How Can I Estimate My Spending Without Doing a Spending Journal or Log? Part One

The best way to track your spending is to write down every single cent you spend and why. (If you pay by debit or credit it’s still to the penny not the nickel.) But if you don’t, won’t or can’t, you may need to estimate your total spending without the benefit of a journal or log: here’s how I estimated our profligate expenditures.

In the Beginning Money Was Tight and Controls Were In Place to Identify Places to Cut Costs

When I finished university and started my first job, I bought a notebook and started tracking my spending. Everything, from the 25 cents I put into a parking meter to save a stranger from a ticket to the $99.98 I spent on a portable vacuum cleaner (no sales tax in Alberta in those pre-GST days!) was written down at the end of the day. I knew I could lose my job at any time due to the recession and saving an emergency fund was priority one.

It was an interesting exercise. I learned, for example, that I was donating and gifting way more money than I would have estimated. Every birthday, birth, transfer and retirement in the office was celebrated by passing the envelope. Although new hires weren’t expected to contribute much, even $5 (which would be about $10 now) started adding up when you multiplied it by 2 to 4 events per month. And the endless charitable appeals, particularly for the United Way, but also for the Cancer Society and other big name charities also were surprising. Our office often had things like pay $2 to dress-down on Friday, all money going to the charity. Or selling daffodils or carnations or other flowers for the charity of that month.

I’d always known eating out was expensive and I limited myself to one lunch out a week. I made sure it was worth it, especially in terms of flavour. And I chose food that would be difficult or impossible to replicate at home so that it added to my enjoyment. Still, it was sobering to see the cost of one meal was over half what I spent on groceries for a week.

Eventually, though, my income far out-stripped my spending. So the logging of my spending in a journal stopped.

As We Approach Retirement Understanding Our Spending Becomes Important Once Again

Once retirement became closer to our current age than our first jobs were, it began to be important to understand our spending again.

We save over half of our income, so we haven’t been very worried about the details of our spending. We are both savers by nature and both people who prefer doing things to buying things so we knew we didn’t have to agonize over each time we sponsored someone’s bike trip down the Don Valley for $50.

But our retirement income will be very low. We don’t have defined benefit pension plans and I won’t get the maximum CPP. A lot of our savings are at the whims of stock market and we don’t trust equities not even blue chip dividend stocks.

So the inevitable question loomed: how much do we spend now and how much of that is discretionary? When will we have enough income to retire?

The Black Box Method of Estimating Annual Spending for a Very Simple Life

When I was a student it would have been easy to use a Black Box method to check my annual spending. In those days I had no credit card and debit cards had not been invented.
I would have been able to check

IN = total income in (add up deposits to my bank account from my jobs and from my parent’s kindness)

CHANGE = change in my bank account balance between the start of day balance on January 1 and the end of day balance on December 31

SPENDING = IN – CHANGE

For example, if I had added $ 1000 to my account during the year, and by the end of the year my account had shrunk from $2000 to $500, then

IN = $ 1000

CHANGE = ($500 – $ 2000) = $ – 1500

so my

SPENDING = 1000 – (-1500) = $ 2500

First year university looked a lot like that as I spent my life savings on text books and train fares.

The Black Box Method of Estimating Our Annual Spending Now

Nowadays, the equation is the same but much more complicated. I’ll explain in Part 2 what I had to do to estimate our annual spending now.

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Do you track your actual spending or do you just wing it based on your credit card report? Do you realize your office is emptying your wallet but you’re not sure how, when or where? Please share your views with a comment.

Beware the New Account Inactivity Fee for BMO MasterCard !

For several years, BMO MasterCard has had a fee for people who don’t use their card much. Specifically, if you had a credit balance on your card (perhaps because you over-paid a bill or received a refund for an item back to your card account) and if you didn’t use the card for 12 months, they would charge you $10 and take it out of your positive card balance. This year, however, they have started charging a fee to everyone!

Who Will Get Charged the BMO MasterCard $10 Inactive Card Fee?

If you don’t use your MasterCard one month, the clock will start ticking. If, eleven months later, you still have not used the card, they will bill your card $10.

What Can I Do To Keep My BMO MasterCard Active?

To avoid the fee, you need to

  • buy something that bills your credit card
  • receive a refund on your credit card account
  • pay interest on a balance on your credit card, or
  • pay other fees on your account, perhaps a fee for a cash advance, for example

at least once every 12 months.

How Can I Remember to Keep My BMO MasterCard Active?

You may want to set it up so that an annual or semi-annual bill is charged to your credit card account.

Of course, you’ll need to make sure you remember and pay the credit card bill or you could end up with a huge amount of interest due!

Why Would Anyone Keep a BMO MasterCard If They Are Not Using It?

Many people keep a credit card as a “backup” card in case their usual card is unavailable. This secondary card may seldom get used.

Other people don’t buy much on credit and may simply forget to use it for a year.

Some people also keep an older credit card “open” to maintain the information about the card on their credit history with Equifax and TransUnion.

Are There Any Other New Fees or New Fee Explanations (for 2016) for a BMO MasterCard?

Other fees that they are emphasizing include Cash Advance Fees and Dishonoured Payment Fees.

If you get a cash advance from your BMO MasterCard using

  • BMO Telephone Banking (whether self-serve or through an associate answering your call) or
  • through BMO Online, or
  • through BMO Mobile, or
  • through BMO Tablet Banking

You will be charged a fee of $3.50 in addition to any interest charges on the advance and any other fees, including currency conversion rates.

I thought they had stopped issuing MasterCard cheques but apparently not because there is also a fee if you bounce one.

If you write a MasterCard cheque that exceeds the amount of credit available on your account, it will bounce. (They will refuse to cash it.) If you do that, they will also charge you a fee of $40-$48.

So watch out that you don’t write a cheque at the same time as your pre-authorized bill payment appears on your credit card balance or you could get a nasty fee surprise.

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Does your bank charge you if you forget to use your credit card? Please share your views with a comment.