Accounting is one of those tasks that is time consuming and seems unnecessary but even just doing the basics can save you money and help you learn the spending habits of yourself or your business. With this knowledge you can make changes that will help you, for instance, get out of debt.
I, personally, like QuickBooks, there are a lot of software out there but in recent years QuickBooks has really stepped up to make accounting easily, but I am not here to sell you on QuickBooks, but it is important to find a software you like and to use it. In using a software you can track things like interest spent, amortizations, bill due dates, and even smaller things like how much you spend on gas, or food, or going out to eat, shipping, and so much more. Tracking these items gives you and idea of where all your money is going, and where you can either cut or save and so on.
Recently my husband and I paid off my car, my credit card, his credit card, and my last student loan. We tracked our spending habits for 4 months, figured out where we could cut, where we could save, and what items we needed to get lower (like our water bill). We then looked at our reports again after 2 months and could sees a big difference. Then Covid hit.
Being quarantined to our house for 3 months really made us realize how much money we were just wasting without even knowing it. My husband is an essential worker and was able to work from home, but I am a yoga instructor and wellness coach, so my business had to close for the quarantine. Even on one paycheck we realized that we were just spending money on mindless things. That is when paying off our debt got real.
We realized that we could save money by not buying things we did not need, like pillows, towels, mugs, random stuff that I found, and so on. If we saved that money, we could pay things off. So, we began saving.
Fast Forward to a few weeks ago my husband had to take a pay cut to keep his job and I am still out of main main source of income (we will chat about why you need more than 1 type of income in a latter blog). Things got real for us. The amount cut was $600 a month, that was basically our food money (I have an insane amount of food allergies, so we have to buy things that are not cheap) and pet money. So, it was time to do the math.
If we used $13,000 of the money we saved we would gain $605 a month of our own money back. I know I know that sounds crazy but that is how debt works. All that money you spent on credit cards, loans, it all has to be paid back, so to buy back $600 per month we needed to pay off $13,000 in debt.
Like I mentioned earlier, I will talk more about how we got the $13,000 but a lot of it was saving up. We have been saving up, not going out to eat, or shopping, we are only buying what we need. This has freed up so much money. If we were not tracking this it is hard to see just looking at your bank statement. In an accounting software you can make as many categories as you want and track things in any way you want, this is how we learned about the crazy amount I spent at Target, or the insane amount my husband spend on lunches out, or the crazy amount I was spending on the dogs. None of these things can be seen easily on a bank statement. The charges just look like $20 here, $10 there, $30 once in a while, but those things add up!
So, I recommend looking into getting set up with accounting software. If you need help, reach out, I run a small accounting firm with a FREE 30-minute consultation, and I can help you decide what you need. The first step to being debt free is to start tracking your spending and that takes effort, but it is so worth it. What is your financial freedom worth?
Love, Light, and Wellness