FIRE tools for newbies

I’ve found two metrics to be very useful now that I’ve been diving into the FIRE movement: tracking 1) my spending/saving and 2) net worth. Below I share two tools that have helped me do both of these things.

Budget
Sample budget/spending tracker from Google

Budget Tracking

Confession – I have never had a budget and never tracked my spending. I don’t know why! Even when I didn’t make much money, I just tried not to spend much and kept an eye on my bank account.

Now that I’ve been diving into the FIRE movement, one of the first things I did was find this free Google spreadsheet. It can be a bit overwhelming with all the tabs, but if you’re just starting, ignore everything except the “Tracking” tab. What I then did was go through my credit card and bank statements and recorded my spending for the previous months the best I could (January – April 2018). This took about an hour or two, so I didn’t do it all at once. There are easier ways to do this, I think through Mint.com, but I love spreadsheets and numbers and being hands-on with things.

I was shocked by what I saw – $350-500 for groceries every month? What??? I think just seeing that made it easy for me to be more mindful and reduce unnecessary spending on food. See my previous post about slashing your grocery bill. And I think you’ll be surprised too. All of those Amazon Prime impulse buys really add up!

After my initial shockwave subsided, I’ve been using the spreadsheet to track my spending, earning, and saving. My goal this year is to save 30% of my gross income. Next year’s goal is to max out my 401K and Roth IRA contributions ($18,500 and $5,500, respectively, are the 2018 values).

Networth
Net worth tracker from Money Under 30

Net Worth

Next up is the net worth tracking spreadsheet. A friend suggested this to me a while back – it didn’t appeal to me at first, but I gave it a try and I’m hooked! I track my net worth at the beginning of every month and I track my condo’s estimated value at Trulia, Zillow, and Redfin (I average the value for these three sites). I guess I don’t have much more to say about this, but I find it’s a pretty motivating tool for paying off debt. I love seeing the principal on my car loan and mortgage go down! I think the main thing about the net worth spreadsheet is: don’t be afraid of it! Many people have a net worth that is negative, either because of a mortgage, student loan, unwise use of credit cards, etc. That’s ok! You start where you are and go forward from there. There are some really inspirational stories of people who paid off LOTS of debt (see ChooseFI podcast, AffordAnything podcast, and this post).

I’ve heard some people say they only track their net worth every 6 months, since progress is often slow and the value of your investments is more likely to vary on a monthly basis (but hopefully will show an upward trend over longer time periods). I think this is a great idea if you’re not super psyched to face your net worth every month.

 

Do you track your spending or net worth? What are some insights that you’ve had?

 

 

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