Easier Said Than Done - Part II

Continued from part 1...

So here's the budgeting experience so far:

I'm using Quicken to track all our expenses. It really helps to see trends and quickly check previous numbers. Turns out just entering in the purchases isn't enough though. So, I went in and updated the budget number so that I could more easily track how we're doing.

The first thing I noticed was that that I hadn't updated some of the expenses. It makes a big difference when my actual Life Insurance expense is twice the budgeted amount for example.

The second thing I noticed was that while we were mostly on budget for the budgeted items, we added some non-budgeted items. These weren't accounted for elsewhere, so we ended up overspending for the month. For example, we bought some movies earlier this month, but there is no budget for it. So if we stick to the budget for everything else, we're still left going over budget. Buying the movies is fine as long as we recognize that something else has got to give.

The third thing I realized was the importance of categorizing items properly. The two biggest examples of this were vacation spending and loans. When we went away for my wife's birthday, we bought alcohol and food for the trip. We also bought a few items that some friends had asked us to pick up. The problem was that these items were all categorized as food. You can just imagine what that did to our food budget. So to track these expenses more accurately, I actually created two new categories: Vacation:Food and Loans.

Lastly, I noticed that our small "savings accounts" weren't being tracked at all. Haircuts, car maintenance, eye glasses, etc. These are expenses that I've broken down into monthly payments, so I that I'm not hit with a huge bill when the time comes. This month was the time we buy the cat his 20lb bag of cat food for example. That kind of throws that budget out.

Once I get this under control, I should be able to find more money to throw at the debt. For example, I budget 250/month for gas. If I only spent 200 one month it's not likely I'll need 300 for the next month, so I can then throw this extra money towards the debt. Also, the next time the car maintenance comes around I'll actually have some money set aside for it.

So, I'm going to keep working at it and I'll let you know how it goes. Overall, I say I appreciate more now than ever the importance of watching your spending closely.

So how do you keep track of your finances? What's working what's not? Do you think it's worth the effort?