Following the money can be a complicated task, especially if you have it going to many directions. In order to follow the money you must write it down somewhere. You cannot keep it in your mind or located with the companies that are billing you. You need to have it on one page of paper, two at the most. It can be done.
At one point in my life things were so bad financially that we went to seek counseling with a credit counselor. After reviewing our information the counselor said, "there is nothing more that we can do that you have not already done". They suggested that we find more money by picking up more employment. Well I can tell you that was not going to happen. My wife and I were working split shifts already and someone had to be home with the kids. If I one of us was to work when the other one was working the cost of daycare would have quickly eaten up then extra paycheck and some. Besides that I was working in a profession with good pay and I had to be available to be on-call every other week for a week at a time.
We considered bankruptcy, but that was not going to happen either. Even the credit counselor said that it would not benefit us enough. The reason being that a large portion of the debt was from student loans. They the greatest portion of them were federal loans and could not be touched even with bankruptcy. Wow! Now what.Well I can say that that was a decade ago as of 2018. We have come along way since then.
We did what it took to get out of that hole. We managed our money down to the pennies. We implemented the "envelope" system and calculated how much money we needed in each envelope in order to make it to the next paycheck. We also set money aside for bills that would come up through out the month. We ran our house like a business. We categorized the envelopes with everything from groceries, gasoline, electric, pet care, entertainment, household supplies, etc. Right now I cannot remember the exact number of envelopes that we used but I know that we kept them in a 4 inch 3-ring binder and it was full.
When I say that we ran the finances like a business I mean that we looked at each envelope as separate accounts. If we borrowed from one envelope because another one ran short we added IOU's to the envelopes from where we took the money. Then when the next payday arrived we paid off the IOU's first so that we would not be short in those "accounts". Now that is not to say that we did not add another IOU to the envelope, but at least they were paid up every payday.
It is now nearly ten years later and I have no need for the envelopes. I have moved to a new system and this works great for where we are in our lives right now. I am able to add to the savings, invest in stocks, and enjoy spending a little extra now and then on entertainment. Am I to where I want to be? Not yet. I am getting closer and closer to the end goal every day.
To the right is a snap shot of the actual spreadsheet that I use to visually understand my finances. I fill out one of these sheets each and every month.
Now I not saying that you need a fancy spreadsheet but you need to set up each of the categories on a sheet of paper so that you can see what you have and where you have it. If you have more than what will fit on the sheet you can turn the paper sideways and put two categories, income and expenses on one side and assets and liabilities on the other side. In the beginning I had to use separate sheets of paper for each of the assets, liabilities, income and expenses.
Do the best you can and your financial information into the categories that you think are the right ones. Don't worry if it is not 100% correct. You will learn that soon. Before long you too will be managing your money like a pro.