Once you really dig into your finances, it's easy to get overwhelmed. Since I've been home and really digging into our own situation, I quickly realized that there are many different ways to peel this onion and I found it fairly difficult to assess how we were really doing. The main question is, "Can we sustain our current earning/spending pace and still achieve our goals?" If not, what has to change?, if so, how can we do better?
Regardless of what the reality of our situation is, the goal is to do better than we are doing right now. Ok, how do we get started, there is so much to think about and it can take a lot of time to assess, research, then take action. Where to begin???
The longest journey starts with a small step, right? One of the first things I did was to give myself an idea of how much money we had to spend per day. It just felt more manageable, like I had more control... Take all the fixed costs out (mortgage, rent, avg. utilities, forced savings, etc.) and subtract that from the dollars coming in after taxes. Then divide that by the number of days in the month and there's a real number I can keep in my head as we spend money throughout the month. When you keep track of every dollar you spend each day you can see how you're doing against that number. Instant feedback. It's not the most important number in your personal finance arsenal but I find it to be a good guideline that sticks with me and has helped me to make some good decisions along the way.
Yes, I'm micro-managing our home finances. It wasn't my style when I was managing people but the money can't make good decisions for itself and it doesn't give me any feedback. Therefore, we need to be involved in every action and every decision.
My number is $63.
Do you know your number?