Are You Collecting Data You Will Never Use? Why?

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We all understand that companies collect information on our behaviors, our shopping patterns and the like. But we collect data about ourselves, too. The problem is that we're not analyzing much of it. And we're missing a big opportunity to improve our lives and our finances.

A friend was recently asking me about Fitbit. Most of my friends know that I'm a huge fan of Fitbit, those little pedometers on steroids, that help you monitor the number of daily steps you take and things like calories burned, food consumption, weight, sleep patterns and other health statistics.

I love the service and what it tells you about your health. My friend was curious about how it can tell if you got a good night's sleep. I told him that it's a cool feature.

Monitoring Your Sleep Is All the Rage

A lot of very cool smartphone apps, in addition to Fitbit, monitor your sleep patterns. Studies have shown that there is an optimal time to wake up at your lightest phase of sleep based on your REM sleep patterns, which ebb and flow throughout the night over the course of a few hours each.

One app, Sleep Time by Azumio, provides you with stunning graphs and a ream of data about how well you slept the night before. But I told my friend that I don't really know what to do with all of the information. Should I go to bed earlier? Should I stop watching television in bed before I fall asleep?

A lot of questions arise from having all of this data at your fingertips. And the same is true with our finances. We often go to great lengths preparing our family's monthly written budget or tracking our net worth. Many credit card companies provide incredible pie charts and graphs about your spending.

So what should we do with all of this new information? Are we wasting most of it? How can we put it to work for us instead?

Make Some New Habits with the Data

"We take the time to construct a detailed budget or use an online budgeting tool, but few of us ever make concrete changes that better our financial lives," says Grant A. Webster, a certified financial planner with AKT Wealth Advisors.

The simple answer is that you have to act on the information. Start with small steps. If you analyze your budget and realize that you're spending too much in many categories, pick one to tackle in the first month. For example, if you realize that you're eating out too much in restaurants, make it a goal to skip going out for a month.

%VIRTUAL-article-sponsoredlinks%An old wives' tale says it takes 21 times repeating something to make it a habit. While there is truth in repetition forming a habit, the timespan is different for everyone.

The same is true for making a new financial habit. After a month of tackling one category in your budget, you should look towards the next category your struggling with in your overspending. Like eating an elephant, take tiny bits and help reinforce building new habits.

Neil Maxwell, a fee-only financial planner with Button Financial in Denver, says that building a new habit should be easy if it is something that you truly want to do. If you are collecting data and not acting on it, maybe you don't need to collect it in the first place. Otherwise simply recognizing that you want to make a change in your life is a powerful force that can help you change.

Find an Accountability Partner to Help

If the sheer amount of information available overwhelms you, Rupert recommends that you seek help from a trusted financial planner or a life coach. (Similarly, people looking to lose weight join a group like Weight Watchers International (WTW) or hire a personal trainer to help them).

Have you sat down with your spouse to discuss your finances? Many couples make this classic mistake. My wife and I have quarterly meetings to discuss how our family's net worth is growing, what we need to focus our investing on and where we are overspending in our budget categories.

We are collecting a lot of data about our lives. Whether it is how many steps we take, how well we sleep at night, or how closely we are following our family's monthly budget, you should scrutinize and act on the data you collect.

Do you collect a lot of data that you don't use? How do you transition form simply collecting the information to acting on it?

Hank Coleman is the publisher of the personal finance blog Money Q&A, where he answers readers' tough money questions. Follow him on Twitter @MoneyQandA.


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Are You Collecting Data You Will Never Use? Why?
"Your daily habits and routines are the reason you got into this mess," writes Trent Hamm, founder of TheSimpleDollar.com. "Spend some time thinking about how you spend money each day, each week and each month." Do you really need your daily latte? Can you bring your lunch to work instead of buying it four times a week? Ask yourself: What can I change without sacrificing my lifestyle too much? 
Remove all credit cards from your wallet and leave them at home when you go shopping, advises WiseBread contributor Sabah Karimi. “Even if you earn cash back or other rewards with credit card purchases, stop spending with your credit cards until you have your finances under control,” she writes.
If you do a lot of online shopping at one retailer, you may have stored your credit card information on the site to make the checkout process easier. But that also makes it easier to charge items you don't need. So clear that information. "If you’re paying for a recurring service, use a debit card issued from a major credit card service linked to your checking account," Hamm writes.  
Reward yourself when you reach debt payoff goals. "The only way to completely pay off your credit card debt is to keep at it, and to do that, you must keep yourself motivated," Bakke writes. Just make sure to reward yourself within reason. For example, instead of a weeklong vacation, plan a weekend camping trip. "If you aim to reduce your credit card debt from $10,000 to $5,000 in two months," Bakke writes, "give yourself more than a pat on the back." 
“Establish a budget,” writes Money Crashers contributor David Bakke. “If you don't scale back your spending, you'll dig yourself into a deeper hole." You can use personal finance tools like Mint.com, or make your own Excel spreadsheet that includes your monthly income and expenses. Then scrutinize those budget categories to see where you can cut costs.    
Sort your credit card interest rates from highest to lowest, then tackle the card with the highest rate first. "By paying off the balance with the highest interest first, you increase your payment on the credit card with the highest annual percentage rate while continuing to make the minimum payment on the rest of your credit cards," writes Mint.com spokeswoman Hitha Prabhakar.
To make a dent in your debt, you need to pay more than the minimum balance on your credit card statements each month. "Paying the minimum -– usually 2 to 3 percent of the outstanding balance -– only prolongs a debt payoff strategy," Prabhakar writes. "Strengthen your commitment to pay everything off by making weekly, instead of monthly, payments." Or if your minimum payment is $100, try doubling it and paying off $200 or more. 
If you have a high-interest card with a balance that you’re confident you can pay off in a few months, Hamm recommends moving the debt to a card that offers a zero-interest balance transfer. "You’ll need to pay off the debt before the balance transfer expires, or else you’re often hit with a much higher interest rate," he warns. "If you do it carefully, you can save hundreds on interest this way."
Have any birthday gifts or old wedding presents collecting dust in your closet? Look for items you can sell on eBay or Craigslist. "Do some research to make sure you list these items at a fair and reasonable price," Karimi writes. “Take quality photos, and write an attention-grabbing headline and description to sell the item as quickly as possible." Any profits from sales should go toward your debt. 
If you receive a job bonus around the holidays or during the year, allocate that money toward your debt payoff plan. "Avoid the temptation to spend that bonus on a vacation or other luxury purchase," Karimi writes. It’s more important to fix your financial situation than own the latest designer bag.
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