Choosing Freedom Over Debt
On Tuesday I wrote about how I have changed the way I spend my money in order to accelerate my debt payments. I wrote about ditching my car, cutting cable, eating healthier and cheaper, and destroying my frivolous spending habits. All of these changes have compounded into each other and allowed me to dramatically cut my monthly variable expenses.
The tips on cutting costs that Mr. Money Mustache lays out actually do work. Today I have the proof.
This week I have been busy inputting all of my spending from 2012 into my budget tracking worksheet. With all of this data collected I have analyzed it in order to illustrate how my new spending habits have impacted my finances compared to last year. The effects are great to see.
The secret to my extra monthly debt payments is keeping my spending under control. I have been able to cut my variable monthly spending by more than half. These costs include food, bars, shopping, restaurants, etc. Rent, student loan payments, utilities, etc. are excluded from these totals.
Click to enlarge.
This right here illustrates the effects of making smart spending decisions. More importantly, I don’t feel like I’m missing out on anything compared to last year. I don’t miss the daily lunches out or the weekly junk food trips or cable. I didn’t need these things in my life and I don’t miss them now that they are gone.
How I’m Tracking Every Dime
Mr. Money Mustache says:
Enjoying life while spending less money is a skill that develops just like a muscle, as opposed to a permanent state of deprivation.
One of the ways I am going to reach my goal is to build up massive frugality muscles. To begin I need to cut way down on the frivolous spending that has been dominating my budget for the past 18 months. The first step to cutting frivolous spending is to identify where that extra money is going. Identify it, recognize it, and neutralize it.
Mint.com does a good job of this already but I am looking for a little more detail. I want to be able to closely see how I am spending my money as it relates to my gross income and my take home pay. So, for the past week I have been building a badass budget tool that will track everything.
I have always been amazed at the magical powers that can be performed in Microsoft’s Excel program and I am a little bit of a spreadsheet nerd. With just a little effort I created a workbook that will track all of my income and expenses and all of my assets and liabilities. The best part is that this data is fully customizable. I can easily create summary sheets with my financial information and pull all of the data into colorful charts and graphs that give me a visual representation of where I stand.
These charts and graphs will help to re-enforce my debt pay down plan. Seeing my debts go down and my net worth go up will push me to do more and keep the process going. All I have to do is to input the data once a month (and keep making the extra payments).