Budgeting for Back-to-School

Screen Shot 2014-04-14 at 8.12.36 AMBut it’s only April, you say. The new school year is months away.

Ah, but so are those heavy startup costs. The folders, glue sticks, pencils, calculators, tape, binders and highlighters. Boxes of Kleenex. Locks.

Depending on how you establish your budget categories, you might even include new sneakers, gym shorts, hoodies and jeans in your children’s back-to-school costs. I don’t; I have a separate clothing category for the kids, and it stays relatively stable from month to month. I am also extremely lucky to have an older sister who regularly boxes up and sends me the OshKosh and Children’s Place items that her own children have outgrown.

But it doesn’t just end with the September stock-up. There are myriad other expenses that pop up throughout the school year. If I search YNAB for “school fees”, I can see that over the last two years, I’ve shelled out for school supplies, hot dog lunches, popcorn days, pizza lunches, tennis lessons, chess lessons, festival costumes, badminton lessons, field trips and project supplies. And that’s not all: there’s a camping trip coming up at the end of June for the grade 4s. Cost: $190. (Luckily, the boys’ dad will split it with me.)

YNAB lets me plan for these inevitable expenses ($56.76 for just one term of hot lunches, holy cats!). This makes August much less stressful, because I know I’ve already got a healthy category balance for buying the kids’ school supplies.

And actually, as I flip back through my budgets for the past number of months, I can see that I have been budgeting too little (I had to snatch five or ten bucks from several categories last September so I could blast an extra $70 into the school fees budget). I see now that ten bucks a month isn’t going to cut it, even with my ex sharing some of the costs. I think boosting my monthly budget to $20 will provide me with more peace of mind, especially now that both boys are getting older. And more expensive.

How do you manage your back-to-school costs?

Don’t let the debt get you down

ostrichHi – jessiebird here again. The other day I came across an old debt payoff chart I had made. It listed all of our debts at the time, with balances, minimum payments, interest rates and a grand total. The five debts — including a credit card on which we owed over $10,000 —  came to a demoralizing $45,162.39.

The chart was dated Aug. 22, 2012.

That’s an important date. It’s not when we started with YNAB; that was July 2011. It was, instead, the first time I had been brave enough to write all of our debts down in one place — and that’s after we had already paid several off.

If you’re a natural-born number-cruncher who doesn’t feel like hiding under your desk every time you think about your staggering debt load, you might wonder how I could have waited so long. Well, when we first came to YNAB, I thought we’d never get out of debt. Seeing the total on paper would have confirmed what I already felt, that I was a complete financial failure. So I waited until we had paid down enough that I started to believe that maybe, just possibly, we could actually get a handle on the debt.

On the off chance there are few of you reading this who are where I was then, feeling hopeless under the weight of your own soul-crushing debt, I offer the following advice:

  1. Crawl out from under your desk; you can’t accomplish anything from there (and there might be spiders). As scary as it is, gather up all of your debts so you know what you’re dealing with. Compare the balances and interest rates to figure out the snowball payoff strategy that works for you.
  2. Focus on your whole budget, not just the debt. Do budget for the debts and pay them off as aggressively as possible, but don’t forget the importance of emergency savings, fully funded categories, a buffer, and even a little fun now and then. This is a budget, not a prison sentence.
  3. Stop letting your past mistakes define you. Yes, you’re in debt. Do the only thing you can do: Deal with it in your budget. And then stop feeling so bad about it. Seriously. It’s exhausting.

Obviously, I was a little late implementing step 1 myself. But I’m doing well with steps 2 and 3. Since I wrote up that debt chart 20 months ago, we’ve paid off around $27,000 (including all of the credit card debt). In total, I estimate we’ve paid off well over $40,000 in less than three years.

And here’s something I never thought I’d be able to say: We’ve only got $18,000 left to go.

(Granted, it would be even more exciting if I could say we were debt free. But at least I’m not hiding under my desk anymore.)

Free Automatic Expense Tracking Software You Probably Already Have

 I nominate myself for the Understatement of the Day Award for this: there’s a lot of wacky stuff on how to lose weight out there.

But unless you’re into something like the Cotton Ball Diet (I wish I were making that up), there is one thing that nearly every weight loss strategy agrees on: tracking.

Creating an awareness of our habits is powerful.

I’m a numbers guy, so when I was shedding pounds, I used a web-based food journal to track my caloric intake. Using my smartphone, I logged my food and exercise.  The software would calculate the calories eaten vs. calories burned and show me roughly how much weight I lost or gained through the day.

It was terrible. And terribly effective.

It was basically a nutritional version of our beloved YNAB software. They should have called it “You Need A Diet.” Then again, maybe not, because when you pronounce “YNAD” aloud, it’s a little awkward.

You’re welcome (and I apologize).

Especially when you’re starting out in budgeting, creating awareness by tracking every little expense right as it happens is very powerful. But I can’t tell you how many times I’ve walked away from a purchase and forgotten to enter it. Or maybe a charge hit my account that I didn’t see for days and the budget got thrown off–grrr.

That’s where the free automatic expense tracking software you probably already have comes in handy. If you bank online, your bank most likely offers free account alerts.

I delved into my online banking setting and set up alerts on my accounts. Here’s how it looks at my bank:

 alert setup

I get an email every time a transaction clears. Here’s how those look (don’t worry, this isn’t anyone’s real account):

 Alert email

I check the alert emails against my YNAB budget right from my phone. If I have time, I enter the ones I forgot right then. If not, I keep the email as a reminder to do it soon.

It’s not exactly the pinnacle of fun, but it beats the heck outta staring at my bank statement, trying to remember what I paid $32.68 for at “CHECK CRD PURCHASE 0127 TPF* FAC IL 439830XXXXXX2345 3?MCC=5241” three weeks ago. I hope it serves you well.

I love account alerts, but between you and me, once I reached my goal weight, I quit food journaling. However, I made a commitment to myself that if I ever gained half the weight back, I’d instantly start journaling until I dropped back down again. My desire to never food journal again has been motivation enough for me to stay leaner.

Being Thrust Upon YNAB, Part Two

alex-smilingI’m going to present you with two words. Just a bunch of letters arranged on a page. Nothing inherently harmful in them. But because of the meaning we attach to them, they’re powerful enough to send an arrow of fear straight into most people’s hearts.



Yeah. Scary stuff. These two words are what brought me back to YNAB in 2012 with a big old *snap*.

Foreclosure. The first time I heard the word from my credit counsellor’s mouth, I cried. It felt like the ultimate failure. I envisioned our furniture on the lawn and a red-lettered sign on our door for all the neighbourhood to see.

We had separated. We owned a four-bedroom house (well, the bank owned it), and even though it had a legal suite, the mortgage was enormous. Neither of us could manage it alone. Neither of us could manage the house’s upkeep. And neither of us had the heart to stay in what had until then been our family home.

But the Victoria market had softened in the four years since we’d bought. No matter what we did, the loss was going to be crippling.

We ended up foreclosing. It took us a long time to make the decision, but once it was made, I was surprised at the relief I felt. I still give thanks that we live in Canada, where you can swallow your pride, press a button marked RESET, and start all over again. There are no armed thugs waiting to exact full payment. Nobody’s going to shoot your family or sell your children for unpaid debts.

In the end, the loss was crippling. By the time the process was finished – post-inspection, post-cleaning, post-sale, post-legal fees – the shortfall on the house was $92,000.

By this time, I had bought myself version 4 of YNAB and was back on track, monitoring my income and expenditures and living on what I earned. It gave me a feeling of control during a time when so much was out of control.

I looked at that $92K, as well as the other debt (including a whole whack of federal tax – a result of the previously alluded to communication breakdown), and realized I was looking at packing around a lifetime of red ink.

As a newly single parent (and a freelance writer at that), it was a devastating load. Even if I could pay it all back over the course of fifteen or twenty years, I would be shorting my children as a result of my and my ex-spouse’s fiscal choices. Their entire upbringing would be a story of their mother being too broke to support school trips, camping, music or swimming lessons.

I agonized. Should I declare bankruptcy, file a consumer proposal, or slug it out? My ego was very much afraid: What would people think if I declared? And how would I feel about what people think?

There’s something so terminally scary about losing your credit. People speak of it in whispers. Had I not been living the YNAB way, I would likely have gone along with the pressure from my (traditional…and very much in debt) parents to do everything possible to avoid damaging my credit rating.

But my desire to provide for my kids trumped my need to look like I had it all together. I’m not a fan of sweeping it all under the rug to look like things are fine, just fine.

And, I reasoned, if I’m living the YNAB way, my credit rating shouldn’t have to be my number one concern because, well, I’m not supposed to be buying things on credit anyway.

And so I threw it in. Declared bankruptcy in mid-2012. YNAB supported me every step of the way. Even when the thumbscrews were down tight as I repaid a portion of the debt (and yes, even if you declare bankruptcy, you still pay some back), I knew how much I could spend in each and every category. I stretched every possible thing, à la Amy Dacyzyn’s Tightwad Gazette. Bars of soap down to slivers. Robes and slippers instead of heat. Noodles.

I was discharged in early 2013, and I haven’t looked back. I don’t eat out – even at Denny’s – and when I’m in the vicinity of Linens & Things I just keep driving. The new 4Runner was out-reasoned by a ten-year-old Escape (4cyl). And my entire apartment is a sunroom now, because it faces west. All one bedroom of it.

I got myself a Capital One MasterCard – it’s funny how fast they come knocking – and you bet I’m paying it in full every month. But I paid cash for my truck. For the kids’ bikes. For the Apple TV. For the dining room table. And when my poor old laptop wheezes her final stalling breath sometime this summer, I’ll have $1300 set aside in my MacBook Air category.

I love giving each dollar a job. Because damn, they work hard when a few of them get together. And I love YNAB. Because it makes this kind of little-by-little saving possible.

So now you know. I’m living proof. There is life after debt.

Budgeting Wisdom from a Dentist

Screen Shot 2014-04-02 at 10.19.15 AMThere’s a kid-focused dentist’s office in my town that has slick flat screens where Nemo and Dori swim across the ceilings and cheerily dressed hygienists offer all sorts of fun. The theme park atmosphere calms and entertains young patients while they rest in cushy recliners. It also serves as fair warning to adults that this little endeavor is going to cost a ton. Your kids won’t let you take them anywhere else from then on, so go ahead and take the Keurig coffee and apple scone–you’re definitely paying for them.

I would have loved those distractions when I was a kid. Cheeks stuffed with the typical fare, I was left in sterile silence except for the occasional one-sided conversation.

The only decoration I remember was a framed cross stitch on the wall. In block letters was the message: You don’t have to floss all your teeth. Only the ones you want to keep.

It didn’t make me floss more as a boy, but it certainly left an impression. Awkward memories aside, I have found myself adapting that logic to conversations regarding budgeting.

I was walking a friend through the process of starting his YNAB budget a while back. His voice was filled with angst when he talked about all the things he wouldn’t be able to do. “I just don’t want to feel guilty if I decide to have a cup of coffee, see a movie, or whatever.”

“No problem!” I told him. “You don’t have to keep track of all your money. Only the money you want to keep.”

“What?” he paused.

“Well, once you’ve covered the essentials, you have some money left over, right?”


“Then take some of that money and drop it into a category you don’t track. Decide how much money you want to blow and go have a blast!”

Ah, the freedom.

Your slush fund, fun money, cashola to burn, or whatever you call it, is essential to budgeting health. It’s liberating to take a chunk of money and blow it. Unashamedly. On whatever.

I, for example, now have throwing knives. Three of ‘em. I’m terrible, but my boys think I’m a ninja.

YNAB’s Rule #1 is to give every dollar a job. Make sure to tell some of your money to go have a good time.

I’m sick and tired of my grocery bill.


I’m spending too much money at the grocery store. I know I am, not only is the budget telling me that, but I can feel it. I think since I’m not struggling financially like I was when I started YNAB, I’ve let myself get too comfortable letting that part of my budget grow unnoticed. So I end up wasting food.  I buy stuff, forget what’s in, buy something again unnecessarily, and some food dies a painful death in the back of the refrigerator.

I became really horrified back in January when I spent $575.86 that month on groceries. It makes me cry a little just to type that. I am feeding one person – me. What was that even for? I have no idea. I’m just not paying attention.

Now, to be fair that does include some pet costs (and I have a collection of them) and non food items, but it’s still too much. So I made a goal to get it under $400. In February, it was $403.75 and in March it was $375.85. Better. I did that just by paying closer attention to the category balance when shopping. There’s a lot of power in that.

But recently I came across Budget Bytes, a fantastic cooking blog my good friend Dave steered me to. She analyzes her grocery budget by calculating cost per meal. But more importantly, her recipes are fantastic and it’s made me realize that I can and should be cooking more at home, because it’s healthier and cheaper.

So how low can I get my grocery bill and still eat well? How many dollars can I free up for other jobs – like paying down my mortgage. I’ve decided to put my grocery budget under the microscope for a month or two and find out.  I thought I’d share the journey and plan to update as I go along.

In the past, anything I purchased at the grocery store, I just assigned to groceries. And by the way, if you’re a newbie, we strongly recommend that.  The type of minutiae I’m about to explain is an advanced technique.  If you’re just starting out, keep things simple and just get good at entering all your spending.

So, today I made a master category called “Grocery Project” and broke out some smaller categories:

Screen Shot 2014-03-31 at 10.31.43 AM.png

The MAX is the amount I’ve been budgeting for groceries, and for now I’m going to keep that at $400. This will help me keep track and make sure I don’t spend more than that. So when I started April, it looked like this:

Screen Shot 2014-03-31 at 10.37.19 AM.png

I just want to track during April to see where specifically the grocery dollars are going. Then I can take the information and set some goals for May.

Yesterday, I went grocery shopping (yes, it was March and I cheated the transaction date to April 1st. Don’t judge me.) After splitting everything out, it looked like this:

Screen Shot 2014-03-31 at 10.39.23 AM.png

So now I need to move money from the MAX category to cover the overspending in the other categories. First I’ll just budget for the other categories:

Screen Shot 2014-03-31 at 10.40.35 AM.png

Now the total for the grocery project master category is up to $558.39 because I added $158.39 to those other categories. But that’s not really accurate. So I lowered the MAX category by that amount.





Now the total for the grocery project is back at $400:

Screen Shot 2014-03-31 at 10.57.34 AM.png

$241.61 is what I have left for groceries this month. The next time I make a trip, I’ll go through the same process.

So on first glance, veggies looks low, but I have a ton of veggies in the freezer, so that’s fine. I plan to do some cooking and freezing of meals, so I bought some supplies for that (Ziploc baggies and containers). You might notice I don’t have a bread category. I make my own bread, so that’s essentially under cooking ingredients.

If I subtract out the non food items, so far I’ve spent $138.04 on food. I’d like to get my total grocery bill for food and non food items down to $250. Possible? I don’t know. This will help me see where the dollars are going and I’ll have to decide what’s worth it and what’s non-negotiable.  For instance, good fresh fruit is really important to me, so while I might shop for better prices, I won’t sacrifice quality.

I think a lot of us struggle with the almighty grocery bill, so I thought I’d share my process as I work to get this part of my budget under control.

Stay tuned!

 Quick Update: I don’t plan to maintain this level of focus forever.  I’m hoping after a few months I’ll have learned some things and implemented some sustainable change.  By summer, I’m sure I’ll have moved back to a much simpler structure.

Budgeting: We’re only human

piggy bankI got a private message this morning from a fellow YNABer. It was a confession of sorts; this person had dutifully put a nice chunk of money into savings and then, almost immediately, had depleted it to cover various unbudgeted expenses. Some of them, like a car repair, were unavoidable, but one item — draining nearly a third of the savings — could only be called a splurge. The message ended with this: “Every attempt I make to budget and save I find a way to fail.”

I responded with the idea that maybe the problem wasn’t that the budgeter had failed to save but that the budget hadn’t allowed for the expenses (and the splurge) in the first place.

I think many of us come to budgeting with the understanding that if we aren’t suffering, we’re not doing it right. To succeed, we believe, we must do without all the things that make us happy. We vow never to eat out, buy a video game, get a massage or, essentially, do anything that brighten our lives until all of our other financial goals are met, in 10 to 20 years.

This would certainly be effective. If we could stick to it.

The budgeter who wrote to me was doing the “responsible” thing: putting every extra dollar into savings. But that plan left no funds for discretionary spending or unexpected needs.  (On a side note: “savings” is a very broad name for a category. Dollars seem to be more loyal when they have very specific job titles. But that’s a post for another day.)

Had a third of the savings money gone into in a “fun money” category and some into care repairs to begin with, the splurge and the repairs would have been budgeted for. No guilt. No failure. The overall spending would have been exactly the same, but the psychological effect would have been completely different.

I am not advocating reckless spending over careful budgeting. I’m saying that while our budgets should reflect our long-term financial goals, they also must be realistic about our actual spending patterns.

It’s admirable to create a budget that holds us to high standards; it gives us something to strive for. However, a budget that pretends the car will never break down or that we will never be too tired to cook dinner — or even be in the mood to just treat ourselves now and then — is almost certainly doomed to failure.

We are, after all, only human.

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.

Discovering YNAB: Part 1


Meet Alex, one of YNAB’s new blog contributors. :)

A note of caution: in this post, you will encounter:

  • shockingly poor decision making
  • a desperate need to keep up with the Joneses
  • financial hemorrhaging, and
  • a catastrophic lack of communication.

You ready for it? Okay. Here’s how I first came to YNAB.

In 2007, my then husband and I purchased a four-bedroom house in a nice middle-class neighborhood. Hey, all our friends were doing it. We didn’t want to be left behind.

alex-houseWe bought the house for $521,000 during that six-month period of shameless real estate hussydom where Canadian banks actually let dummies like us buy property with no money down on a 40-year mortgage. (Shocker alert: we’d actually been approved for $640,000.) The city was Victoria. The market was at its peak.

We were already carrying a fair bit of debt: student loans, a line of credit and a Visa balance that still hadn’t recovered from a trip overseas four years prior, nor our more recent Hawaii vacation. (Are you shaking your head yet?)

Due to the fiscal hemorrhaging generally associated with home ownership, it occurred to me that maybe I could use a budget. I had read about YNAB in a Canadian magazine called MoneySense. Realizing we were headed for a big bad brick wall if I didn’t do something quick, I downloaded the YNAB trial, and got to work.

I fell in love with it. I bought the program, pulled our spending into a state of restraint, and got us hacking away at our debt. We had a tenant to pay part of our mortgage, and we both had good jobs: I was teaching full-time and writing on the side; my husband worked at the university in a technical support job.

Solid incomes, but stretched to the limit. One little leak would have sunk our ship.

I think back to those first few months of working with YNAB. It was such a reality check. It was so frustrating to realize we couldn’t afford to eat out, even at Denny’s, or that we couldn’t dump $200 on a new duvet at Linens & Things. I wanted a new 4Runner like my friend. I wanted the things my colleagues all seemed to have. Vacations. A new sunroom. Great shoes.

But YNAB showed me how that kind of thinking was incompatible with getting a grip on our finances. I remember feeling such resentment each time I slapped a few hundred dollars into a debt repayment. I wanted to be saving toward our next holiday, or that cedar sunroom. Or better yet: the buffer. But I was sobered by the amount we owed, and I was determined to clear off our debt as quickly as I could. I loved the power of YNAB’s tools to help me visualize where the money was going. Still do.

I untangled our rigging and sailed the good ship YNAB for our family for a year. Gathering wind. But I was juggling a lot in those days, including a baby and a preschooler and a burgeoning freelance writing career, and I needed to hand something off.

So, after careful deliberation, I handed off the budget.

And I got busier.

And I didn’t push hard enough for the monthly budget meetings.

And I got busier.

And I maybe hid my head a little, and just tried to keep the money rolling in faster than it was going out, although it never really ends up that way, does it?

And at a certain point (around 2011), I gave up. On all of it. Not just the budget.

Fast-forward to 2014, where I live a very different life – a much simpler, and very debt-free life. A true YNAB existence. That old brand of wanty-want thinking doesn’t even come around any more. I can’t remember the last time I dropped $100 on a meal out; I’m still rocking boots from four seasons back; and the duvet is going on its tenth year now.

How did I get here…from there? Ah. There’s a story there.

Stick around. (And until next time, make sure your monthly budget meetings are a priority!)

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.