Meet Your Goals Efficiently By Tracking Them

Anyone who has the goal of improving their financial situation should at least be tracking their spending.  Without knowing where the money goes once it gets into your accounts, it becomes extremely difficult to set realistic goals for yourself and build wealth over time.  We use a combination of Mint and Excel to track all of the money coming into and going out of our lives, and it’s proved extremely powerful in helping us work towards our goals.

Now this post isn’t about tracking your spending, but rather one of the important things that happens as a result of tracking it in the first place.  It comes down the idea behind a popular business quote, “What gets measured gets managed”, but can very easily be applied to our everyday lives.  Once a personal goal has some kind of measurement attached to it, there are a ton of little things that happen almost automatically in your mind that will help you reach the goal.  I’ve found that there doesn’t even have to be a specific number or target that you are trying to reach, it’s simply the act of tracking it that leads to improvement.

Once the metric you are tracking has entered your mind, your brain will begin to subconsciously take it into account for almost every decision you make related to the measurement.  Some decisions will have a straightforward influence (choosing to buy a new gadget will increase my spending, lower my net worth, etc.), but there are hundreds of other decisions that you make daily which may have a much more subtle impact.  As long as you have an understanding of what moves the metric up and down, your brain will do a lot of work for you without you even realizing it in some cases.

It obviously doesn’t make sense to optimize every decision for any given metric because that never works (optimizing ONLY lowering spending would cause you to not spend anything!), but letting a bit of your subconscious (or gut feeling) help guide some decisions you’re on the fence about is much easier if there’s a number somewhere that is being tracked consistently.

In addition to our spending, let’s look at several other things I track on a consistent basis and how that is helping us reach all of our goals, financial and otherwise.

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How We Averaged 14% Back On Our Everyday Spending Last Year!

Recently, I broke down exactly how much money we spent last year and mentioned that we are pretty good about maximizing our return on that spending with the use of credit cards.  I thought it would be fun to break down exactly what kind of return we got from that spending and on which cards.  Between bonus categories that can go upwards of 10% back and numerous generous signup bonuses we took advantage of, I was amazed to find out we averaged just over 14% back across all expenses!

Below, I’ll break down our stable of different credit cards that make it possible to maximize bonus categories and the different cards we signed up for this year.  Of course, not all miles and points are created equal, so I’ll break down how and why I arrived at the 14% number hopefully without rustling too many feathers in the process (some people are very picky about how you value their stash of miles!).  Let’s dive right in.

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Reviewing Our 2016 Expenses

The past year is getting further away in the rear-view, but won’t completely disappear out of sight until we’ve at least filed our taxes in a couple months.  This is a good time to look over last year’s expenses to see where all of our money went and look ahead to see if there’s any changes we want to make for the coming year.  As I’ve said before, tracking your expenses it probably one of the most fundamental tasks you can do to start improving your finances.  Just knowing where the money is going (good or bad!) allows you to make much more informed decisions on every purchase, investment strategy, and any future-looking forecasts you might want to make for things like your net worth.

We track our expenses by having everything plugged into Mint.com which does it all for us automatically.  Our credit cards, bank accounts, investment accounts, and more are all digested on at least a daily basis by Mint and we can then view the status of them all at any point.  I’m a big fan of Mint, but it definitely falls short on a few things, investment tracking in particular (Personal Capital is much better for this part).  I take care of this by exporting all of our transactions in my own custom excel sheet where I clean them up a bit and categorize them to my liking.  It takes a little bit of effort every month or so, but I like the process of looking over every expense.

Looking back at the totals for the past year usually aren’t a big surprise because we keep up with our expenses monthly in most cases, but being able to compare categories to the previous year is helpful for finding trends.  Last year around this time, we shared the total of our 2015 Expenses and it turns out our expenses this year weren’t too far off of that number IF you don’t count the two very large one-off expenses we had this year, a wedding and Lasik surgery…  Let’s break it all down by category below.

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How Flexible Award Bookings with Alaska, American, and IHG Saved Our Upcoming Trip

Booking trips with miles and points has more benefits than just saving you money.  Most award trips increase the amount of flexibility you have after booking, just in case you need to make any last-minute changes for any reason.  With standard travel booking, you usually have to pay a hefty premium in order to get flexibility which can really add up.  Whether it’s booking refundable airfare, a refundable hotel stay, or protecting everything with some form of travel insurance, there is almost always a surcharge if you need the flexibility.  Unfortunately, it’s not always obvious when you will need the flexibility!

Recently, we booked a trip in June to attend a specific event that I mentioned in my review of 2016.  Exactly one day after publishing that article and less than a couple of weeks after booking both our flights and airfare, the entire event was moved to be a month earlier!  Even booking everything with the Chase Sapphire Reserve’s travel protection didn’t cover an event date change like this, but luckily all of our award bookings happened to have varying degrees of flexibility and we were able to re-book everything without any extra costs being incurred.

Below, I’ll walk through how we were able to change the dates on our American Airlines flight, completely cancel and re-book our Alaska Airlines flight, and switch the dates on our IHG booking all completely free thanks to the flexibility of having booked with points and miles.

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