Completely debt free for 5 months. Here is the most important habit.

[minimalistgamer]

Here is the link to the blog post -
http://minimalistgamer.blogspot.com/2017/06/importance-of-tracking-expenses.html

Here is the full text -

If I had to pick the one habit I had that helped me stay out of debt, and maintain control over my finances during my college years, and throughout my working life so far, it would be tracking my expenses.

To give you an idea of how this has helped me, check my net-worth graph from September 2014 to June 2017. During this time, I paid off my house, and maximized both retirement accounts.

http://imgur.com/a/zN8tZ

Understanding my spending patterns also helped me cut down on food waste (among other things). Here is a breakdown of spending on food (groceries and eating out) over the years. Compared to the year 2011, where spent $4938.77 on food, we only spent $2688.83 in 2016! We saved over $2000 on food without compromising on quality of life! To me, this is the very definition of minimalism. Reducing waste, being intentional about spending and maximizing the quality of life in the process.

http://imgur.com/a/i3jd6

My own version of the spreadsheet is a little cumbersome, and it is not suited for everyone. Therefore I decided to create a very basic spreadsheet which gives you a platform to begin the process of tracking your expenses. Once you get into the habit, you can customize this as you see fit.You could also use this to create your own spreadsheet in excel, so feel free to make a copy of it and change it to your heart's content. The idea here to be able to look for patterns, and make changes in your life that are advantageous to your goals.

You can view the spreadsheet:
https://docs.google.com/spreadsheets/d/1Zk_QZ2xnoda9Y81e_15qcLqMKBe5HoTnkwKCVFZ6QUs/edit?usp=sharing

I understand this might be a difficult task for some, but personally it was worth the effort to be meticulous about tracking spending.

https://youtu.be/Q1yqaaLXSEA

(I am not very good at video editing, so forgive any mistakes)

If you are a college student, I especially recommend this, because I started doing this in college, and it has helped me immensely when I entered the job market.

Why not use Mint?

This is a reasonable question, I suppose. I personally do not want to give all my information to Mint. I am not comfortable with it.

Filtering data, and getting the information I need is very simple provided I enter the data correctly. If you are someone looking to skip the data entry part, then you have to look elsewhere. This spreadsheet won't help you.

I also found Mint lacking when a single transaction combines multiple categories. As I have shown in the example, a single transaction might contain groceries, computer peripherals, household items etc. Mint does not analyse each item within the purchase (at the time, it might be different now), and it would only show me the overall expense. This was not helpful for me, so I decided to create my own solution.

Conclusion

I strongly suggest you try this for a week. If you feel its too much work, then you could look for a more hands off solution. You are no worse off than before.

Feel free to ask me any questions you might have.

[marielle]

Mint allows you to split a transaction if you bought multiple types of things. Not 100% hands off but close. And if you are very frugal you shouldn't be having too many transactions every week so it should be pretty easy.

[Plugra]

If I had to pick the one habit I had that helped me stay out of debt, and maintain control over my finances during my college years, and throughout my working life so far, it would be tracking my expenses.

Definitely true.  My siblings and I have been trying to steer our parents away from bankruptcy in old age. Not much progress. The biggest obstacle has been that Ma & Pa just refuse to add up the numbers.  We combed through all their checking and credit card statements and made a spreadsheet to show how much money they are blowing through. They just wouldn't look at it: "No no, that can't be right. You must be double-counting a couple thousand a month in expenses somewhere."   

[minimalistgamer]

Mint allows you to split a transaction if you bought multiple types of things. Not 100% hands off but close. And if you are very frugal you shouldn't be having too many transactions every week so it should be pretty easy.

I am pretty sure it didn't allow that at the time...that was my primary reason for using a spreadsheet of my own.

Also, with a spreadsheet I have a lot more control over how the data can be represented, and how I can "mine" the data, so to speak. Since I am half way decent with numbers and Excel, I figured I should just use my own method, and it has worked well for me so far.

[CoreyTheMan]

A fellow imgurian, I am a lurker of sorts lol

I am also a fellow reader of your blog, keep up the good work man. Very inspiring

[marielle]

You can also export data from Mint into Excel. If you use keywords and such in Mint you could accomplish the same customization as with manual entry.

[minimalistgamer]

You can also export data from Mint into Excel. If you use keywords and such in Mint you could accomplish the same customization as with manual entry.

Interesting. I might look into it over the weekend. Thanks for the suggestion.

[neo von retorch]

Great job on being debt free, and all of the progress you've made. Thanks for creating and sharing the video and spreadsheet. I've used custom software to track expenses for 14 years, and it's been very instrumental. (I wrote a new version from scratch in February, as a hosted web site application, which is publicly available if anyone wants to try it out.) Knowing where your money goes, cumulatively, really helps you take a step back and say "do I really value xxx enough to spend $#### on it every year?!"

[Beardog]

+1.  I also track all my expenses on a simple spreadsheet and find it very useful.

[brooklynmoney]

Congrats on your progress really remarkable. I do both -- use Mint and then record everything in my own sheet according to my categories and divided into needs and wants like the Elizabeth Warren budgeting recommendation. I have been using the same template since 2008 and do just as you did by comparing categories y-o-y.

[Dicey]

I'm approaching five years post-FIRE. I'm frugal by nature, so I don't track expenses any more, but dang if this conversation doesn't have me thinking about it again. Thanks!

ETA: Does it go without saying that FIRE includes being debt-free?

[HipGnosis]

Congrats!
But that doesn't mean it will work for everyone.
Like diets, you gotta find what works for you.
I've been debt free for years - with an excused absence of a car loan to boost my credit, which I paid off in 18 months.
The most important habit for me, was/is constantly telling myself "I'm broke".  I tried tracking my spending, but that included tracking my savings.  And constantly seeing that I had money saved lead me to spending half of it.  Spending half my money lead to situations that took debt to get thru...

[minimalistgamer]

Congrats!
But that doesn't mean it will work for everyone.
Like diets, you gotta find what works for you.
I've been debt free for years - with an excused absence of a car loan to boost my credit, which I paid off in 18 months.
The most important habit for me, was/is constantly telling myself "I'm broke".  I tried tracking my spending, but that included tracking my savings.  And constantly seeing that I had money saved lead me to spending half of it.  Spending half my money lead to situations that took debt to get thru...

Absolutely. This is a whole lot like diets. You have to find what works for you. That said, there are certain basics that are true no matter what. the fact that in order to lose weight, you have to burn more than you consume, and if you want to build wealth, you have to live below your means. These principles do not change. The method of accomplishing them might be different.

I felt that a single spreadsheet that allows me look at where my money is being spent is about as simple as it gets in terms of getting a financial picture.

That said, you absolutely have to pick an approach that works for you. I am glad you found for yours! :)