Then, in November of 2002 I proposed to Julie.  Since that day, I’ve wished that I could travel back to my Past Self and not share stock tips, but rather, popping-the-question tips. Honestly, if I could do one thing over that I’ve done in my life, it would be to grab my Past Self by the collar and hogtie him until I (Present I) could talk some sense into myself (Past Self).

But I can’t talk to my past self. So I try and make up for that every February with our anniversary. Oh my word. It’s in two weeks.

I can talk to my Future Self. And you can talk to Future You.

A Dialog with Future You

When you’re budgeting, you’re having a chat with Future You. This can get confusing, because if you’re budgeting with your spouse, you’re going to really be dialoging with four people.

You: “Let’s plan on $150 for eating out…$950 for rent…and a bajillion dollars for diapers.“

Future You: “Um, the tire’s going to blow out.”

You: “Oh yeah, when?”

Future You: “Eventually.”

You: “Right. No need to get snarky.”

Future You: “Don’t make me purse my lips at you (again). It’s not comfortable for either of us.”

You: “Right. So… $80 for eating out, $70 into car repairs for the next couple months.”

Future You: “You mean, $70 into car repairs for the next infinity months.”

You: *sigh* “I think we’re done!”

Future You: “What about Christmas?”

You: “What about it? It was 30 days ago!”

Future You: “Well, it’s coming (again). It’s recurring, even though it’s really, really far away.”

You: “We’ll deal with it when we get there.”

Future You: “Ha! Like the last time? Where you were stressed about not having any money for gifts? So instead of hiding in a cave, as I suggested, you just gave up, and started charging stuff on the card?”

You: “Your cave idea was so unbelievably dumb.”

Future You: “I got excited at the prospect of a debt-free Christmas. So sue me. How much do you want to spend on Christmas this year?”

You: “Maybe $600?”

Future You: “Really? Because last year you spent $1,200. What makes you think this year will be any different?”

You: “Okay, $1,200.”

Future You: “I like it.”

You: “You like that I’m going to spend more on Christmas?”

Future You: “I just like that you’re being realistic. $1,200 saved for Christmas means $100 per month goes to the Christmas category.”

You: “Hrm. There’s not a lot of wiggle room just with the month-to-month stuff.”

Future You: “This is reality though. These are real expenses that you can’t put off. What do you want to do?”

You: “I’ll stop eating out.”

Future You: “No you won’t.”

You: “Yes. I will. Cold turkey.”

Future You: “You won’t. You’ll last three days and then end up binging on waffle fries at Chick-Fil-A.”

You: “I’ll eat out less.”

Future You: “How much less? You already took $70 from your eating out budget to pay for eventual car repairs.”

You: “I’ll cut the cable.”

Future You: “I admire your spunk. But come on…”

You: “I’ll cut $20 from miscellaneous, $40 from groceries, $10 from entertainment, and $30 from furniture.”

Future You: “You cutting $30 from furniture means you’ll get that new coffee table three months later than you were shooting for.”

You: “Yeah, I know. That’s not a big deal though.”

Future You: “And you can realistically swing the deductions from miscellaneous, groceries, and entertainment?”

You: “Entertainment, for sure. One less movie. Easy. Groceries, no problem there as well. I felt like I already had some cushion in there anyway. Same with miscellaneous. I usually end up with $30 or so left in that category at the end of each month anyway.”

Future You: “I like it! You’ve covered eventual car repairs, and you’ll have a Merry Christmas.”

You: “Yeah. Doesn’t actually feel as bad as I thought it would.”

Future You: “Hey, I gotta jet. Something BIG is going down her—”

You: “What? Hello?! What?! Whaaaaat?!”

Rule Two

Rule Two is all about Future You. You bicker, compromise, and eventually come to a consensus on what should be done now so you don’t have to be stressing about things later.

If you have a friend that could benefit from a cash-only holiday for this year, spread the word!

This list is meant to get your introspective gears turning. All generalizations are false.

1. Do you live well below your means?
2. Do build your wealth by spending your time, energy, and money efficiently?
3. Do you care very little about social status?
4. Have you received no financial help from your parents?
5. Do your adult children pay their own way (popular ways to help, but still prohibited: down-payment for a home, and private schooling)?
6. Are you married?
7. Just once?
8. Do you own your own business?
9. Do you spend less than 7% of your wealth each year to live?
10. Is your net worth about six and a half times the average net worth of your neighbors?
11. Do you work 45 to 55 hours per week?
12. Do you save and invest about 20% of your annual income?
13. If you wear a watch, is it a Timex or Seiko?
14. If you’re wearing a Rolex, was it a gift?
15. Have you purchased two or less vehicles in the past 10 years?
16. Are those vehicles Fords, or Toyotas?
17. Ladies, was your last haircut about $45?
18. Men, was your last haircut about $16?
19. Are you happy?
20. Do you own a home?
21. Is your home’s value less than 10% of your net worth?
22. Have you lived in the same house for more than twenty years?
23. Are you college-educated?
24. Were your parents still married before you turned 18?
25. Was your mother’s primary role as a homemaker?
26. Was your father a blue-collar worker, or a business-owner/self-employed?
27. Is a typical meal at your most-frequented restaurant about $20?
28. Do you give at least 5% of your income to charitable causes?
29. Have you never paid more than $41,000 for a vehicle?
30. Do you have little to no debt (including the mortgage)?
31. Do you feel balanced between work, family, socializing, and your community or church?
32. Do you spend time planning investments and consulting with a tax advisor?
33. Do you maintain a budget?
34. Do you have integrity?
35. Do you possess high levels of self-discipline?
36. Do you get along well with all types of people?
37. Is your spouse supportive?
38. Do you work harder than most people?

I’d focus on the questions over which you have control, and not agonize over the rest!

I can’t wait for his book to come out.

I’m seeing seven plates on each side. You’re seeing Franco Columbu deadlift 675 pounds. Unless those aren’t 45 lb. plates, though I’m 99% sure they are.

If you want to get an idea of the weight there, just go to your nearest gym and lift (with your legs!) 100 pounds. Then use your imagination after that :)

If you’re looking to get stronger, you want to use linear progression and add little bits of weight to the bar every single workout. You do this as long as you can, but eventually your muscles can’t adapt and recover quickly enough. When you’ve attempted a weight at your target sets/reps for a few workouts and you aren’t able to get it, you need to “de-load.”

So you strip 10% of the weight off the bar for the next workout, and begin adding weight again. You’ll be surprised how many times your body blows right past your prior sticking point.

A few weeks later, you may stall out again. You de-load, then ramp back up. It’s like you’re getting a running start–allowing your body the chance to get some speed before attempting a new weight.

And Now…Budgeting

I was snooping around our forums today and noticed a post about overbudgeting during their first month with the program.

And I’ve been re-reading Starting Strength, so naturally this post came together.

When you first start out with your budgeting, you’ll feel really good. You’ll feel good because you’ll have control that you maybe haven’t felt for a while. Even though you may not have done anything substantial, you’ll have a clear picture of where you’re at, every dollar in your account(s) will have a job, and you’ll feel less stressed. I can guarantee that.

And then something lame will happen that will blow your best-laid plans out of the water. You’ll stall. Burn out. The potential reasons for the stall are too numerous to list.

And that’s where you de-load. Give yourself some budget “breathing room” somewhere. Take 10% off the bar so you can get a running start back toward paying down debt, putting a bit more toward retirement, saving for that awesome thing, etc.

After the De-Load, Attack with a Vengeance

Franco didn’t get to that deadlift by adding five pounds to the bar every single workout. It was an up and down journey that trended in the right direction! It’s okay if you have a target for your debt snowball of $100 extra per month, and then in month two you only manage $50. That’s okay. It’s a de-load. You’re just getting a running start to find that $100 next month and then you’ll bust through it and keep moving forward!

Once you’ve had that breather, attack your financial goals again with a vengeance. The de-load isn’t being lazy. It’s strategic realism–knowing that the best laid plans change five minutes later.

Great movie. I LOVE Dory. She has such a positive attitude.

I’m convinced that we live in a “succeed or fail” society. Success is good, failure is bad, and in many areas it seems to be an all or nothing thing. That can be a very destructive mentality to bring into budgeting.

“I overspent in groceries, I failed at budgeting.”

“Ugh, I’m going to have to lower my clothing category so I can have more money to cover that birthday present I bought. Maybe I shouldn’t have spent so much on it. I failed at budgeting.”

That’s just silly.

I remember learning to ride a bike. I fell down a lot in the beginning and crashed into a lot of bushes. I skinned my knees and my pride over and over again. But falling was actually a good thing, because it made me focus on balance more. I learned how to brake quicker so I didn’t crash into things. I learned when I needed to pedal harder so I could get up the hill. I learned when I could just coast.

You could say all that falling down and crashing taught me how NOT to ride a bike.

While working on the lightbulb, Edison said, “We now know a thousand ways not to build a lightbulb.”

Now, that’s more like it.

So let’s just remove that ‘failure’ word, okay? It’s counter productive and it’s not going to help you move forward with budgeting.

(Side note: It doesn’t help with dieting either.)

“I overspent in groceries, I failed at budgeting.”

If you overspend in a category, maybe instead of failing, you’ve just learned that next month you should budget a little more in that area.

Or maybe not. Maybe the overspend was for a very specific reason and you know that reason and you know it’s not likely to happen again. Cool.

“I haven’t updated my budget for 2 weeks. I failed at budgeting.”

So? Update it today. It’s not too late. Yeah, it may take a little bit of work to update it. You know what? If it’s really overwhelming, just do a fresh start.

It doesn’t matter that it’s been a day, a week, or two weeks. It only matters if you stop. As long as you keep going, you’ll learn and get better.

So perhaps you’ve just learned that two weeks is too long to be away from your budget.

“I didn’t save enough for that car repair. I was short $100 – I didn’t realize the car would need brakes and tires. I failed at budgeting.”

I’ve never been able to predict with 100% accuracy everything that will happen to me financially.

You won’t be able to either. Let it go. Adjust. Move on. It’s really okay.

Be glad you saved something toward car repairs, it could have been worse. Your accuracy will improve the longer you budget.

You’ve just learned to budget a little more toward car repairs in the future.

“Ugh, I’m going to have to lower my clothing category so I can have more money to cover that birthday present I bought. Maybe I shouldn’t have spent so much on it.”

Or maybe getting that present was more important to you than buying more clothes. Celebrate the fact that you HAD money in your clothing category to move around. You were being proactive. You saw something go wrong and you adjusted. Hooray!

“To err is human, to forgive is divine.” ~ Alexander Pope

It’s okay. This is all part of the learning process.

Forgive yourself.

Move on.

Just keep swimming, just keep swimming, just keep swimming…what do we do?

We swim!

~ Erin
Lead Teacher, YNAB

When I talk to people in webinars or through coaching, I hear a lot of excitement about being able to enter transactions on the go. I must admit that it is pretty cool – I love being able to enter my gas station fill up really quickly instead of taking the receipt to be another scrap of paper in my pocket. I loved being out on our summer vacation this August, hitting three stops (lunch, an antique shop, and ice cream…) and knowing it was all entered in my budget before we even got back to the inn, let alone home from the weekend.

We share your excitement for entering spending on the go, and we’re always working on making that process even more seamless for you.

But the mobile apps are about more than entry on the run – they’re about taking YNAB’s Four Rules with you wherever you go.

Perhaps the most important point we discuss in the Intro webinar is the idea that, with a budget and YNAB, the most powerful lever for change in your finances is making your spending decisions based on your category balances. With a YNAB mobile app, you can do this wherever you go. At the shoe store and wondering if that fabulous new pair are in the budget? Grab your iPhone and check your Category Balance. Out and about and wondering if you’ve budgeted enough to stop at the fancy restaurant or only enough for quick bite of fast food? Get your Droid out and pull up your budget.

When you can check your category balance on the run, you’re taking Rule One – Give Every Dollar a Job – with you. You won’t be spending dollars that have some other job, because you’ve got all the information with you. Spending this way is how you put Rule One into action in your daily life, unlocking its real power.

You’ll also know how well you’ve prepared for that rainy day using Rule Two. You’ll know exactly how much you have to work with before needing to invoke Rule Three and roll with your overspending. And by looking at those category balances before you spend, you’ll get closer and closer to building (or keeping) that Buffer and getting out (or staying out) of the paycheck-to-paycheck cycle – Rule Four bliss.

So go ahead and revel on the joy of entering your spending on the go…but don’t forget to check those category balances first!

- Todd
YNAB Coach

I’ve been waging war against an 30 extra pounds for more than 5 years. About a month ago I decided to try again, and I joined my local YMCA. This time, I tried a different approach.

I decided to go to the gym more instead of less. So instead of going a couple of times a week, I’m going five times a week. As a result, it’s become more of a habit. I’m there more days than I’m not. I set up a schedule each week on Monday, and I stick to it. If someone asks me if I want to do something, and it’s during my workout time, I say, “No, I can’t. That’s my workout time.”

The other thing I did differently was I got some help. My local YMCA offers a great program where you can get one on one time with a personal trainer and a dietician. This has given me a measure of accountability I really needed. They set me up with a great plan and I get to check back in with them every few weeks to see how I’m doing.

This support helped me get over the biggest hurdle – the beginning. My level of fitness was pretty sad when I started. I think that may be one of the reasons that people have a hard time developing a fitness routine or habit. It’s really hard to work out when you’re out of shape.

Support helped me get over that hurdle and now it’s not painful and I don’t dread it. It seems to be working as I’ve lost 5 pounds in the first month. I still have a long way to go, but now I can see how I could maintain this.

As you may imagine, I think a lot of this applies to budgeting.

When I started budgeting, my finances were not in good shape. That made getting started much more difficult. I was in a credit card nightmare that felt insurmountable. But I had support through that because I joined the YNAB forums. Getting feedback from others really helped me stick with it.

I also updated my budget more frequently than I do now. I probably checked it every day. That made me aware of what my money was doing. That awareness led to much better decisions about my money.

Over time I’ve grown into a maintenance mode with my budget. I know what I need to do and how often I need to do it to keep things rolling along. I suspect I’ll get to that point with fitness as well.

If you’ve had a hard time getting started with your budget, double your commitment! Get in there and look things over and update it every day. Most likely, if you check it daily, it will only take a few minutes. You probably won’t need to do that forever, but you may find that it helps as you get started.

Set up a routine for checking it. Maybe it’ll work best for you in the morning when you first get up. Maybe you have kids and that’s a horrible time and you’d be better off doing it in the evening after they’ve gone to bed.

Finally, take advantage of all the support we offer. There’s a lot more support now than there was five years ago when I started. We still have the forums – and they’re more fabulous than ever.

We also have a large number of video tutorials and some recorded on demand classes. If you haven’t checked those out, you really should.

We also have free live classes. We run an Intro to YNAB course frequently – several times a week. You may be aware of that, but did you know we also have a class called the Budget Workshop? It’s interactive – you get to work on setting up your budget while we help and answer questions. If you want to get started on the right foot, that’s a fantastic way to do it. We even have a separate class to help you if you are starting in overdraft.

We’re also running an eight week series called Weekly Meet Ups. We cover a different topic each week, have a tip of the week and then open the floor to your questions. It’s not too late to jump in!

Finally, we have a great customer support team. Really, they are awesome. You can email a question to the team and they’ll jump right on it. They know YNAB and they love helping.

Double your commitment to your finances and grab some of the free support we offer. In no time at all you’ll be financially fit and it won’t be a chore to check your budget.

You’ll look forward to it, and it’ll be easy.

~Erin
Lead Teacher, YNAB

There’s a war out there…

There is a war out there. Marketers, bankers, lenders, institutions, and governments want you to stay uninformed. They want you to part with your money by making poor decisions based on bad information.

The key is to be aware, plan ahead, and to part with your money on purpose.

I’ll admit that I’ve had issues with my kids and money. As soon as they get it, they want to spend it. I try and teach them the popular Give/Save/Spend model and it ends up just being a pain to keep up with. Harrison was using three of the four corners of one of his dresser drawers to segregate his money into categories. We then graduated to Ziploc bags.

Porter has a little bank with three compartments for the giving, saving, and spending. But he lost the key, and when I gave him my copy, he promptly lost that.

The biggest pain of all is when they earn a dollar, you have to start divvying everything up appropriately. One dollar earned means you need five dimes and two quarters (one dime for giving, and then half of the rest for savings—a quarter and two dimes, and the other half for spending—a quarter and two dimes). If they earn $1.50 for something? Yeah, forget about it. It turns into, “I’ll get the change later.” Or, “Let’s work on that later.” That’s Parent Code Speak for, “I’m banking on you forgetting. (And I’m being a lazy dad.)”

It sounds harsh I guess, but it ends up being a tedious nightmare.

So FamZoo had me pretty intrigued. You set up virtual accounts for your kids, Giving/Saving/Spending and then pay them by simply making a transaction in one of the accounts. Or you can set it up where it does weekly or monthly allowances that are automatically distributed to various accounts based on percentages (in my case, I’d use 10%/45%/45% for giving, saving and spending respectively).

You can even have their savings account earn interest that you specify. Remember, you’re the bank, so you’re paying them the interest.

I set it all up last week and then sat the kids down that evening to show them how it all would work. Well, I somehow forgot to save the password I’d picked, so I needed to get a new one. FamZoo is still very early in their buildout process it looks like, because I got an email directly from the CTO 21 minutes (edited: I had originally written four hours later, but that was four hours from when I first set it up.) later and he had manually reset my password. (Awesome he was so responsive during the evening. Reminds me a lot of how things started with YNAB. And what we’re trying to maintain for our customers!)

Before that password reset though, I had my kids as a captive audience, and an anxious wife, ready to move on to other things for the evening. So I didn’t have time to wait for the password. I decided I’d use YNAB to do the same thing. Granted, it won’t have all the features of FamZoo, but it’ll do the job we need it to do.

(Some of you are probably already doing this, and you’re thinking to yourself, “Duh Jesse! How come you’ve been torturing yourself for so long?!” The answer: I don’t know.)

The first thing I did was set up a new Master Category:

Then the appropriate categories for each of our kids (not including Max, who’s not yet two, or the new boy/girl coming in January):

I added an “allowance pool” (more on that in a second) category:

Then finished up with the rest of the categories. I ordered them by age, then by priority (giving, saving, spending):

Finally, I took the money they had on hand (we picked Porter’s lock on the bank he’d been using, which he found simultaneously disturbing and cool) for each of the kids and budgeted those amounts to the correct categories:

Each of the kids got to see me count their money and enter the amount. I then made sure they understood that this was their money, and I was the bank. I then sync’d with my iPhone and showed them how I would know how much they had in Fun at any moment by just looking at my phone.

How this plays out

The Kids Earning Money
The kids earn money by doing morning/evening chores. Each week, if they’ve done their chores, they’ll be paid. We’ll pay them by budgeting the appropriate amount into their respective categories. I’ll still need to do some math, but I won’t have to deal with change.

The Kids Spending Money
When they want to spend their fun money on the umpteenth pack of gum, we’ll check the balance in their Fun cateogry and let them see it. If there’s enough, Julie or I will buy it for them, and record the transaction in our phone. We’ll then show them that the balance has gone down.

You may think there’s a psychological loss here, that the kids aren’t “feeling” the money, seeing those crumpled Washingtons, and hearing the jingle-jangle of Lincolns… there probably is a bit of a loss there. But when I purposely pulled out $80 in ones from Porter’s account (birthday money we’d been holding for him at ING) for Porter to completely blow on a Leapster… if this were Twilight, and those dollars were vampire powers, he was Bella—impervious.

So I guess I’m okay with the small loss of psychological power (since I’m yet to find proof of that with my kids) for the ease and convenience brought about by the whole system.

The Kids Giving Money
When the balance in their ‘Tithing’ category is high enough, we’ll do the same as above. We’ll show them the balance in their Tithing category, write a check, and have them give that at church on Sunday. I’ll make sure they see the balance go down, and it’ll be a good teaching moment to talk about how the money’s used, why we give, etc.

The Kids Saving Money
This is the best part. The kids don’t see this money. Ever. It never touches their hands. They can’t lose it. They can’t spend it. When it’s large enough, I may consider moving all of their Savings accounts to one online account to earn some interest, and still just track the segregation here on the budget. That’s a bridge we’ll cross when we get there. With how little we pay them for their chores, it’s going to be a long time before they have savings of consequence.

The Allowance Pool

The extra category called the Allowance Pool is basically a holding area for funds Julie and I set aside for potential allowances. We don’t pay the kids automatically, so we don’t know how much they’re going to earn until they’ve actually earned it. I figure we’ll throw $30 into that and it will stretch quite a while (the kids can earn up to $1 per week.)

Wrapup

This is the system we’re running with. I’ve yet to have any of the scenarios above actually take place. Right now we’re in the honeymoon phase of this new idea and it’s all feeling very doable. I have high hopes for this for two reasons: 1) It can’t be worse than what we were attempting and 2) It’s integrated right into our normal workflow as is.

Let me know if you’re going to attempt something different, already have and what you learned, or if you have any questions!