Track Your Spending to Avoid Unmanageable Debt

We’ve talked before how it is often the small everyday expenses adding up over a period of time that contribute most of the debt problems many American households face. Of course major expenses like mortgage payments, car payments and utility bills contribute as well. But getting swamped by small recurring expenses is an easy trap to fall into because they seem so inconsequential when viewed in isolation. But consider the example of the morning cup of coffee.

If you stop at a coffee shop on you way to work or to run your daily errands, you probably spend about three dollars for a regular cup of coffee — even more if you go for the fancy stuff. Three dollars doesn’t seem like a lot of money. But say you do the same thing every weekday — that’s $15 a week. Over a month, that’s $60. Over a year, it’s $720. Now, say you paid with a credit card that charges 15% APR. That’s over $100 in interest by year’s end for a total of well over $800 dollars. And that’s just a cup of coffee.

Tracking these small recurring expenses can help you get a better understanding of where your debt actually comes from. You can do this by keeping a journal, making a budget, or even just carefully reviewing your credit card statement every month. These simple actions can help you identify where your money is going, where your debt is coming from, and what things you can reduce or do without in order to decrease your expenses.

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