Don’t Be Lazy When It Comes to Money: Use A Manual Ledger

Written by

If you’re like me, you find it really convenient that your credit card or banking institution provides you with a list of your most recent transactions when you log into your online account.  It really simplifies the book keeping process and that’s great.  Unfortunately, with simplicity comes laziness and with laziness comes mistakes/unwelcomed surprises.  I have to admit, I have fallen victim to this.

This past month, I have been going out more often with friends for birthdays, dinners, movies, etc.  This leads to me placing charges to to my credit card.  I usually check my balance once a week to make everything is in order, but with multiple things going on and again, laziness, I skipped a few weeks.  To my unwelcomed surprise, I spent a lot more than I have in a long while.  Luckily, I can handle it, but it blew out my budget for the month.

What could I have done to avoid this?  Well, I guess I could have checked my online balance more often, but not all transactions appear immediately.  And even if they do, they typically don’t include the additional tip you’ve added to the bill.  Going out to eat numerous times can really cause your total debt to be offset by a lot.  My solution is to keep a simple ledger going forward.  It doesn’t have to be anything fancy whatsoever, just follow these three easy steps:

  1. Create a new spreadsheet
  2. Create four (4) columns: Transaction Date, Vendor, Card, and Amount:
    • Transaction Date – the date you made the purchase or deposited money
    • Vendor – the place you made your purchase or return
    • Card – in case you have multiple cards, you can keep track of which one your spending with
    • Amount – the cost of the transaction
  3. Enter all your transactions each night through the receipts you collect

This is a tactic I used to curb my spending after college as well.  It worked wonders because it gave me a real time tally of how much I was spending and how much I truly had left in my accounts.  It’s also the idea of associating your purchase with additional labor and helps with memorization.  What does it help you remember? THAT YOU KEEP SPENDING MONEY THAT SHOULD BE SAVED!

What Are The Benefits to Calculating Your Daily Interest Rate?

Written by

After I created the “Calculate Your Daily, Monthly, and Annual Credit Card Interest” page, I was asked numerous times, why did you specifically decide to create that tool and what purpose does it serve?  Well, I guess my brief intro on the homepage was a bit too brief.  Let me elaborate.

Around the time I created that automated form, I was actually trying to make the decision of whether or not it’d be worth my effort to transfer my credit card debt into another credit card.  I had multiple 0% balance transfer offers on existing cards, but knew better than to think it was a no-brainer decision, since there’s always a transfer fee associated with them.

The first step I took was to calculate how much interest I was losing per month.  The idea was that the one time balance transfer fee may equate to be about three months worth of interest, in which case I could potentially pay off within two months.  If that were the situation, then I would be wasting time calling up their customer service to perform the transfer.  Not to mention, it’s just a dumb decision to pay more in the long run.

Once I got the formula to calculate the monthly interest rate and determined it was a good idea to perform the transfer, it dawned on me that it’d be extremely interesting to figure out how much I was “spending” by carrying this balance for so long.  Of course my balance fluctuated throughout the months and years, but I just had to simplify my decision making process by fixing the balance to the amount at the time. What I discovered was pretty eye opening the moment I saw it.

I believe my daily interest came out to be about $1.25, that like one item from the McDonald’s Dollar Menu (plus tax).  But, I haven’t been eating at McDonald’s and a side salad sounded pretty good at the time.  Then, I thought, what if I escalated the calculation to a week?  It came out to be $8.75.  That equated to about 3 gallons of gas for my car.  And what the heck? I’m always filling up my tank. That extra money would come in really handy!

Essentially, it put the money I was spending on credit card interest into perspective.  Seemingly small amounts really add up and I couldn’t believe it.  At that point, I made it a goal of mine to erase my credit card debt as soon as possible.  So, my purpose of the form is mainly to provide people, in a similar situation that I was in, some perspective.  It’s extremely important to manage your money (especially for kids) and figure do what you can to lower/extinguish your credit card debt.

I truly hope some people out there who have used my form realized the same lesson I did.  For those who are severe bad credit situations, I recommend determining and monitoring your credit score first to determine how deep you’re in it and then just work your way up.