Committed Budgeter Reveals Her Secrets

Tracking every expense let this couple pay of $40,000 in debt and buy a house.

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In response to a post I wrote on the benefits of making an annual budget instead of a monthly one, Aryn of Sound Money Matters wrote in to say that she and her husband do both -- they outline their expected annual expenses, and then map out the cash flow for each month. It seemed like a pretty sound -- and detailed -- strategy, so I gave her a call to ask her to explain how it works.

Aryn, 35, and her husband track all of their expenses -- even a $5 Subway sandwich -- with Quicken. The program allows them to analyze the last 12 months of their expenses and create averages for each month, which they then transfer to Excel. Once the data is in Excel, they tweak it as needed. "We'll say, 'This year our health insurance changed so we need to budget that in this month,' or, 'Our cars are older so we need to add this amount,'" she explains. The resulting analysis gives them a sense of how much they'll spend each month and how much they'll have leftover to put into savings.

The fact that both of them came into the marriage as committed budgeters made for a smooth transition. "I was always a Quicken user, and he was an Excel user. When we got married, we decided that he's in charge of the day-to-day expenses and I'm in charge of taxes and investing," says Aryn, an Internet marketer.

It sounds like a time-consuming process, but Aryn says it just takes about five minutes every other night or so to enter in expenses. Plus, the pay-off is well worth that effort. She says the strategy is what allowed the Los Angeles-based couple to pay off $40,000 in credit card and student loan debt last year, which helped them to buy a house. Her advice to others? "If you're going to track cash, you have to do it often -- or else you won't remember."

A note to Alpha Consumer readers: I will be on vacation for a week starting tomorrow, so you won't hear from me for a few days, but I'll have plenty to blog about when I get back.