Author Archives: jesse

About jesse

Jesse is the founder of YouNeedABudget.com. When he’s not speaking on, writing about, fine-tuning software for, or doing his own budgeting, he enjoys playing the piano, working in the garden, CrossFit, marksmanship, and honing his golf swing. Jesse graduated from Brigham Young University with a Masters of Accountancy degree. Immediately after he obtained his CPA license, he let it lapse so he could work on "You Need A Budget" full-time. Jesse lives in Utah, is married to Julie, and has five children. You can conect with Jesse on Google+ here.

Status on Part-Time Support Rep Position

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Hey all, for those of you interested in the support rep position, just a quick status update.

We received just shy of 200 applications, so we’re still working through the first phase.  We’ll be finished with the first phase by the end of the day on Tuesday.  On Wednesday, if you hear from us, that means you’ll move on to Phase Two :)

If you don’t hear from us, it means you didn’t make the cut :(

Our plan is to have about 20% of the candidate pool move to Phase Two.

The applications have been great, and it’s been fun getting to know some of you YNABers a bit better.  You’re voracious readers, and have added a lot of books to my “To Read” list!

We’re Hiring Another Part-Time Support Rep. Are You It?

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I keep thinking our hiring will slow down, and then find myself writing another job posting.  This one is for a front line Defender of the YNAB Brand—a support rep.

What this job would look like:

  • You would set your own schedule, but you’d need to stick to something fairly regular.  So if you told us you planned on knocking out some cases for a few hours on a Saturday morning, we’d plan on you doing just that.
  • You care about the single customer.
  • You know that speed of response is the number one driver of customer satisfaction and that,
  • Accuracy of response is a close second.
  • You’d track your time and email me your hours on a monthly basis.  I’d cut you a check each month.
  • You’d be a 1099 contractor, responsible for your own internet, working space (probably at home, but you could do the work wherever you preferred), computer, etc.
  • The pay would be $10-$15 per hour, depending on your experience.
  • We’re looking at about 20 hours per week, with a bias toward weekend hours.
  • The hours would perhaps ebb and flow, where some weeks were very busy (new years is always busy, where December is not).
  • Your technical skills would definitely need to be up to snuff.  You know your way around computers, basically forward and backward, can troubleshoot stuff with some Google searches, and can explain things for people that aren’t as skilled as you, so they can feel victorious :)
  • Your location, country-wise can be totally flexible.  Your English needs to be superb, but accents are totally fine!

How YNAB works

  • We collaborate using email, Basecamp, Google Hangouts, Skype, and HipChat.  Even a real phone on occasion.
  • We do meetups in person every 18 months or so.  The next one is in a few weeks, where we’ll be doing some survival training out in the California desert, and then staying in a hotel at night. Yes, those two can coexist.  We may take surfing lessons while we’re there.
  • We’re profitable, and in this for the long haul, boostrapped initially from $63 of AdWords spending back in 2004.
  • We don’t track vacation or sick days. We hire people that would never abuse that situation.
  • Our number one growth driver is word of mouth.
  • We don’t work during the week surrounding Christmas.
  • We give our team members birthday presents :)

How to Apply (Application DEADLINE is April 30)

  1. Everything should go to: YNAB+YNAB0518@applications.recruiterbox.com
  2. Send us your resume as a PDF.
  3. Send us a really interesting/compelling cover letter that answers, at a minimum:
    1. Why you would make a great YNAB Support rep.
    2. What prior tech support experience you’ve had.
    3. The book you’re currently reading, why you’re reading that book, and what you’ve learned so far from it.
  4. Share a positive customer service experience where you were the customer.  What made the experience positive?
  5. Respond to the following support case:  ”Hey, I bought YNAB about two weeks ago, and it’s just not working out.  Could I please have a refund?”  (Bear in mind that since we offer a 34-day free trial, our stated policy on refunds is that we don’t provide them.)
  6. Respond to the following support case: “We are trying to install YNAB on a 2nd computer in our home and I can’t find the right activation key for it. The one I’m using isn’t working.  Are we not allowed to install YNAB on another computer? And if we are, how can I get the key to activate it?”
  7. Respond to the following support case: “I must say that I’m pretty frustrated at this point.  I just purchased YNAB and spent several hours trying to import transactions from the last 6 years into YNAB.  And now the program that I just paid $60 for is running super slow.  To top it all off, I just found out that YNAB doesn’t automatically connect to my banks and download transactions for me going forward!  Why would a financial program like yours NOT do this automatically??  I’m not sure I can spend the time manually entering transactions every day and would like to ask for a refund.”
  8. Respond to the following support case: “I can’t get Cloud Sync to work for the life of me. I have YNAB installed on two computers and I have an Android phone with the YNAB app.  On my mobile app it just says “Woops! we couldn’t find any budget set up for Cloud Sync…”  And the YNAB app on my computers are definitely NOT showing the same budget files. Please help!”

 

Investing for the Rest of Us

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I’ve gone through phases in the past few years, where I feel like becoming a professional investor that does a bunch of research, discovers trends before they’re trends, plays the options games, and makes money “in any market.”

And then I remember that I already have a full-time job, a family, and a garden to tend.

So I go back to my super-simple, a few-hours-per-year investment strategy.

A while back, I wrote a review of Betterment, my investment option of choice (above and beyond my company 401k contributions).  The comments on both the post, and our Facebook page, spurred me on to write a 10-day investment course to help people understand why they’re investing, what they’re investing in, and how to get started and stay the course.

It’s an investment course for YNABers.

If you’re interested in signing up for the free course, you can do that here.

 

Are You a Mood Spender?

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We have five kids ages eight and under.  One of these days I’m going to record the sounds of The Arrival, when I open the door from the garage to the house.  It’s a mix of elation (“Daddy!)–this never gets old–and world war three.

My Awesome Wife makes awesome dinners, so the norm is for me to basically sit down to a home-cooked meal that’s healthy, and delicious.  Imagine going out to eat, but you don’t have to order, you just have to sit up at the table, and then imagine the food is more delicious than what you get at most any restaurant, and your imaginations will be a pretty accurate representation of my daily reality.

I’m telling you, this is awesome.

But Every Once in a While…

The shrapnel from the third (fourth? fifteenth?) world war of the day has done some serious damage.  I come home and I can tell that a tough battle has been fought, there are casualties, and I’m now a medic.

What I imagine myself wearing.

What I imagine myself wearing.

This happened Tuesday.

Julie lets me know that dinner isn’t ready, and we should maybe go grab some sandwiches at the new sandwich place.  My wife’s wounded here, under fire from my kids, and I take it upon myself to call for ground support.

Ground support is piling into the Honda Odyssey and seeking refuge far from the battlefield. (Side note: Enemy Kids, when told “We’re going out to eat,” are no longer the enemy. They’re quickly in the happiest of spirits–at least until they start discussing the van seating arrangement.)

Just a Bit of Spending Will Make It Go Away…

That’s what I’m thinking.  I’m thinking, “We’ll just eat out, even though there’s only $8 left in the restaurant category (plan would be to pull it from the furniture category), and with seven mouths to feed we’ll run a $30 tab without blinking, but then everything will be better.”

But I’m fooling myself.

The craziness of the day that ran clear into the evening will pass.  It’ll all pass.  The kids will be in bed in two hours (we’re sticklers for a 7:30 bed time), the house will be quiet, a calm will fall over the battlefield, and I might even get to watch an episode of Duck Dynasty, My Julie’s favorite show of all time.

But I’m not thinking of any of that. I’m compulsively trying to remedy the situation with a quick, overpriced, high-carb fix.

About a mile into the drive Julie tells me, “Turn the car around. I’ll make pancakes.”  Well, she lied, because she ended up making scones.  They were delicioso.  The kids calmed down as predicted, and we lived to fight another day.  Thank you Julie, for being awesome.

This Too Shall Pass

There are many instances in my life where I’ve tried to spend myself into a better mood. Have you ever experienced the same thing?  I think it started over at my friend Cody’s house in the fourth grade. We’d be sitting around bored, and decide that we should go to the gas station (it was about a 30-minute walk) and buy an Icee.  (The best flavor is Cherry : Coke at about a 30 : 70 ratio.) Man, did that change the collective mood!

The thing that has you down right now, that has you thinking about making a quick Amazon purchase so you can get your shopping fix… that thing will pass.  See if you can’t figure out an alternative mood-altering activity and save yourself a few bucks, and some buyer’s remorse to boot.

YNAB Mobile Apps are Now Free

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Before I get to the announcement, I wanted to let everyone know that  the Android app now has Geosmart Payees, which gives it full feature parity with the iPhone! Android users will love that feature.

Starting today, we’re making our mobile apps free for both iPhone and Android. If you’ve been on the fence about whether $5 is worth it, I guess now that question should be answered :) Download the iPhone or Android app (on Google Play only for now; we are still waiting on Amazon approval).

We’ve had a lot of internal discussion about this, and I even posted a question about it on Facebook to see what you guys thought.  The reaction was mixed.  Some said they were happy to pay for it, and were worried that development would slow down if we didn’t charge for it.

Others said that they thought the app should be combined, and they felt a bit nickel and dimed by the second purchase.

A few even said that they didn’t have a smartphone, and wouldn’t want to subsidize development of the mobile apps with their desktop purchase.

Over the last while, we’ve increasingly felt that it wasn’t making much sense to charge for the mobile apps, since the desktop is required for them to have any functionality.

Friction during the trial of YNAB

A potential new user comes to YNAB (likely referred by a friend), sees what we have to offer, and jumps into the trial.  But a big part of what’s making a lot of YNABers successful these days is cloud sync. Users can sync with their spouse’s data, enter transactions on the go, and feel more in control of their money.

But these trial YNABers were in a bit of a pickle.  Do they purchase the iPhone or Android app so they can test cloud sync? (iPhone had the Lite version, but did the trialer know what the difference was based on their experience? Android didn’t even have a Lite version, so the problem was compounded).

On top of not being able to give the full YNAB experience a fair shake, we were also adding one more thing to think about when it came to answering the question of whether or not YNAB–as a package–was worth it.

Advantages to making the mobile apps free

So, we’re making them free.  This has three advantages, the last one being small, but still nice:

1) Those of you worried about development slowing on the mobile side because we’re making them free, don’t worry about it.  We’re fairly confident that the improved experience for trialers of YNAB will improve conversion rates, and that those improved conversion rates will translate into more revenue than was earned when we were charging for the mobile apps.  (Mobile app revenue, as a percentage of total YNAB revenue, is very very small, so this idea is not at all a stretch.)

2) Those of you on the fence about the $5 app being worth it won’t have to ask yourselves that question anymore.  You’ll just have to think about the one-time purchase, and go from there.  The cognitive load for potential purchasers will drop, and we think that will help them come to the right decision. (The right decision, in this case, is to buy ;))

3) We won’t have to send refund checks of $4.99 to people that accidentally purchase the mobile app, not realizing that the desktop app was required!  That doesn’t happen a lot, since we use a very big screenshot to warn people, but it still happens, and it won’t anymore :)  Yeah for less overhead!

To those few that mentioned not wanting to subsidize mobile development with their desktop purchase, I’ll just have to come clean and let you know that you already have.  The mobile app revenue has never made enough to cover their own development costs.

What about those that just purchased?

There will always be some people that just purchased.  We’ve had our builds ready to go free for quite some time, and basically have just been waiting on for the various store approvals (still waiting on Amazon).  So we haven’t given a second thought to which day, or time of week or month would be ideal to make this switch.

The fact of the matter is that there is no ideal time, and we have to make a cutoff somewhere.

Hopefully those that just purchased understand that the change means no offense, and that if you felt the app was worth the $5 purchase before we made this announcement, that doesn’t suddenly change how much you feel the app was worth :)

Conclusion: We’re excited

In the end, we’re excited to make this change.  We think it will help a lot more people appreciate exactly what YNAB has to offer, will lead to increased sales, and will help us further development to make YNAB–the whole system–even better.

An Old Dollar is Like Aged Wine (I Suppose)

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I don’t drink alcohol, so my analogy may fall flat in many places.  But I hear people talking about how an older wine is better.  Pretty much every time, right?  People collect old bottles of wine to store, and never drink, right?

So I’m going to run with this analogy.

An older wine gives you more satisfaction than a newer wine.  Spending older dollars gives you more satisfaction than spending brand new dollars.  Maybe both are easier to swallow :)

The guy that received his paycheck last Friday, and hit the clubs Friday night…he was spending the money almost instantly.  That spending doesn’t taste very good.

However, the lady that sets aside $150 for Christmas, and ends up with $1,800 of ready cash, just waiting to create some Christmas joy (that’s another post, about joy and consumption, not to be delved into here), that spending will taste great!

I haven’t yet figured out how this analogy works with overspending on a credit card.  I guess it’s like you’re eating the grapes? You can’t even make the wine because you’re consuming them well before the process can even get started!

And then there’s the retired couple, that is spending dollars they’ve let “age” for 35 years.  That spending must feel so good.

If you follow Rule Four, you should, on average, be spending dollars that are about 30 days old.  Then add in your Rule Two funds where you’re giving dollars jobs where they won’t be used for several months, or even several years, and you’re spending starts to taste pretty good!  Vacationing with aged money. I like the sound of that.

Gravy Money (Side Money or Passive Income), and Why I Love It.

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Gravy money is the money you earn, but on which you don’t rely–at all.

If your budget operates under the assumption that your quarterly bonus will definitely happen, and that the quarterly bonus will be used to pay off some credit card debt accumulated in anticipation of the bonus…that is not gravy money.

But if your quarterly bonuses are saved and used to purchase a rental property every three years. That’s gravy money. Gravy money should, most of the time, be used to create more gravy money.

With gravy money, you should never need it, but you should love making it.

In general, I prefer a stream of gravy money over a one-time shot.

In my opinion, gravy money should not be consumed, but should be used to purchase appreciable assets (real estate, alternative investments, starting a business, etc.). That is, of course, after you’re out of debt.

My First Gravy Money Stream

YNAB was my first stream of gravy money. At first, it was totally necessary, and helped us avoid going into debt while I finished school and Julie stayed home with our first (and second) child.

However, once I started my full-time job at an accounting firm, we no longer needed any YNAB money, and it all became gravy money.

We used that gravy money to purchase our first home much faster than we would have been able to otherwise. Thank goodness we hadn’t consumed it to bolster our lifestyle.

I ended up taking a job back in Utah, still afraid to use YNAB’s gravy money for supporting my family. That job lasted about four to five months, and then I realized YNAB could do the trick, and we started on that full-time I think toward the end of 2007.

New Gravy Money

With us now living on YNAB money for our livelihood, my conservative radar was beeping constantly. It didn’t take long before my desire for that gravy money led me to do some other internet-based work, where a friend and I would…basically flip websites. Buy them, make them perform better, and then sell them much-improved. (For those that care, we wouldn’t flip domains, we would flip actual websites.)

We were lucky with our timing, because within a few years, the field became fairly saturated. That gravy money, the buying and selling of websites, is what helped me and Julie pay off the house.

Having that second stream of something that’s (fairly) passive, can make all the difference.

Emergency Gravy Money

YNAB continued to grow, and I didn’t need to take as much out of it to live on, though our personal earnings were still all over the board. During 2009, we were investing so heavily in YNAB 3 that our personal financial situation deteriorated fairly rapidly. Our emergency fund was drained, and right before the launch of YNAB 3, I carried about $25,000 on a credit card.

I used the stream from the buying/selling of websites to keep us from going further into debt. If we didn’t have that gravy money (that quickly morphed into “we need this to stay afloat” money), we would’ve missed our YNAB 3 launch deadline by probably six months.

(A side lesson Iearned here is to never give a public launch date unless it’s something like, “We’re launching Tuesday!” because everything’s in place ready to go. Also, make sure Apple has approved your software before giving that type of public launch date.)

Gravy Money Dried Up, New Stuff Found

The buying/selling of websites kind of fizzled out, mainly because I wanted to focus more on YNAB, and my partner wanted to make some movies.

The lack of gravy money lasted about two months, before I partnered with a developer to begin developing some small iOS apps.

The developer didn’t end up lasting too long, but we launched about five related apps and they all-together, make a whopping $150 per month. (I ended up buying out the developer of his half to simplify things.)

What’s actually pretty intriguing about this small amount of gravy money, is how much I still enjoy it. Apple deposits the money monthly, into a bank account dedicated solely to these iOS apps. It climbs and climbs, ever so slowly, and I don’t give it a second thought. But I still love that it’s there.

More Gravy Money

About a year ago, my old business partner started buying/selling websites again. I didn’t have the time to invest in the nuts and bolts, but I decided to become a silent partner in the operation. That’s ended up providing some gravy money for us. It’s nothing we personally consume in our budget, so it just grows on the side, where I reinvest it there, or dedicate it toward another gravy money stream.

Even More Gravy Money

The stream I’ve been working on currently is with real estate. I am so far from a guru, it’s not even funny, but I’ve felt like there have been some buying opportunities, so about eight months ago I jumped on a short-sale opportunity and purchased our first rental property. I’m extremely conservative in my forecasting, but based on my analysis, the property should cash flow, provide reasonable equity appreciation, and provide a nice tax benefit from the depreciation.

I’ve set up a separate LLC (for liability reasons, nothing else), and bank account. The property manager sends me an accounting each month of any costs, their management fee, and the remaining proceeds land in the account. My plan is to obviously carry a buffer of 3-6 months’ rent, reserve 10% of rent specifically for eventual repairs, and anything above and beyond that high-water mark will be used to accelerate the mortgage paydown.

(A note on carrying a mortgage on the rental property: Dave Ramsey, a guy whose advice I like a lot—I mean, come on, he’s yelling at people all the time to get on a budget!—says that once you’ve paid of your personal residence, you shouldn’t borrow money ever again, even for another house. I’ve never quite understood the logic of this. It seems to me that if it’s too risky to carry a mortgage on a single rental home, then that’s the end of it, and you shouldn’t borrow money for your personal residence either. But this is just a tangent at this point. The fact of the matter is that I evaluated the risk of carrying a mortgage, recognize that we could handle the payment if we couldn’t find tenants for a really long time, and went for it.)

The Amount of Gravy Money Seems to be Irrelevant

I find myself excited at the prospect of fairly small amounts of gravy money each month. I get excited when I see a dividend be paid–even if it’s just a few dollars. I’m excited about a few hundred dollars of positive cash flow from the rental property, and I love seeing one of our website investments earn some commissions.

The size of the gravy money really does appear to be second to the fact that it exists in the first place!

Dual Incomes: Could One Be Gravy Money?

After interviewing many new YNABers in depth, I realized how big of an expense day care is to a lot of families. The search along those lines led me to a book called The Two Income Trap: Why Middle-Class Parents Are Going Broke, and one takeaway I have from that book is that the second income from a spouse used to be gravy, but doesn’t have that designation any longer.

If you have a 3-6 month emergency fund, then when a financial disaster strikes, you’re ready for it. But if you’re dealing with a longer bout of financial strain (job loss, disability), having a gravy money stream could mean all the difference.

Would it be possible for you to consider your spouse’s income as gravy money? Could you two reasonably pretend that the money simply does not exist? Possible? Totally impossible? I’m not even certain, but want to at least plant the idea of you having some money that is not ever needed, which can be used to produce more of its own kind.

Your Business as Gravy Money (to the extent possible)

There are so many “business skills” I don’t possess, but I feel I’ve cornered the market on one, and that is keeping my business separate from my personal finances. Julie used to be confused by statements like, “Man, the business is rocking it this month!” followed shortly thereafter by, “Our restaurant category is depleted, so let’s stay home to eat.”

Those kinds of apparently contradictory statements no longer confuse her :)

The ability to separate the money that’s for consumption, and the money that can be used to create more money, is invaluable.

I’ll give you two examples:

1. I imagine that I’ll eventually sell the business. At least, that seems logical. I’m not banking on the sale of the business, so any proceeds from that hypothetical sale are seen as very distinct from our retirement savings, where we contribute to a 401k and our Betterment account. In other words, the sale of YNAB would be gravy, not something I’m relying on in order to be able to retire.

2. Since I now budget the business money, it’s very easy for me to be motivated to not take any personal distributions. Why? Because if I take money out of the business for personal reasons, I’m eating the seed corn. I’d rather keep it in the business and be able to hire another developer, try a new marketing channel, or maybe just make our company meetup awesome.

Conclusion

In the end, I just want to get you thinking about what could be your gravy money. A portion of your spouse’s paycheck? Some overtime you pick up on a fairly regular basis? Those quarterly bonus checks? Your tax refund?

If it’s gravy money, that means you won’t ever need it, except to purchase appreciating assets (if you’re still paying down your debts, I’d use extra money for that).

You want gravy money to create more of its own kind. Don’t consume it! Plant it and watch it grow!

Post a comment below on what you could use for some gravy money, and how you’d use it to help it grow.

Just a Spoonful of Hope Helps the Reality Check Go Down.

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The comments following my 2012 budget recap were awesome. I’m motivated to invest more by spending less.

A few commenters were a bit down on themselves for where they are currently at financially, which is what spurred the following thoughts.

Reality Check

Some time late in 2003, Julie and I found out we were pregnant.  (The pregnancy was intentional.)  We had been married less than a year, and the due date was June of 2004.

The fall semester of 2003 was also the start of the Junior Core in the accounting program at Brigham Young University.  The accounting program there is extremely competitive, where your first semester’s grades can, a lot of times, determine your options for an internship. And that internship determines your job.

I was teaching German on campus part-time, making $10 an hour, and Julie was working full-time as a social worker with the adult mentally ill.  She was making $11 an hour.

We had been following YNAB (which hadn’t yet been named) and the Four Rules since April of 2003.

Financially, everything was working out fairly well. It took us several months after getting married, but we ended up buying a car.  I would take the bus to school, Julie would take the car, we could go grocery shopping without borrowing a friend’s car.  Things were pretty good.  We were actually saving money.

We wanted Julie to stay home with the baby once he came. So there was a night somewhere between finding out we were pregnant, and our baby arriving, that I remember sitting at the desk in our basement apartment, running my Dell Inspiron laptop that weighed more than the iMac on which I type this.

We had a pile of savings that was the product of some extreme frugality, we had two and a half semesters of school left, and I didn’t want to borrow money or have Julie continue working once the baby came.

I divided our savings by our monthly expenses (which I could predict with an uncanny accuracy because of our budgeting), calculating that I could continue to work 20-25 hours for the duration.

I ended up with a run rate that was far short of when our schooling would be over, and I could earn a full-time income.

So I went a little more generous on my assumptions.  I cut our expenses a smidge (pretty naive considering the fact that I wouldn’t have known how much MORE we would spend with a baby in the family), resolved to work 30 hours per week, and also work during each Christmas, where we received pretty good overtime pay.

Even given those rosier assumptions, the money was still running out far earlier than school was ending.

I could feel myself growing pretty frustrated and, to this day, can still picture the desk I was sitting at, the cooler I was sitting on (it was a massive Dr. Pepper can-cooler, one of my favorite wedding presents we received), and the spreadsheet I was using for the number crunching.

It wasn’t fair.  We had been living on the cheapest of cheap, and our only option was to borrow money to finish school.

My Spoonful of Hope

Unless I could figure out a way to cover our rent.  It was $350 per month and included utilities. It also made us sick the entire time we lived there (probably mold).

Over the course of several weeks I wracked my brain over different ideas.

“People make money in real estate, right? Maybe I could flip a house or two?” (I am not a handyman, I had never purchased a home…this was so ludicrous it’s laughable.)

“I could sell security systems or pest control over the summer.” (I had a few friends do this very successfully, but that would mean that I wasn’t going to be doing summer school. And the summer school was what was enabling me to finish a 5-year degree in 4 years.)

“Maybe I could sell the budget we’ve been using.”

Julie said it wouldn’t work.  I will never let her live that down.

Hope Floats (Us Through School)

Porter was born in June of 2004, and YouNeedABudget.com launched in August of the same year.  The site looked like this (pardon the broken images) and thankfully, despite its horrid looks, and aimless sales copy, we made some sales.

The earnings from YNAB weren’t massive, but they did keep us from having to borrow any money from school, enabled me to take a month off work post-graduation to study for the CPA exam, and several years later, let me jump ship from an 85-hours-per-week-family-killing job to what I do today.

Your Budget Giving You that Reality Check May be the Best Thing That Ever Happened to You

I was frustrated and down on myself when I realized our savings wouldn’t get us through school without any debt.  Had we never been budgeting, had we not had a system in place that gave us the reality check, who knows where we would be today? I wouldn’t have felt the need to market the system, I would have likely borrowed “to make ends meet,” and I’d likely still be working at a job that wasn’t too fulfilling.

I know reality checks can be tough. But staring reality in the face can be just the push you need to dig deep and figure out exactly what you can do to change that reality.  It doesn’t happen over night, or even over several months.  But years of being acutely aware of your money will give you practice in facing reality down and  will breed in you a self-reliance and confidence worth far more than your paycheck.  It will make you a survivor.

One Year of Using YNAB for YNAB (the Business)

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It’s been about a year since I moved YNAB to YNAB, and I wanted to report how it’s been going.

In a word, awesome.

Speed

Monthly bookkeeping used to be the absolute bain of my existence (and I’m a trained accountant, so it’s not that the stuff is technically hard for me).  I hated it.

Now, I hate it less, because I’m done a lot faster.  What took me about 4 1/2 hours each month in 2011, took me about 2 1/2 hours in 2012.

So the speed is obviously a big win.

Tax Planning (and Preparing)

What about taxes? Well, here’s a little test to see if your accountant actually cares about your numbers, and is a tax planner instead of a tax preparer.  The two are so very, very different.  The test?  If they demand that the format you give them is importable into Quickbooks.  Yes, it saves them time, because then they can export that Quickbooks format into their tax preparation software, give it a once-over, and finish preparing your return.

I went to the Reports section of YNAB, and did an export of Last Year of the Income v. Expense report.  I gave the spreadsheet to Casey (a guy I will recommend again, and again, and again to every YNABer that needs a live person to help with their tax strategies. Here’s his book, and here’s a podcast I recorded with him recently) and did he come back and demand it be in a Quickbooks format?

Nope. He combed through the data, had questions for me, and then went on his way.

I’m generalizing here (and getting off-topic), because I’m sure there are many tax professionals that just like the time savings of having it be QB-importable, but also really do look at your numbers and try and save you money.  But if you get the feeling you’re just one of a thousand returns done by your accountant, and that he is, perhaps, running a tax prep mill more than a tax planning practice…you should probably shop around a bit more.

Anyway, doing a quick export and handing my tax data off to Casey was super easy.

So, speed has improved, and tax preparation is still a piece of cake.  That all pales in comparison to the greatest benefit of using YNAB for YNAB: The Budget.

The Budget

I’ve always been so extremely conservative with the business money, I’ve never really had to budget (your alarm should go off right there).

The business has always been profitable, except for a dark time in 2009 when we were sprinting to the finish line of YNAB 3 and I was draining every last dollar I personally had.  But besides that period that I will never repeat? It’s been profitable. (I should say, that had I been budgeting in 2008 and 2009, I likely would never have experienced the dark period that was YNAB 3 Development).

So, I never budgeted for the business until 2012.

And then I started budgeting every single dollar (duh), and saving for rainy days (double-duh) and… it’s been awesome.

A few wins, all directly related to the fact that I’m now budgeting for the business:

  • We spend less frivolously.
  • We save for big projects (like the iPad, and Other Big Things).
  • We set aside money for fun things, like our meetup this year, where we’ll be doing some wilderness survival training.
  • We set aside money for Christmas and birthday presents.
  • We set aside money for our Buffer, just in case the revenue stops flowing for some reason (My target is a three-month buffer for the business).
  • We can be more aggressive with our hiring.

That last bullet has made all the difference. I see new hires as debt, more or less.  I promise I’ll pay them indefinitely, and they promise to totally change their life, and spend (potentially and hopefully) years pouring their heart and soul into YNAB.  This is debt in my mind, and I take it very seriously.

So serious, in fact, that I was pretty afraid to hire people.  The budget has fixed that. I now see a Category in the Budget that says [redacted] and I get excited about it! I see the funds are there to hire someone, and everything’s giving me the green light.

It’s help me be more aggressive.

And for some of you swashbuckling entrepreneurs that roll in a totally different way, it may tell you to slow down a bit :)

Either way, running the business with YNAB has been one of the single best business moves I’ve made.  If your business is YNABable (you don’t have inventory, or significant AR/AP tracking needs, and you don’t need significant reporting on capital), you ought to give it a serious go. You can read how I moved to YNAB to get a step-by-step.

Your Financial Life on a Treadmill

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Nobody wakes up on some random day, sees the bright sun streaming through their window, and thinks, “We need a budget.”

I didn’t. And I’m a budgeting Freak of Nature.

No, my wakeup call came entirely from a Big Event on my horizon: marriage.

I’ve always been a bit of a personal finance geek. When I was 14, my dad gave me Dave Ramsey’s “Financial Peace” and I read it in a few days. Before I graduated from high school I had read “The Millionaire Next Door” and “The Richest Man in Babylon.” It all made pretty good sense to me.

Because of that indoctrination, student loans were never an option with my education. And because I was getting married with three years of schooling still pending, with debt not an option, I thought my wife and I would need a budget.

We did (so do you).

Most anyone can walk on a treadmill with no degree of incline, at a steady two miles per hour.

Many of us have done this with our finances in the past. Everything’s going fine, we’re keeping pace with the treadmill, and we’re not even sweating. We could do this for a LONG time.

Then some Big Event happens.

Hours are cut at work, so the speed of the treadmill increases to 2.2 mph. You can still make things work. The cut was pretty small.

Or you and your spouse find out you’re going to have a baby! So you’re walking on the treadmill and someone hands you a 25 pound bundle of joy that you now need to carry while keeping pace.

Maybe you’ve outgrown your apartment and decide it’s time to purchase a house. The house payment is a stretch. The treadmill’s incline bumps up to 5.0.

Your oldest needs braces. The kids summer camp bills are due, and the car just broke down (again). Christmas is coming. The vacation that you take with your family every year is in six weeks.

The treadmill is now going faster, at a steeper incline, and you’re having to carry your 25 pound bundle of joy. You’re sweating, you slip, grab on to the railing for some support, and then realize that walking won’t cut it, so you break into a slow jog.

You can’t hold that pace for too long.

And at THAT moment, you realize that You Need A Budget :)

Once you begin giving every dollar a job, and treating larger, less-frequent expenses as monthly bills, your breathing will regulate, your leg muscles will find new life, and you’ll get that elusive “second wind” that long-distance runners always talk about (I’m yet to actually receive that second wind in real life, but it sure sounds nice from the descriptions).

Even if the treadmill stays at the faster clip, and you can’t shed the 25 pound bag (as if you’d want to! I’m feeling that analogy break down a bit…), and the incline won’t abate, your budget will help you handle it. You’ll find your stride, and be able to find the time to handle the longer-term financial changes that may need to take place in your life.

Leave a comment below and let me know what event helped you realize that you “needed a budget.” Was it a gradual increase of weight, incline, or speed on the financial treadmill? Which event was the “final straw?”