I already talked about getting control of your most likely largest expense in a previous blog - your mortgage. But it is equally important to get all of your expenses in order. Besides your mortgage you need to pay off all the debt that you can... Pay off those cars and pay off those credit cards if you have them ASAP!
To better understand my expenses was to go back in time and record all of our expenses in an excel spreadsheet. This was easy for me to do since all of my expenses are paid out of two accounts. Our primary bank account and our primary credit card provide us all the numbers we needed. Between these two accounts I was able to easily categorize our expenses.
I created a column for each category of expenses I wanted to track and by doing so it made it very easy to see where our largest expense categories were. For us they were department stores and travel. Well having discovered this made it very obvious to us which category was needing our attention. We needed to begin a reduction in expenses and it wasn't going to be in the category travel. I now have 17 months of expense data in my spreadsheet along with the same number of months for our revenues. Our financial picture has become clearer and even more clearer is what we need to do to prepare us for reduced income in our future retired lives.