Getting Organized

How to allocate more money to aggressively pay loans? I think it’s common to look to making more income from a second job, and I did have one at one point. But I think it has diminishing returns especially if you are too busy and eating lots of take-out, or if your performance at your main job is suffering. It’s ok in a pinch to meet a short term goal (as mine was), but I find this option tedious when there is an easier, obvious solution. Stop spending so much money!

Here is something simple I did a long time ago: open up a big old spreadsheet, and start labeling the columns 1-31. For days of the month. Then consult your bank statement honestly and pop all your monthly costs into the spreadsheet columns. Check out a site like or the similar tool on Bank of America’s website, and grab a monthly average for costs like groceries and gas. Stick those somewhere in the spreadsheet. Really try to round out all of the “required” items: things that auto-debit out of your bank account or otherwise are unavoidable. Going out to dinner doesn’t go on here (that is a whole different matter).

Now sum all these costs at the end, so you can see how much of your income you are really spending just on “essentials” before even hitting the mall or bar or wherever.  You know, out of curiosity.

Now color-code the things that are legally required or are otherwise truly necessary. And color-code everything else some other color and really scrutinize these. After studying this spreadsheet, I cancelled my gym membership and Netflix account, and paid a small credit card bill. That freed up $100 in my monthly finances and was a no-brainer. And now I just jog outside like a boss.

Now go over to the “required” costs you thought were untouchable and take a look at your rent. I heard this guideline once that you should not spend more than 1/3 your take-home pay on rent. It’s more drastic, but if you’re spending more than this, you could consider moving. Rent is usually the largest monthly cost for people, so there is the most room to find savings here.

I originally made this spreadsheet when I first committed to paying down loans.  I had decided I would just dump all the money leftover from the last pay period into the loans on payday.  I wanted to see and understand how much money I could expect there to be in my account on my company’s regularly scheduled paydays, based on other monthly costs.  But then I realized that was a really weenie and passive use of this information.  Identifying the costs only made me want to eliminate them.

How have you streamlined your costs toward a finance goal?  Or have you discovered a better way to help pay loans you would like to share?

One thought on “Getting Organized

  1. Pingback: Farm Fresh Spreadsheets | Yay, Goodies.

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