Where does the money go?

Realizing DH and I were headed for financial trouble, the first place I turned was the bookstore where I stumbled accross Daivd Bach's Smart Couples Finish Rich. It seemed like the perfect place to start- covering the financial basics from how to talk to your spouse about money, how to save money every day, 401K and Roth IRA breakdowns, and for the more advanced couples, stock market options.

Perhaps the most important thing I took away was his Where Does the Money Go inventory. It breaks down all of your income sources, expense sources, and all of the other places you could spend money (and if you are really good at spending money you can add as many extra rows as you need). At the end of every month I go through our bank statement and our main credit card bill (the only 2 ways we spend money) and inventory every expense and income.

I was pleasently surprised to see that despite DH and I both commuting 50ish miles a day and living in an area of the country with the highest gas prices, we were only spending about $330 a month on gas. (Kudos to us for carpooling and using the truck sparingly).

I was horrified to see that I was spend about $130 a month on books, $200+ a month at Target for who knows what, almost $400 a month on eating out, and $100 a month on new toys for the dogs.

At the end of the spreadsheet it sums up all of your income minus all of your expenses (plus a 10% Murphy's law expense) and you can see for yourself if you spend more than you make. This was a huge wake up call for DH and I. We always knew we were living on the edge, but seeing the numbers was a huge reality check.

Needless to say, DH and I have identified several areas where we can cut back and start saving. If I can figure out how to post a graph to this blog, I'll add one showing how much money we save each month.