Home » The Importance of Finding the Leak in Your Financial Ship

The Importance of Finding the Leak in Your Financial Ship


One day soon after we began our “getting out of debt” journey I decided, for motivational sake, to go back and track how much we spent on eating out in 2012. It was in December of 2012 that we had our financial wake-up call and realized we had to do something about our money situation.  We’d cut down quite a bit on eating out over the last couple of years before that, so I was curious to see what we’d actually spent on restaurants, given we’d tried to make 2012 a little more budget friendly in that area. 

Now, I have to start by saying that I had a serious addiction to eating out.  I loved taking the kids out, I loved going out with my friends.  I still do, to some extent. When you’re the main chef for a household of 6, there’s something very relaxing about sitting down and having someone else cook your meal for once.

But given our financial mess and how it escalated in 2011, I knew that in 2012 we needed to reign in spending a bit more if we were to start learning how to get on top of our mountain of debt.

I sat down that cold December morning, pulled up our checking account e-statements, and wrote down every single restaurant purchase I could find for the year, from the sit down restaurants to the “picking up a kid a hot dog and coke at Target” expenditures.  Then I added in $200 cash for stuff I couldn’t track.

The Truth is Tough to Take

I started in December and worked my way backwards.  By the time I reached my November statement, panic was starting to set in.  By October, I was having trouble breathing.  The more I wrote, the more I freaked out.

Dear God, can’t this be over??

No, it can’t.  You’re only on September.

By June, the panic had calmed, not because we had spent less, but because the end of the exploration was drawing near.   By March, I was almost at peace.  I was at peace, you see,  because I had accepted the fact that we’d spent our family into a crater and was giving us kudos for at least facing the music and committing to change.

And because I was finally starting to understand how we’d gotten ourselves into the mess we were in.  It was all becoming crystal clear.  We had literally nickeled and dimed our way into a mountain of debt!  No vacations, no fancy clothes or fancy restaurants.  No trips to the opera or the theatre.  No fine jewelry or furniture.

We had piddled away our money on stupid, useless stuff.  In the case of eating out, we had piddled away over $2100 in 2012.  Yes, I said Two Thousand One Hundred Dollars.

And that was in the year we’d cut back on eating out.

That doesn’t even cover our astronomic expenditures on groceries, gas, entertainment and other miscellaneous stuff. In each case and for each category I found that we’d spent at least 50% more than we thought we had spent.

Spend Tracking Is Your Friend

Many people poo-poo my suggestion that spend-tracking is vital to financial success – at least for those new to personal finance awareness. Personally, I’d read years ago that one major key to getting control of your money is to track your spending for thirty days to see where your money is going. I’d tried – and failed – at least a half dozen times to track our spending for thirty days.

The problem? I’d get to about day three during the month and fear and panic would overtake me like a boss. I’d feel horribly guilty if I spent one cent that wasn’t a necessity.

The truth was that money scared us. Not having enough scared us. Having too much scared us. Being hungry and homeless scared the crap out of us, and we were convinced that if we made even one money mistake that our lives would fall apart and we’d find ourselves out on the street.

Looking back, we realized that we both grew up in households where fear about money was a major factor. Those messages we received as children made us both terrified to manage money. So we simply spent as we wished and put our heads in the sand about the consequences.

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When we moved from suburbia to a hobby farm in October of 2012, something happened. We were on the outside peering in at this rat race Americans live in. We could see the futile attempts at keeping up with the Joneses for what they were. Suddenly, we became radically aware of the fact that our net worth balance sheet is in our control. Being rich or being poor, it’s not just luck of the draw; it’s about making daily, minute-ly decisions about what to do with the money that comes into your hands.

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So after looking over our 2012 expenditures in the area of groceries, restaurant expenditures, gasoline expenditures, etc., we found that our spending numbers were MUCH higher than we thought they were.

  • Where we thought we were spending $600 a month on groceries, we were actually spending $900 a month on groceries
  • Where we thought we were spending $75 a month on eating out, we were actually spending $175 on eating out

On and on the list went. Suddenly, it became crystal clear why we were tens of thousands of dollars in consumer debt.

We started spend-tracking on January 1st, 2013 and haven’t looked back.

Spend tracking allows us to see in real time what we’re spending, and to make adjustments in our spending right at the moment, before things get out of control during the month. The result?

  • We now spend $400-$500 a month on groceries for our family of six, effectively cutting our grocery bill in half
  • We spend between zero and $100 a month on eating out and entertainment instead of $175 a month, cutting that bill in half

We went over every single bill we had each month and assessed it to see if we could lower or eliminate the bill. We cut our cell phone bill by over half when we switched to Republic Wireless.

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Tracking our spending enabled us to find the leaks in our financial ship, which freed up more money for us to throw at our consumer debt every month. We are now well on our way to becoming totally consumer debt free.

If one truly wants to get out of debt, they’ve got to find, and repair, the leaks in their finances.  Don’t be afraid.  Trust me; I know it’s scary.  But think of the success and the freedom you’ll have once you find that leak and plug it up.

If you can face the facts and commit to change – radical change – I guarantee it’ll be worth the trouble.

Have you discovered any leaks in your financial ship? Do you spend-track?



  1. Laurie, we’ve always focused on saving “x%” (Lately, 20 – 25%), and didn’t worry about the rest. However, in 2014 we tracked every penny for 10 months as part of our retirement cash flow planning. As we tracked each category, we challenged ourselves to find “leaks in the ship” (great analogy, btw!). We saved thousands in the process, the biggest singe “win” was changing our insurance company (home/auto).

    Great advice, and something we also benefited from!

    • Laurie says:

      Isn’t it amazing?? We changed our insurance carrier too and saved several hundred a year. Same with cell phone service. It really does make an impact on one’s financial goals!

  2. Dan says:

    We use Quicken and have been swearing by it to track every expense down the the cent since 2010! I love having a record of my expenditures. I don’t get mad when we overspend – I just see it as a “hey, let’s cut back on this next month” kind of thing. It also provides me a solid base of knowledge knowing that a good 30-day average is for any category. For example, I know that $300 every 30 days for our family of 3 (lot’s of 3’s in this example!) is roughly about right for our groceries. I know if we go below that, our pantry is probably getting a bit barren; above that, well, let’s figure out what’s about to go bad first and make what we can tonight.

    • Laurie says:

      Yes! We do the same thing, Dan. We don’t condemn ourselves over budget fails, we just make the next month more frugal to right the scales. When you’re not spend-tracking, you have no measure to use. Great comment!

  3. Brian says:

    Spending tracking can be such an eye opener. Sometime we fall into habits, routines, convenience type things that we are just unaware of that cost us money. It’s a must when first getting your finances together. We periodically tracking and reviewing to make sure no new leaks need plugging.

    • Laurie says:

      Yes!! You’re right about the habit part of it too. After a while one becomes accustomed to not spending money. Then tracking may not be as necessary. We still do, however. I don’t trust us fully yet. 🙂

  4. Mrs. Groovy says:

    We’re on year 3 of tracking every penny. And I mean every penny. To the point that I jot down notes on my phone when we’re out for the day or weekend in case we miss a receipt. However, we don’t budget. Never have. Mr. G starts our yearly expense form by entering all of our recurring monthly expenses in our tracker. Here’s the link if anyone needs a template.
    We haven’t found any major leaks but we decided recently to cut out all fast food except when traveling (to the tune of around $60 month savings, and thousands of calories).

    • Laurie says:

      I think spend-tracking can largely negate the need for a budget, although we do both. If you know where your money is going there is little need to create a budget. For us, it just gives us a target spending amount to shoot for during the month, then we use the spend-tracking to make sure we’re in line and find out where we spent differently if we’re not in line. Thanks for sharing the expense tracker – groovy! 🙂

      On a different note, we’ve largely cut out fast food as well, but the motivation came from watching documentaries such as Super Size Me and from a recommendation from my niece who worked for a time at the local golden arches that we probably wouldn’t want to eat there if we spent any time in the kitchen. 🙂

  5. I have a leak in my spending with food/going out/etc. I’m going to plug that thing this month. I spent $468 on food, eating out in April and I want to see how low I can get that number. $200? We will see 🙂

  6. Aaron says:

    Boy, if we could take emotions out of the picture, money would be a lot easier process. A lot of our spending is out of emotion (at least it has been for me).

    Kudos to you guys for getting budget for food down to $500 for such a large family. Not easy.

  7. Dining out was our leak too. But more than double yours… we were leaking faster :-/ To the tune of about $5,000 per year.

    While we only have one child, so we don’t have the cooking-big-meals reasoning, we have worked from home for almost 20 years now. When you spend ALL YOUR TIME in your house, it feels really good to go out to a place to eat. It’s like leaving the office.

    We had to dial it back though, and we did, thankfully. This “finding the leak” concept is definitely something everyone should take a little time to consider. Small leaks sink big ships. 🙂

    • Laurie says:

      Yeah, it’s funny about dining out when you work at home. Rick is so eager just to relax after work, but I’m all “let’s get out of here!’ 🙂 Love your remark about small leaks sinking big ships. So true!

  8. Yes, tracking expenses is pretty important because most of us underestimate what we really spend. Like you said…the truth is tough to take. Sometimes you don’t want to see what you’re actually spending but being in denial is much worse.

    • Laurie says:

      Yeah, we lived in denial for years and all it did was make a mess of things. We’re much happier now that we’ve faced up to the facts. 🙂

  9. Oh, yes! Finding those leaks is so important. Amazon is one I’ve discovered lately. I realized I didn’t record all of the transactions (since they were online). I recently signed up for Tiller, which pulled all my transactions and there were a few I had missed doing it manually. Since I hate to shop, I tend to go to Amazon. Need a toothbrush? Amazon! While I’m pretty good at only ordering what we need, we’re still spending more than I thought we were there.

    When I first started tracking several years ago, I started asking myself if the spending in each category really aligned with our priorities and values (an exercise from Your Money or Your Life). Boy, does that put things into perspective!

    • Laurie says:

      That is a really good book. I try not to be on Amazon unless I have to. Too tempting, even when buying little things, to reach the minimum for free shipping by adding in a book or something. 🙂

  10. I totally understand that fear of facing the truth. Tracking for 3 days and then thinking, “Oh no! I’m overspending! If I stop looking, maybe I can pretend it’s all OK.” Such a strange coping mechanism! And when we started our journey out of debt, we also had spent a year trying to improve our financial life – yet we paid off over 300% more debt in year #1 than we had the year before. So many parallels! Including moving in the right direction now : )

    • Laurie says:

      I know, isn’t it? I think the emotional part of getting out of debt is by far the toughest factor. At least it was for us. So glad we’re over that hump now. 🙂

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