how I use credit cards to track spending
There are many good ways to track spending. Mine is weird, but it's working for me, I don't see any downsides, so I'm going to write about it.
First here are two ways that I don't use.
Dave Ramsey recommends the envelope method. When you get paid, you convert it to cash, and sort it into appropriate envelopes based on your budget. When your "grocery" envelope is out of cash, you scrounge around that week. He hates all credit cards. The downsides I see to this: it sounds like a real pain in the ass, you have NO real record of where cash goes, and you miss out on credit card points, which I like. Upside: you definitely won't get into credit card debt!
Most of my finance communities OVERWHELMINGLY recommend an app called You Need A Budget. It lets you assign a "job" to each dollar and tells you automatically where you're at. The downsides I see: first, these apps will require you to input your credit card and bank info for easy tracking, they have to, you can do it manually but that sounds awful. Second, the app is $12 a month after the trial. Its users say it's worth every penny but... you know, pennies.
Maybe that's my pattern. I hate all manual tracking. I hate the idea of putting my receipts into a place and writing them down someplace.
So I use the credit card method. All the credit cards I currently use at least have a website where I can check my balance whenever I want, a notification setting to text me when they're used, and a download utility where I can go get a csv file of my transactions to mess with in a spreadsheet.
The chase app is my spending card because it has this "weekly snapshot" where I can see at a glance how much I have spent this week, including the pending charges that I just swiped 30 seconds ago. I'd like to know about any other cards that have this because I use it a lot:
I don't know if chase is the best for points/rewards all the time. Some travel hackers love it but I am not them. I mean yes if I happen to know that I get 5% on groceries this quarter with my freedom card, then transfer those points to my sapphire and then to hyatt rewards for 50% off a hotel, it's like I get $10 back when I spend $100. If I don't use the special categories, don't need a hotel, then it's $1. Complicated as hell. But if you're a US person and you want to try it here's my link.
The more simple card is the one I have from fidelity that gives me 2% back no strings attached auto-deposited into Josie's college fund. $2 back on that $100. No thinking required. But the spending tracker isn't as cool, they don't have an awesome app, so it has become my Card in the Drawer used for spending I don't have as much control over day to day so I don't need to stare at it. Automatic bills, subscriptions, charities... it'll be the same balance every month and it'll be very boring. I can watch my spending card to limit my spending, without it being clouded by "well I spent more this week because of the electric bill" or whatever. Those things confuse me.
I tell everyone getting their first credit card that the trick to avoiding debt is to know in advance what you plan to spend on it and what you're going to use it for. Don't just start buying stuff. Spend consciously. Know that you are going to spend $1000 on groceries and $100 on clothes, or whatever, and then you'll be able to predict what the bill is and definitely afford to pay it off every month.
I program all credit cards to message/text/alert me when they're used. Yes, even if I swipe it myself. This sounds like a pain, but it helps me hold each transaction in my hand individually like Marie Kondo, so I can ask myself if it sparks joy. If an auto-bill crept up this month, I'll know it. If a subscription I don't use is on there, it has its time on screen to be specifically considered. If, heaven forbid, a card is ever compromised, I will know pretty quickly.
At the end of each month I get the statements for my cards. I record the "purchases" line on a spreadsheet I have kept forever. It has each card's purchases total, the whole total spending, and a notes section where I keep track of big unexpected expenses of interest in case I'm wondering why my total was high. Repairs, vet bills, the house breaking... I've learned that there's something pretty much every month, so how much is it? Or maybe we had a fun trip or made a big donation. just a few words explaining myself.
I also download a .csv file of all transactions. I've only done this for a few months, and really, you should only do this if it's fun for you, it's work. but it's interesting to me. Every credit card I have comes with this utility. You can even download a year at a time. I combine them all together, sort by "merchant", and categorize appropriately. I do not keep track of individual things I buy, just where I buy them. I assume that if I spent money at the grocery store it was on groceries, and try to stick to that, even though it's only 90% or so true that's good enough for me. Most things we buy at Target are Not Groceries, Kansas still has specific liquor stores where we buy alcohol so that helps, all the odd merchants get throw into the "shopping" category. Doing this helps me understand our best case scenarios, worst case scenarios, what a "good" month looks like, what a bad month looks like, so when we want to talk budget we have great ideas of what we should be spending.
There are lots of good tips out there. Most of them acknowledge the fact that a month is a long time, and to keep credit cards in check you should have a system for checking in more often. I think one of my lj friends said they pay off their full balance every week instead of every month, I like that. All I know is that I used to have credit card debt and now I don't, I'm on like month 40 or something of paying everything off every month. I got out of the debt by staring at that "purchases" total on my statements and trying to predict what it should be... less than my income, that's the magic yet totally unsurprising answer! Sat down, made a budget, and started tracking.
To summarize:
1) Two credit cards: one for spending, one for auto-bills
2) I have predicted what the balance on the "Spending" one should look like, per day/week/month, and I watch the balance very closely
3) The whole story is told by the "total purchases" line on my statements
I get a lot of questions when I post my spending entries, so I wanted to sum this up. I am not a financial expert but this is working for me. I've paid off all balances for something like two years now, it seems like a good run.
First here are two ways that I don't use.
Dave Ramsey recommends the envelope method. When you get paid, you convert it to cash, and sort it into appropriate envelopes based on your budget. When your "grocery" envelope is out of cash, you scrounge around that week. He hates all credit cards. The downsides I see to this: it sounds like a real pain in the ass, you have NO real record of where cash goes, and you miss out on credit card points, which I like. Upside: you definitely won't get into credit card debt!
Most of my finance communities OVERWHELMINGLY recommend an app called You Need A Budget. It lets you assign a "job" to each dollar and tells you automatically where you're at. The downsides I see: first, these apps will require you to input your credit card and bank info for easy tracking, they have to, you can do it manually but that sounds awful. Second, the app is $12 a month after the trial. Its users say it's worth every penny but... you know, pennies.
Maybe that's my pattern. I hate all manual tracking. I hate the idea of putting my receipts into a place and writing them down someplace.
So I use the credit card method. All the credit cards I currently use at least have a website where I can check my balance whenever I want, a notification setting to text me when they're used, and a download utility where I can go get a csv file of my transactions to mess with in a spreadsheet.
The chase app is my spending card because it has this "weekly snapshot" where I can see at a glance how much I have spent this week, including the pending charges that I just swiped 30 seconds ago. I'd like to know about any other cards that have this because I use it a lot:
I don't know if chase is the best for points/rewards all the time. Some travel hackers love it but I am not them. I mean yes if I happen to know that I get 5% on groceries this quarter with my freedom card, then transfer those points to my sapphire and then to hyatt rewards for 50% off a hotel, it's like I get $10 back when I spend $100. If I don't use the special categories, don't need a hotel, then it's $1. Complicated as hell. But if you're a US person and you want to try it here's my link.
The more simple card is the one I have from fidelity that gives me 2% back no strings attached auto-deposited into Josie's college fund. $2 back on that $100. No thinking required. But the spending tracker isn't as cool, they don't have an awesome app, so it has become my Card in the Drawer used for spending I don't have as much control over day to day so I don't need to stare at it. Automatic bills, subscriptions, charities... it'll be the same balance every month and it'll be very boring. I can watch my spending card to limit my spending, without it being clouded by "well I spent more this week because of the electric bill" or whatever. Those things confuse me.
I tell everyone getting their first credit card that the trick to avoiding debt is to know in advance what you plan to spend on it and what you're going to use it for. Don't just start buying stuff. Spend consciously. Know that you are going to spend $1000 on groceries and $100 on clothes, or whatever, and then you'll be able to predict what the bill is and definitely afford to pay it off every month.
I program all credit cards to message/text/alert me when they're used. Yes, even if I swipe it myself. This sounds like a pain, but it helps me hold each transaction in my hand individually like Marie Kondo, so I can ask myself if it sparks joy. If an auto-bill crept up this month, I'll know it. If a subscription I don't use is on there, it has its time on screen to be specifically considered. If, heaven forbid, a card is ever compromised, I will know pretty quickly.
At the end of each month I get the statements for my cards. I record the "purchases" line on a spreadsheet I have kept forever. It has each card's purchases total, the whole total spending, and a notes section where I keep track of big unexpected expenses of interest in case I'm wondering why my total was high. Repairs, vet bills, the house breaking... I've learned that there's something pretty much every month, so how much is it? Or maybe we had a fun trip or made a big donation. just a few words explaining myself.
I also download a .csv file of all transactions. I've only done this for a few months, and really, you should only do this if it's fun for you, it's work. but it's interesting to me. Every credit card I have comes with this utility. You can even download a year at a time. I combine them all together, sort by "merchant", and categorize appropriately. I do not keep track of individual things I buy, just where I buy them. I assume that if I spent money at the grocery store it was on groceries, and try to stick to that, even though it's only 90% or so true that's good enough for me. Most things we buy at Target are Not Groceries, Kansas still has specific liquor stores where we buy alcohol so that helps, all the odd merchants get throw into the "shopping" category. Doing this helps me understand our best case scenarios, worst case scenarios, what a "good" month looks like, what a bad month looks like, so when we want to talk budget we have great ideas of what we should be spending.
There are lots of good tips out there. Most of them acknowledge the fact that a month is a long time, and to keep credit cards in check you should have a system for checking in more often. I think one of my lj friends said they pay off their full balance every week instead of every month, I like that. All I know is that I used to have credit card debt and now I don't, I'm on like month 40 or something of paying everything off every month. I got out of the debt by staring at that "purchases" total on my statements and trying to predict what it should be... less than my income, that's the magic yet totally unsurprising answer! Sat down, made a budget, and started tracking.
To summarize:
1) Two credit cards: one for spending, one for auto-bills
2) I have predicted what the balance on the "Spending" one should look like, per day/week/month, and I watch the balance very closely
3) The whole story is told by the "total purchases" line on my statements
I get a lot of questions when I post my spending entries, so I wanted to sum this up. I am not a financial expert but this is working for me. I've paid off all balances for something like two years now, it seems like a good run.