet below is what an ATM Transaction Monitoring spreadsheet looks like. Please take note that I made up the amounts in order to protect my privacy.

Here's a quick explanation of the content of this spreadsheet.

The column Money In represents the money that is deposited into my ATM, e.g., payroll while the column Money Out refers to all withdrawals. The Available Cash column refers to the balance and is solved using the formula,

Available Cash (row 2) = Available Cash (row 1) + Money In (row 2) - Money Out (row 2)

The four transactions in bold represents all of my non-regular expenses from March 5~30,2013.

Using this spreadsheet, I can see quickly how much money went into my ATM and where this came from, and how much money went out from it and where this went to. This helps me track my cash flow quickly.

Btw, if you are curious about the transaction Pay envelope click here to know more about this simple yet very powerful money management tool.

That's it folks. Till next time.

PS: I don't claim to be an expert in money management. I'm just an ordinary Pinoy who wants to share to you simple and practical ideas that I have learned and applied for over 10 years of deliberately managing my finances. Managing finances is one of the most important tasks of every person, yet so neglected by many. It is my hope that you will find the ideas here useful. Whether you agree or disagree, please do write your comments below. I love to hear from you and hopefully exchange ideas and opinions. After all learning is a continuous process.

Friday, March 1, 2013

Manage Your Money - Step# 7: Monitor Your Credit Card Expenses

After eight months of hiatus, it feels good to be back.

Now let's get the ball rolling quickly, and sprint from where I left off months ago.

If there's one thing that you need to monitor closely in your cash flow, it's got to be your credit card expenses. Because it can file up pretty high pretty quickly. It can become very overwhelming in a blink of an eye. I am speaking from experience because, like some of you, I got burned before and since then I promised myself never to repeat that experience again. Now I am sharing to you (for free) the fruits of that experience.

Below is the template that I use to monitor my credit card expenses.

From this spreadsheet you can get the following important information:

(1) The expense breakdown with corresponding date of transaction
     This can be used to check if the charges reflected in the Billing Statement are correct.

(2) The total due amount and the due date
      This will help you remember the due date and amount to be paid to the credit card company so that you can prepare the funds, and that you can avoid late payment charges.

(3) The source of your fund to pay the debt
     This will help you figure out in advance where you will get the money to pay the credit card debt.    

(4) The amount you paid and the date of payment
     This will give you peace of mind knowing that your debt has been paid up.

(5) The due date of the annual renewal fee
     This will remind you to prepare funds for the annual renewal fee.

Further suggestions and recommendations.

(1) Update the spreadsheet as soon as you can.
      I suggest that immediately after every transaction, you should update your spreadsheet to avoid forgetting it.

(2) Pay the whole amount, not just the Billing Statement due amount, on time
      The credit card company will not force you to pay the whole amount one time because they want to charge you with interest from the unpaid amount. So in the first place, do not swipe that shiny card if you know that you can't pay it in full. And pay on time to avoid charges. Be smart!

(3) Keep only one credit card.
      One credit card is already a handful to manage, much more if there's more than one of its kind. However, if you have more than one credit card then you create one spreadsheet for each card. Again, I strongly discourage keeping more than one credit card unless you have a business reason.

(4) Negotiate to have the annual renewal fee waved
      Try negotiating to have your annual renewal fee waved. Don't feel guilty about it. Remember that the people running the credit card companies are smart and savvy businessmen. All their decisions are thoroughly calculated. If they say 'yes' that means they are not losing money.

So simplify your life and live in peace. Tame your credit card spending habit, and monitor it CLOSELY. Have a nice day!