About mark

Mark has been working online full-time since 2008, owning an educational website and two small software businesses. He joined YNAB (as Blogger/Staff Writer) after selling his businesses in late 2012. In addition to his love for budgeting and personal finance, Mark enjoys hanging out with his wife and two kids, snowboarding, CrossFit, bike commuting, and tinkering with side businesses.

More Updates to the YNAB Android App

Hi Android users –

Graham and Adam continue their work on a full refresh of the Android app; in the meantime we’ve released an update that offers several fixes and improvements. This update touches on issues with transaction entry and cloud sync, as well as a few bugs with adding and deleting budgets.

…which is all just to let you know we continue putting polish on the current Android app even as we look forward to the new, shiny version!

More YNAB Quick Tips, Including How to Hide Reconciled Transactions

The more familiar you are with YNAB, the better it will help you take total control of your money. Here are five more very Quick Tips to help you master your favorite budgeting software. Make sure you subscribe to our YouTube channel to get all future Quick Tips and other YNAB videos.

Quick Tip 06: Change the number of months you can view.

Quick Tip 07: Collapse and Expand Master Categories

Quick Tip 08: Search by Cleared and Uncleared Transactions

Quick Tip 09: Hide Reconciled Transactions

Quick Tip 10: Date Filter for Transactions

“I am awful with money.”

exclamation copy_thumbI just saw that headline in the YNAB forums. “No, you aren’t,” I thought to myself (before clicking in to read the poster’s comments).

Be careful with what you say you are; it impacts how you feel – which impacts what you do.

You aren’t “awful with money” – you’ve made financial decisions that increased your stress and limited your options.

When you say “I’m awful,” you’re applying the verb “to be” incorrectly. ”To be” describes a permanent (or near-permanent) characteristic. “I’m American.”

Managing money is something you do, not something you are. Maybe you’ve done it poorly. I managed money poorly from ages 21 to 33, producing debt, stress, and conflict. But I was a good person* the whole time I was managing money badly.

Budgeting with YNAB gave me better information about my finances and allowed me to understand my true expenses. I used my new understanding to improve my decisions. Better decisions have reduced the stress and conflict in my life and given me more options. It is that simple.

Money stirs up some serious emotions in all of us (including me). As you transition from a poorly-informed money manager to a fine-tuned budgeting machine, go easy on yourself. You’re a good person who’s learning to use better information to make better decisions.

By the way, “better decisions” doesn’t mean “and then I never stepped foot in a restaurant again.” It means “I use my money to my real benefit a much higher percentage of the time.” :)

*Forgive the unrelated aside, but here’s an interesting social experiment: Approach friends and family and ask them one question: “Are you a good person?” Then, watch them squirm. This is entertaining, but tragic. A person who sincerely tries to do right by himself and those around him has no reason to reply with anything but a calm “Yes.” And yet, the squirming. To take this experiment to another level, stand in the mirror and say “I am a good person.” Listen to your own mental response (squirming). Interesting, right? 

If your credit card doesn’t automatically pay itself off, it’s time for a new credit card.

Green VisaI enjoy credit card rewards, but I don’t ever want to carry a credit card balance again. YNAB and my two credit card providers have safely automated my credit card usage.

YNAB’s role is to help me give every dollar a job, ensuring I don’t spend more than I bring in. Because I use my budget to make spending decisions, I don’t have to keep track of my credit card balance (just like I can ignore my checking balance).

I put every possible purchase on the credit card, earning points that pay for the occasional weekend getaway with my wife. All is well – as long as I don’t forget to make the payment on time.

Luckily, both my credit card providers (Capital One for personal stuff and Chase for my side business) allow the card automatically pay itself off each month. I logged into my online account, set the card to draw the full balance from my checking account on the date due, and that’s it – all the convenience and rewards of the credit card with no risk of fees or interest charges.

YNAB is the key to my safe, automated use of credit cards. Without my budget to guide my spending, I’d have to play the normal game of comparing my credit card and checking balances to avoid heavy interest. I’m afraid too many people lose that game simply by forgetting to check in.

If you don’t have YNAB, download it now and use it to guide and simplify your finances.

If you have YNAB and use credit cards – see if you can set the cards to pay themselves off monthly. It’s a tidy little system.

How do I budget if I’m paid fortnightly?

Screen Shot 2014-01-27 at 10.39.28 AM“Hi Mark -

I’m just starting out, I can’t get the budget to work as we are paid fortnightly. I can’t seem to find any work around for this!”

Lynda sent me that message this morning, wondering if she needed personal coaching to establish her budgeting rhythm. Maybe coaching is the solution, but maybe a subtle shift in perspective is all Lynda needs.

By the way, Lynda, you’re not alone: the perceived conflict between a month-based budget layout and other-than-monthly pay schedules has confused many of us.

Lynda’s specific confusion is (I think), “How can I plan with a monthly budget when I get paid every two weeks?”

As a first step, let’s re-frame the word “budget” as a verb.

This makes budgeting something I do, not just something I have.

I budget whenever money enters my life, asking “What do I need and want my money to do before I get paid again?”

Personally, I maintain awareness of the jobs I need my dollars to do by naming my categories like this:

Screen Shot 2014-03-11 at 10.55.19 AM

You see the category name, the expected amount, and the date the money leaves my budget.

Let’s imagine I get a paycheck on March 21st. My job pays me every other week, so I’ll receive another check on April 4th.

My money needs to handle all my wants and needs between March 21 and April 4th. It doesn’t matter that the calendar happens to turn over between paychecks. It only matters that I know which bills come due before I’m paid again.

I scan my Monthly Bills and see I’ll be making payments in the following order:

March 24th – City Utilities
March 31st – The payment on my 2nd mortgage goes out (two mortgages, two separate lenders, two different due dates)
April 1st – Car Insurance
April 3rd – The payment on the first mortgage.

I’ll fund those categories first with my March 24th paycheck because they’re all due before I’ll receive the April 4th paycheck.

I’ll also need to fund other categories in my budget (food, fuel, fun), giving each enough dollars to carry me through to my next check. In the best case scenario I’ll also give some of the March 24th paycheck to my Buffer category, allowing me to eventually graduate from the need to time my bills and budget.

I’ll know I’m finished when I’ve budgeted the entire paycheck from March 24th.

Which means we’re back to YNAB’s most basic – most important – three steps:

1. Enter income.
2. Budget income.
3. Follow budget.

It doesn’t matter whether you’re paid daily, weekly, bi-weekly, fortnightly, or monthly – just budget whenever money enters your life.

Understanding how inertia impacts your finances.

ID-100230477Newton’s inertia seems to apply to finances as much as apples. This is simultaneously great and terrible news.

Many of us have applied significant, sustained force to our finances – in the wrong direction. We’ve spent carelessly, procrastinated saving, and borrowed to make it all “work.” This force in the wrong direction has created velocity on the path to more stress and fewer options in life. What a drag.

Reversing our course requires us to apply equal and opposite force to slow our negative financial momentum, eventually bringing us to a state of rest. In this restful state we’ve stopped borrowing and achieved awareness of our life’s true expenses.

After achieving “rest” we can finally build positive momentum in the right direction; this is when we experience fat checking accounts, buffers, and debt freedom. The good news is the positive momentum builds steadily as we employ the power of a functional budget and compounding interest.

Every day we sustain our positive financial momentum we’re that much further from a state of rest (“just getting by”) and heading in the wrong direction (borrowing).

Which is the most difficult phase? Having gone through it over the last eighteen months, I found it hardest to slow the negative momentum and achieve financial rest – that point where I’m not saving much, but not borrowing either.

What makes this phase so hard? The fact that my previous bad decisions and habits kept applying force in the wrong direction long after I’d resolved to go in the right direction. I had to maintain high focus, resolve, and optimism to overcome the negative momentum.

This post may have gone a little too abstract, but I know some of you are wondering why you can’t seem to build up your cash and move further from $0. Be patient. Use your budget to spend smart, work on your earning power, and hang in there. You’ll make it.

Image: FreeDigitalPhotos.net

Three More Ways I Make Extra Money

piggy bank copyA good side gig greases the wheels of your budget, creating a little free cash to accelerate debt elimination or bump up your fun money category.

Since I last posted about earning extra money I’ve developed three new side gigs of my own. I share them to spark your thoughts about adding to your budget’s biggest category.

1. Bookkeeping for a Buddy

When I sold my share of the business to my former partner (and still good friend), he lost his “books guy” – me. He never got into the habit himself, so when it was time to do the books for this year’s taxes, he hired me. Once I’d built his P&L and Balance Sheet for him, I offered to contininue maintaining his books for $100 per month.

He uses YNAB in his personal finances, making it easy to set up a business budget file, share it through Cloud Sync, and keep his transactions current. The gig takes me about two minutes per day, five days per week. And it’s nerdy budget fun.

2. Website Disaster Prevention and Recovery

This is a reasonably simple gig with a technical-sounding name.

My clients all use WordPress (same platform as this blog). I charge them $25 per month, which covers:

1. A full daily backup of their website.
2. Monitoring for malware attacks by hackers.
3. Emergency support if anything on their site breaks.

Sounds complicated, right? It isn’t. Yes, you do have to have the technical skills to fix a broken WordPress site. I’ve been working with WordPress for a few years; I rarely run into a problem I can’t solve (and I’m not a programmer).

The sneaky part of this service is the fact that I just go to third parties to buy the backups and malware monitoring. I set up accounts for each client, tack a little extra onto the price to cover the emergency support part of the business, and bundle the whole thing as my “WordPress handyman” service.

My clients know they could set these services up for themselves, but they choose to pay me because it reduces their mental overhead and time risk. If something – anything – breaks down with their site, they just email or text me and I’m on it. That’s the value-add. Nerdiness for fun and profit.

3. Website Assembly and Customization

The key point with this gig is that it’s not web design or web development. It’s website assembly. People like Adam do website design and development. People like Jesse hire people like Adam.

The niche here is working with clients who need a clean, presentable website but don’t have thousands of dollars to invest in someone with Adam’s experience and ability. They hire me to assemble a functional site from existing components (WordPress plugins and WordPress themes). It’s only a few hours of work for me, so it’s only a few hundred dollars for them. And, again, it’s nerdy fun.

I’ll also have clients hire me for one-off tweaks or cutomizations to their sites. I bill $50/hour for that kind of thing.

I realize many people don’t have the skills (today) to run with my second and third side gigs – but many (most?) of you could do “bookkeeping for a buddy.”

There’s no need to overstate your ability or your value, either. I’m not claiming to be a tax professional (gig 1) or a full-blown web developer (gigs 2 and 3). I’m using skills I’ve developed to save my clients a little time and headache.

Think you could run with any of these ideas to make a couple hundred bucks each month?

A user to user chat about the new YNAB reconciliation workflow.

Screen Shot 2014-02-28 at 10.51.01 AM

A Note from Jesse (3/3/14): I meant to write this last week, but was out of town. I apologize that I didn’t write it quite a bit sooner.  I want to make clear a few things: 1) We understand that we slowed down the workflow of many users. 2) We do hear your feedback. We may not always agree with user feedback, but we do listen. I feel like that distinction needs to made. 3) To address the workflow we’ve made worse, we are working on an update that will be better than what we had before, and better than what we have now.  It will also improve the workflow (even more) for those confused users whom we were originally trying to help. Thanks for your patience as we iterate. We mean no malice. To fewer keystrokes for all. – Jesse

This post is for a very specific type of YNABer:

(If the following doesn’t describe you, carry on, and have a great weekend!)

1. You update your Budget Accounts frequently, and you know your YNAB ‘Cleared Balance’ matches your online account balance.

2. You’re thorough, so you like to use YNAB’s Reconciliation feature to officially lock down transactions as soon as the bank has cleared them.

3. Because you updated your Budget Accounts frequently, and because you knew your YNAB balances always matched your bank balances, you could trust YNAB’s suggested Reconciliation number.

(That was a mouthful, but you understood it if you’re this type of YNABer.)

4. YNAB’s new Reconciliation workflow has thrown off your game, and you’re mad.

I’m not part of YNAB feature conversations, so let’s just talk user to user for a second. I used the new workflow to reconcile accounts this morning, and I found it pretty straightforward.

I went into my credit card’s online account and manually entered a few missing transactions. I made sure the card’s current cleared balance matched my ‘Cleared Balance’ in YNAB.

I clicked ‘Reconcile Account,’ and saw this (click to enlarge):

Screen Shot 2014-02-28 at 10.54.15 AM

I knew the account was current as of today, and I knew the cleared balances matched in YNAB and in the online account. The old YNAB Reconciliation would have filled -$773.54 in for me, so I just typed it in myself and clicked ‘Begin Reconciliation.’

Screen Shot 2014-02-28 at 10.00.55 AM

Couple clicks later I was finished.

In other words, the new reconciliation process does cost me a few extra key strokes. But given my habit of frequently updating accounts and visually matching cleared balances and online balances – the few extra keystrokes are all it cost me. Right around five seconds per account in added work.

Trust me, nobody on the YNAB team likes to disrupt users’ flow, but the old reconciliation flow was positively wrecking the budgets of newer users way too often. Might there be a happy medium? I imagine so. But if this feature stays as is forever – just speaking user to user – I’m feeling fine about it.

Update: Jesse tells me that he and the product team recognize the need to serve both types of workflow. They hear the feedback and plan to address this in a future release.

Use YNAB’s Quick Tips to Save Time and Clicks

The more comfortable you feel with YNAB the software, the more likely you are to live YNAB the philosophy. The education team already serves up hundreds of knowledge base articles, video tutorials, and live classes. Erin and team have decided to add some lighter fare to the support menu: a steady series of 30 second (or so) tutorials to help you shave clicks off your YNAB work.

The Quick Tips’ beauty is their brevity; a one or two minute weekly investment will turn you into a YNAB ninja.

You’ll never miss a Quick Tip if you hang out with us on at least one of our social media channels (although we’d love to have you on all of them, of course):

Let’s kick things off with Tips 1 through 5:

1. Date shortcuts in your account register.

2. Customize column views in YNAB.

3. Spending by payee filter.

4. Using the down arrow to move through the budget.

5. Customize Column Widths in YNAB.

And fat checking accounts for all.

envelope with moneyI bet you know your checking account balance. I bet you check it daily, maybe multiple times daily. I bet it’s the first number you look at when you or your significant other ask that not so useful question, “Can I afford it?”

I’m sorry you have to look at your checking account all the time, because I know how much stress that number produces.

But I wonder if you realize why your checking account balance stresses you. “Because it’s low,” you say? Fair enough. But that’s not why it’s a stressful number. It’s stressful because it gives you vague, incomplete information.

Your checking account doesn’t know whether you can/should buy something. All it know is whether you’ve run out of money.

Wouldn’t it be cool if you didn’t know your checking account balance, because you didn’t need to know it?

It’s possible – all you have to do is detach your financial decisions from your account balance. How? By assigning your available dollars to individual needs and wants in your life.

It’s called envelope-based budgeting because many of the people who use the concept actually take cash out of the bank and divide it among correctly-labeled envelopes (“Groceries,” “Clothing,” etc). When the cash in an envelop is gone, they’re finished spending.

It’s a brilliant system, and YNAB didn’t invent it. YNAB took envelope budgeting and made it digital, allowing you to take your meaningless checking account balance and turn it into near-perfect awareness of your needs and wants.

It’s a beautiful system that produces a couple desirable results in your life:

1. Reduced stress as you’re able to let go of obsessive account balance checking.

2. Fat-approaching-obese checking accounts.

A couple of years ago, before I adopted the YNAB way, Jesse (YNAB founder) and I were having lunch. I’m sure my financial stress came up in conversation, and Jesse happened to mention he had no idea what his checking account balance was.

“What do you mean, you don’t know how much you have in checking?”

“No idea. Lots of thousands.”

Sure, you say, Jesse had lots of thousands in checking because he’s the fancy-pants founder of a successful company.*

Wrong. Well, sort of right. He is the fancy-pants founder (the fanciest!), but that’s not why he had lots of thousands in checking, and it’s not why he had no idea what his account balance was.

It’s all about the digital envelopes Jesse – and all YNABers – use to maintain high awareness of our money.

Jesse didn’t know what he had in checking because that wasn’t the important number in his life. Every time he got paid he divided his dollars among his family’s needs and wants, assigning the money to virtual envelopes called budget categories.

Budget category balances give useful answers to important questions:

“Can we buy a new car?” Check the “Car Replacement” category.

“Can I buy some new running shoes?” Check the “Clothing” category.

No more vague, contentious conversations about “Can we afford it?” – only rational chats about whether the category balance is big enough to buy it, whatever it is.

My tax refunds hit my checking account this week, and I laughed when I noticed the new balance: $24,436.97.

For pre-budgeting me, $24,000 might as well have been $24,000,000,000. I was equally likely to have either amount in checking in those days, in spite of much higher earnings.

Of course, my budget categories – my envelopes – have already spoken for the money. Some for needs and a good amount for wants. But thank goodness I don’t have to think about the number itself anymore.

If you’re a person who has to monitor your checking account balance like Keanu Reeves watching an airport shuttle’s speedometer, take our 9-day money management course by email.

Life’s circumstances produce plenty of stress; don’t let low-awareness money management compound your worries!

*I kid. Jesse is one of the least fancy people I know.