A few years before starting Consumerism Commentary, I realized I was in a financial predicament. The salary I had been earning from my non-profit job was barely paying this bills in addition to the cost of commuting to the said job. I was relying more and more on my credit card to get by, ignoring obligations like my student loans.
A confluence of Bad Events led me to the conclusion that I could not continue along this path forever, so I forced myself to make some changes. I got serious about finding a new job. I wanted to teach — the starting salary would likely e better than what I was earning at the non-profit — but the timing was bad and I needed to find a job in the meantime.
I stopped driving and moved in with my father, a few blocks from a train station, and found a temporary job in the city down the line. It turned out to be a good opportunity, working for the Chief Operating Officer of a major financial corporation. I put off the idea of teaching for a while.
I used my free time to organize my personal finances. Without having to pay for rent, I was able to pay off debt and start saving. They keys to all this organization were “waking up” by starting to pay attention to my money rather than closing my eyes, not knowing how much was incoming and outgoing, and hoping for the best.
To start paying attention, I downloaded MoneyDance, which at the time was free software for managing your money. I started entering my accounts into the software and tracking my income and spending. The ability to visualize what was going on provided me with some motivation for improving my condition.
People ask me what my favorite piece of financial advice is, and I always come back to this point of my life. I really believe that once I opened my eyes to what was going on and stopped hiding from my condition, the best thing for me was tracking my finances in MoneyDance, followed soon by Microsoft Money, and later Quicken.
Even if you don’t use software, and start using a pencil and paper to keep track of all the money you spend, I guarantee you’ll find that there’s something you can spend less money on. Every choice you make when handling your money, whether good or bad, will be recorded and impossible to ignore. Eventually, if you look at the data enough, you’ll want the good choices to outnumber the bad.
Here are some tools for tracking your financial condition.
Software: Intuit Quicken, Microsoft Money, Moneydance, GnuCash (now featuring a stable version for Windows XP/Vista)
Spreadsheets: Income and expenses, balance sheet
Budgeting: Mvelopes, You Need a Budget
Calculators: Financial Calculators from Dinkytown, Motley Fool Calculators
Updated February 6, 2012 and originally published July 19, 2007.