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2 Steps Toward Minimalist Finances

Flowers at the Sac market 002“I refuse to spend the first 60 years of my life worrying about the last 20.” via Possum Living

We’ve been following the program laid out in Your Money or Your Life for the last few years. The program helped us get out of debt and seriously question how we spend money (our life energy). We’ve been talking about streamlining our finances for the last few weeks and reading The Simple Guide to a Minimalist Life prompted us to take action in 2 areas: expense tracking and the use of credit cards.

1. Tracking expenses.

Right now we track all of our purchases through a program called Money Dance. Tracking expenses is a good exercise because it really forces you to take a hard look at what you’re spending your money on. The number of receipts I’ve been entering is crazy! I think it’s a sign that we’re spending too much money.

2. Cash only, no credit.

We use our credit card sparingly and pay them off every month, but I’d rather use cash. Cash is easier to manage (at least for me). Also, once the cash is gone we won’t be tempted to overspend. Overspending is so easy to do when using a credit or debit card.

For example, I’m thinking of using an envelope system. The envelopes would be separated by spending category, for things like groceries, dining, laundry, etc. We won’t have a lot of money lying around the house because a majority of our bills are set up through automatic withdrawal. I’m able to set aside money every month for our fixed bills, like rent, power and the internet. Automatic withdrawal has made my life a lot easier and has cut down on the amount of paper that enters the house.

Money management isn’t rocket science. But it’s important to reflect on the type of tools that are useful. Using a good expense tracking system, doing automatic bill pay and using cash are a few ways that keep my financial life sane.

What about you?

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  • Alejandro Reyes January 19, 2010, 8:21 am

    I never track my expenses or count my money. For some reason each time I do each of those something goes awfully wrong. Instead I follow a very easy set of rules.

    – Never use credit (I do have it for online payments but I pay the credit minutes after I’m charged).
    – Wait it out: wait before I buy, unless I really need it.
    – Pay all bills first. This is a must for some reason. If I don’t do it, bad things happen.
    – Always have money in my wallet. Not much around 20 USD or roughly 300 Mexican Pesos!
    – Save as much as I can. Usually 150 USD each month.

    Following these simple rules I have been able to archive financial stability. But let’s remember that when I was a kid I had a very close perspective at living almost with no money (very rough times). My parents could show me the value of money without making me feel like I had to desire and do everything I could to get it.

    • Tammy January 19, 2010, 3:48 pm

      @Alejandro – excellent and simple tips. My mom and dad taught me similar accounting rules. I’m very lucky that I didn’t have a lot of credit card debt. Student loans and car loans were my downfall. ):

      Thankfully those are paid off and we’re debt free. Yay!

  • Sam January 19, 2010, 8:46 am

    I track my expenses in a simple spreadsheet I’ve made in Google Docs. At the end of every month I make a summary document in which I add up my expenses in different categories. Once I’ve done that, it is easy to compare my spending habits by category each month and even by year. Now that I have developed the habit of inputting receipts into my spreadsheet right away and not letting them build up, it is easy to keep this system going.

    I’ve used Mint in the past, but I had some problems with bugs. I prefer to use my own spreadsheets because it allows me the most control.

    • Tammy January 19, 2010, 3:42 pm

      @Sam – Thanks for the tips. Our current software program is okay, but I’d love to use something that both Logan and I can access online. Google Doc’s sounds like a perfect answer. Thanks for sharing! 🙂

  • Lisa January 19, 2010, 9:58 am

    Tammy- There must be some strange kind of kindred spirit thing going on here! The quote at the beginning of this entry via Possum Living was one that I just read yesterday. Have you known about their site for awhile?

    And as for the actual topic, I’m with you. When it comes to simplifying finances, I’m all for it. We have many of our payments set up on an autopay system. I did my yearly paper purge at the beginning of the year, saving only what was absolutely necessary. Since then, I’ve accumulated very little. Yippee!

    • Tammy January 19, 2010, 3:38 pm

      @Lisa – Actually I just started reading Possum Living and so far I love the book. I didn’t know about their site, but I’ll check it out. 🙂

      Paper purges are the best. We did a huge paper purge when we moved out of our 2 bedroom apartment a few years ago. It was such a relief to shred our old documents. With our upcoming move approaching quickly we’re doing another paper purge. But this time it’s on a smaller scale. 🙂

  • Sam January 19, 2010, 10:07 am


    I always enjoy reading your posts!

    I also recommend the envelope system but you might consider using digital envelopes instead of real ones. There are several software programs for the Mac that let you do it, don’t know about the dark, evil world of the PC. It makes it virtually impossible to overspend even when using debit cards or credit cards because every expenditure has to come out of an envelope.

    Congratulations on being out of debt. It’s a great way to live.


    • Tammy January 19, 2010, 3:34 pm

      @Sam – Awesome! Thanks for reading the blog. I really appreciate it.

      I’m a Mac fangirl! So I’d love to hear more about the software programs you mentioned. What are your favorites? I really like the idea of using a “digital envelope.” 🙂

      • Sam January 19, 2010, 4:03 pm

        @Tammy: I use MoneyWell. There are some others that do roughly the same thing but that’s the only one I’ve used. It’s a minimalist app, it doesn’t do as many things as MoneyDance or Quicken but what it does do (cash flow management) it does very, very well. Like you, I mostly use cash but like Heather, I have to make 12 debits per month to get my 5% rate and I find the digital envelope method perfect because it doesn’t care where the money comes from to drain the buckets (MoneyWell calls them buckets instead of envelopes).

  • Jesse January 19, 2010, 10:13 am

    Good for you! I cut up my last credit card before moving and have been doing just fine with a debit card and cash. But then I’m lucky in that Israel is a cash driven society. It’s actually not uncommon to find stores that don’t take plastic.

    That said, I’m still looking for a software or web-based system that works with my financial institution…ggrrr

    • Tammy January 19, 2010, 3:32 pm

      @Jesse – Dang that is awesome! We are still using our credit card (but only for car rentals). I’d prefer not too, but the car companies put a hold on your credit card. I guess it’s a precaution (just in case you end up stealing the car). I don’t want a hold of $500 or more on my checking account.

      Finding web-based software can be difficult. I’ve heard really good things about mint. 🙂

  • heather w January 19, 2010, 10:55 am

    I have tracked expenses via YMOYL for several years, first on paper, then in Quicken, and now I’m trying mint.com (which I like, but is not great for detailing things bought with cash).

    I prefer to rely on cash-only for discretionary spending (i.e. not utilities & rent, which are my only regular bills) and give myself a set amount to use each month and no more. However, my new credit union offers an account that pays 3.9% interest if you make at least 12 debit card purchases each month — ATM machines don’t count — the rationale being that merchants pay them something when I use the card, so they’re giving it back.) Debit card use is a slippery slope for me, and I’m not thrilled with having all my savings accessible by ATM (I’d rather put savings in an out-of-sight, out-of-mind account). but I decided it’s worth the risks to get that much interest.

    Other credit unions offer this sort of account, so it’s worth looking for if you can manage debit card use.

    • Tammy January 19, 2010, 3:29 pm

      @Heather – I love the YMOYL program. It helped us get out of debt and really prioritize what’s important in life (not stuff, but relationships).

      WOW 3.9% interest is awesome! ING Direct does something similar, but their interest rate has fallen. And I agree about debit cards being a slippery slope. We always keep a little extra in our checking account. So it’s easy to spend more on certain expenses because I know about the cushion. ):

  • Hayden Tompkins January 19, 2010, 7:47 pm

    Living cash only has made a huge difference in our budget and has been amazing for helping us focus on what we really value. When you have to choose, you make more conscious choices.

  • Kev January 19, 2010, 10:09 pm

    I have been tracking my money for two months. After the first month i thought – how much do you spend for eating in restaurants? Since them i am trying to eat more at home.

    The credit card i use sometimes, but only if i know that i have the money.

  • priscilla January 20, 2010, 5:06 am

    My favorite tracking software is YNAB (you need a budget). It’s awesome and the developers give great service and are responsive to input and ideas. Their latest version is mac compatible as well as pc.

    I also use cash and find it’s a great way to curtail spending. And I love the possum living quote — trouble is, BTDT. I will have a grow-your-own retirement. Which is not a bad thing.

  • Kerri Fivecoat-Campbell January 20, 2010, 5:42 am

    Money, expenses, credit and debt is something I’m working on this year, so I appreciate your mentioning these books and programs.

  • emilie January 20, 2010, 11:33 am

    i’ve been using mint and finding it extremely user friendly. i never have to enter anything manually because it’s synced up with my accounts. i just go through from time to time and make sure debits are correctly categorized. i think mint has a great way of setting up budgets and putting that right up front so you always know how your spending stands without having to run reports like quicken. i can only speak for quicken’s mac version, and all i have to say is that it really wasn’t useful. i think quicken actually bought mint and is redoing its whole system in mint’s image. but i could be wrong about that. initially mint had some problems syncing a couple of my accounts, but it looks like it all smoothed out and i’ve had no issues. the only real problem with switching to a new system is you lose your historical data. another thing i love about mint is how easy it is to “split” expenses and to search by category. thanks for the post!!

    • Tammy January 20, 2010, 7:16 pm

      Thank Em – I’ve been thinking of giving Mint a try again. ING (our bank) has pretty tight security and it was a pain dealing with the verification process. ):

  • Tuttabella August 9, 2010, 2:26 pm

    I have an inexpensive, prepaid cell phone, and I take advantage of its organizational features. It has an easy-to-use expense tracking feature with set categories and the option of creating new categories. As soon as I incur an expense, whether it’s cab fare or the cost of a pack of gum, I punch it into my cell phone.

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