I’m sick and tired of my grocery bill: Mid-April Update

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We’re two weeks into April so I thought I’d post an update to my post about my annoying grocery bill. There were also a few comments on the original blog post that I wanted to address a little more directly in case not everyone read the comments.

Rethinking January

After I wrote the post, there was something still nagging at me regarding the horrific number of $575.86 for January. It’s such an abnormally high amount for me. It’s usually around $400.00 a month. Really.

Then I remembered something. I was doing a 30 day gluten free experiment during January. My brother had been up visiting at the holiday and had great success eliminating gluten from his diet. I was inspired and decided to give it a 30 day test. (Side note: Though it was a game changer for him, I didn’t notice any difference.)

I suspect some of you who are gluten free will respond that it could be done for much less – and I know that’s true. I was trying some different things as part of the experiment and I just wasn’t paying attention to my budget. But I was relieved that I remembered that something was different and that contributed to the higher bill.

Has that ever happened to you?  You look at a category and say, “Woah, what happened there?”.  Just think about it for a minute and you can probably get to the bottom of it.  Then, take what you’ve learned and move on.  Yes, I had a horrible grocery bill in January, but it’s not the end of the world.   Feeling bad about it will only get you so far.  Remember to let things go and move forward.

Goodness, this is a lot of work. How will you sustain this?

A few folks mentioned that I wouldn’t be able to keep this up, it’d be too tedious. I don’t intend to do this forever. I’m just trying to move the needle a bit. I know there will be a day when I realize “Ok, I’ve learned what I needed to learn from this experiment.” Then I can shift gears.

Think about that for a second: You can change your approach to your budget any time you want. How cool is that? And you thought budgets were restrictive. Pssh.

So, how April is going?

Pretty good. It actually hasn’t been that hard to maintain. These are my numbers right now:

I’m pretty set for meals through April. I’ll just need fresh fruit for the most part. I’m betting I’ll come in under $300 for the month. I haven’t done anything with the breakdown information yet. Too soon.

When I find my mind drifting off to “Hey, maybe you should go to the grocery store.”, I stop and think for a moment. Do I really need anything? That’s stopped me a few times, and that’s a good thing because once I’m in there, I quickly lose control.

“Mmm…fresh bread, yum. Cookies! Gotta have those. Lasagna, wow, haven’t had that in a while. Oh…I’ll need spaghetti sauce for that.  Do I have cheese? Well gee, I’m already here, maybe I should get a few more things.”

I spiral out of control in about 4.2 seconds once inside the store. So I’ve done two things to slow that down.

I made a simple have/need list as suggested by Sonny in the comments on the original post. (Thanks Sonny!) I had to inventory what I had, but now I have a spreadsheet and can check it from my phone in the store.

Second, I make a list before shopping and try harder to stick to it. It seems to help. Sometimes it’s the small things, right?

What about sales tax on these split transactions?

Yana asked about sales tax and it’s a good question. When a transaction is split across a half dozen categories, what do you do with sales tax? Put it in it’s own category? Nah. Just let YNAB handle this for you.

When you’re creating the split, if you select “Done” before allocating the full amount of the transaction, YNAB will open a dialogue box to ask you how you would like to handle the unassigned amount. Chose “Auto-distribute amongst splits”. This will distribute the remaining amount between all items.

Can I get a report with a percentage breakdown for these categories?

Hannah was wondering if YNAB can report out the % spent in each of the sub categories.  You can do that easily in reports.

At the top of the Spending by Category report, make the necessary adjustments in the filter:

I chose “This Month” for the time frame and selected the Grocery Project master category:

Then you’ll see just that master category in the pie chart:

Click on the pie chart to see the breakdown by sub category:

Voila! Percentages! You can change the time frame as well once you have a few months of data.

That’s it for now.  I’ll post another update when April is over.  If you have any questions or want me to address something specific in the next follow up, just leave a comment.

 

The Acquisition of Stuff

One question we’re asked frequently in our live classes is  “Why doesn’t my credit card payment show up on the budget screen?”

I completely understand this expectation.  When you’re paying your credit card bill, that feels like any other bill you pay.  Money is leaving your bank account, and as a good YNABer, you want to make sure your budget knows about it.

The thing is, credit cards are a unique beast.  They’re loan accounts AND spending accounts.  Think about that for a second…

Your car loan is a loan account, but you don’t spend from it.   You just send money to it.  There’s one transaction to complete two steps:  changing the location of the money (sending it to the car loan people) and categorizing it (telling the budget you made a payment).

Your checking account is a spending account, but the balance is positive.  When you spend from it, you’re done.  There’s nothing to ‘pay back’.  Again, it’s one transaction to complete two steps: changing the location of the money (giving it to the grocery store for example, when buying groceries) and categorizing it (telling the budget you bought groceries).

With credit cards, these two steps require two transactions.  You categorize when you acquire the stuff, and then later, you move the money to the credit card account. We can’t categorize both of those transactions for a single purchase. That would be telling the budget the same thing twice.

Let’s walk through the acquisition of stuff – specifically a new shirt – and follow the path of the money and the information that’s sent to the budget.

I’ve decided I want a new shirt, so when I got paid, I budgeted for clothing.

LOCATION OF MONEY: Checking Account

I finally find my dream shirt.  Now I need to pay for it so I use my credit card for the purchase.

LOCATION OF MONEY:  Checking Account (still)

But I’ve got the shirt.  So I enter the spending in YNAB in my credit card account and categorize it to clothing.

LOCATION OF MONEY:  Checking Account (still)

Yup. It’s still in checking because I haven’t paid my credit card bill.

However, according to my budget, the money is gone, and that’s true.  I no longer have that clothing money. It’s important that I tell the budget right now, so I don’t forget and try to buy another shirt later only to find out the money isn’t there.

We categorized it because we got the shirt.  That’s what the outflow column really represents: the acquisition of stuff.   When you categorize the payment to your landlord, what do you acquire?  Housing for another month.  When you categorize your phone bill, what do you acquire?  The use of the phone for another month.

That’s what the budget cares about.  What stuff did you get?

The budget doesn’t care about whether or not you pay the credit card bill because at that point you aren’t acquiring anything.  You can’t buy the shirt twice.  The budget just wants to know:  Did you set money aside to buy that stuff and did you eventually buy it?

Back to our shirt.

When I categorize the purchase, I’m having this conversation with my budget:

Me:   “Hey, you know that shirt I’ve been wanting?  I finally got it.”

The budget is all business.

Budget: “Got it. You look great. Let’s move on.”

Now I need to pay my credit card bill.  I record the transfer of the money from my checking account to the credit card account.  If I try to categorize this payment, the budget  gets all up in my face about it and throws a red flag.

Budget: “Hey, what is going on?”

Me: “Oh, I’m paying that credit card bill. Remember that shirt I bought?  I need to pay the bill.”

Budget: “Dude, you already told me this.  I already know about the shirt.”

Me: ”Oh.  So you don’t need to know where the money is?”

Budget:  “Nope.  Not my job.  Accounts handles all that.  He loves that kind of stuff.  He’s kind of obsessive about it if you ask me.  But hey, I’m guess I’m obsessive too, just about different things.  You just need to tell me when you get stuff.  I’m pretty quick, no need to tell me twice. It’s not like I’m a teenager or anything.”

So I move the money from checking to the credit card account with no category.

LOCATION OF MONEY:  Credit Card Company

So what about credit card debt?  What about all that spending that happened before you started YNAB?   In YNAB, that “stuff” is acquired when you set up the account.  You’ll see it in the outflow column of the month you created the account.  So the conversation with the budget would be something like this when setting up a credit card account:

Me: “Hey, ummm… listen, I don’t know how to break it to you… but …. I owe $4000 in credit card debt.”

Budget: “Okaaay…What was it for?  What did you buy?”

Me:  *sigh* “ I wish I could remember. I know there were some meals out, a new phone, a weekend away, and I had to charge a car repair on there too.  Sorry.  I promise I’ll be better!”

Budget: “I see.  Well, don’t worry about it.  We’ll just put it all together in this Pre-YNAB debt category and consider it gone.  Just budget something each month to pay it back.”

Me:  “Ohhhh, I get it. So I tell you NOW that the money is gone and I just tell you when I plan to pay it back.  You’re the best. Thanks for not making me feel bad about it and for giving me a way to deal with it.”

So remember, you can only acquire stuff once, and when you acquire it, that’s when you tell the budget.

The outflow column is about the acquisition of stuff.

*As an aside, we do understand that this is not intuitive and are working in development to improve credit card handling in the future.

Keep Monopoly Money Out of Your Budget

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A couple of my recent posts have mentioned Rule 1. Yesterday’s sparked a conversation with a good friend who told me he’s been breaking Rule 1 without even realizing it (which I’ve also done).

He gets paid twice monthly, on the 1st and 15th, and he’s not fully buffered yet (meaning he isn’t able to live on last month’s income).

Rather than budgeting twice per month (one budgeting session for each paycheck), he estimates his expenses for the entire month when he gets his paycheck on the 1st.

By the way, Jesse tells me that 80% of YNAB users get paid other than monthly, so my friend’s situation – and the way he handles it – are normal. Less than ideal, but normal.

Another way of saying “he estimates his expenses for the entire month” is “he budgets money he doesn’t have.”

Which turns his whole budget into Monopoly money. If any of your budget is fake, all of it is fake.

Things Fall Apart When You Break Rule 1

When you break Rule 1, the other three rules break down, and YNAB becomes a simple expense tracker instead of a finely-tuned money happiness machine.

How so? Because Rules 2, 3, and 4 are extensions of Rule 1:

“Estimating” detaches your budget (and spending) from your real account balances (in checking, savings, etc), creating undesirable outcomes:

  • You always have to check your bank account balance before making a purchase.
  • You’re missing out on the magic expense reducing-power of a real budget (because your brain knows those category balances are made up, and don’t have to be honored).
  • As your budget becomes less and less meaningful, you have less reason to use it, and you run the real risk of quitting.

Make a Fresh Start

First of all, don’t feel bad. Feeling guilty about your money is a waste of energy (No shame, no blame – right?).

Second, consider a fresh start with your budget. I don’t know how many times I’ve fresh-started YNAB – could be a dozen or more.

After fresh-starting (which, you might not realize, is an actual feature in the software under the “File” menu), resolve never to budget money you don’t have.

When money enters your life, assign it to those jobs that need to be done before you get paid again. In the unfortunate event you have to use a credit card to get by (we’ve all been there), you’ll be doing so with full awareness.

For those of you paid weekly or twice monthly, use your category names (or the notes feature in YNAB) to estimate your bills and remind yourself of their due dates. (I just made this change myself.)

Bottom line: “Available to Budget” is a sacred number. As long as you treat it accordingly, you’ll be using YNAB to its full potential.

Join us for the March Spending Fast Challenge!

From March Monday 25 through Sunday 31, we’re going to do a YNAB community spending fast.  That means no unnecessary spending during that week.   Let’s bring March to a close by bringing some of our categories in under budget!

We’ve created an event on facebook so you can comment on how it’s going, share what you’re learning and support others.  If you don’t have a facebook account, you can leave thoughts here on this blog post.

Obviously, you’ll want to pay your bills and all that good stuff.  It’s important to be responsible. But everything else is on the chopping block!

So what’s unnecessary?

I think that’s a line that each of you should draw for yourselves.  It’s easy for me to say “No eating out! Period!” as a guideline, but I don’t know your specific situation and you may have to eat out for a very legitimate reason.  (Work lunch meeting, too far away from home at meal time, etc.)   I myself have a dinner meeting next week and I’m going to proceed with that.  So look over your budget, think about the upcoming week and set your own parameters.  This is really about increasing awareness on YOUR spending habits, so I’ll leave that up to you.

 Here are my personal parameters.  I will not spend money during that week on:

  •  Groceries (If you choose to not spend on groceries make sure you have enough food in the cupboards for the week ahead)
  •  Restaurants (except for the pre-scheduled dinner meeting)
  •  Pet Stuff (I tend to go overboard with stuff for the dog, and there’s plenty of pet food in the house right now.)
  •  Gas
  •  Household Stuff
  •  Clothes
  •  Entertainment
  •  Hobbies
  •  Software, technology, etc.
  •  Books

Basically, I’m just going to make sure bills get paid.  That’s about it.

A spending fast isn’t sustainable over the long term, and that’s certainly not the goal.  This is just for a week.  Hopefully, that’s long enough to be meaningful.  The point is to become aware of places where you could cut back and where you might be spending wastefully.

So join us and comment as the week goes along to share what you’re learning about your spending habits!  Naturally, we’ll be giving away a handful YNAB T-shirts when it’s over for insightful comments, deep words of wisdom for others, and meaningful lessons learned.

Share your successes and challenges with us as the week unfolds.  And be sure to keep track of what you think you’re saving so you can share that at the end!

When a Bonus Really Becomes a Bonus!

This came to my inbox from Trudy yesterday. There’s a lot to glean here!

For the last 5 years I’ve had a job that pays a bonus in late March/early April. That bonus has always been spoken for – and then some – by February. Property taxes, income tax, medical bills, home owner’s insurance, new tires, whatever …

This year, after using YNAB consistently just since last July, that bonus is going to the the topic of a very joyous conversation for my husband and me. Not one penny of it is allocated. When the bonus pays out we are going to sit down and actually make conscious decisions on how to give every bit of it a job. It won’t all go to fun since we’re still paying off debt, but what a huge relief to not have to hope that the property tax doesn’t come due until the bonus is paid, or worry that the balding tires will wear out too soon.

Rule One helped them squeeze dollars that were simply slipping through their fingers and allocate them toward Rule Two categories (income tax, medical bills, homeowner’s insurance, new tires, whatever…).  That’s the gist of it. The bonus then truly became a bonus.

Congrats to Trudy. That “how do we allocate this bonus” conversation is going to be a lot of fun!

Suggest a topic for YNAB's Weekly Meet Up

Hi folks,

YNAB’s two teachers met today to develop YNAB’s upcoming Weekly Meet Up Classes which are beginning in March.

Todd Curtis and Erin Lowell

Each Weekly Meet up will begin with a short presentation on a Topic of the Week and the topics will be generated by participants. This will be followed by Open Q&A on whatever you want to discuss about YNAB!

Weekly Meet Ups will be free, of course. You can attend once, or every week.
Here are the dates and times for March:

March 14th – 8:00pm EST

March 22nd – 9:00pm EST

March 27th – 7:30pm EST

We’d like your feedback on topics! Please take a second and fill out this short 2 question survey.

Trust your Budget and Close Some Accounts!

I am growing more and more convinced that the reason a lot of people struggle with budgeting is because we live in a world that is too focused on accounts.  Most people have more than one account, typically checking and savings at the very least.  Some folks have two checking accounts – one for bills and one for everything else.  On average most people have between three and six Savings Accounts based on what I see through webinars and coaching.  They have one savings account for property taxes, one for emergencies and so on.

Then there are credit cards.  Most folks have a few of those as well.  Many people have a credit card they use for purchases and pay in full each month and some folks have cards they have stopped using entirely and are just trying to pay off.

It’s not unusual for me to look at a YNAB file and see ten accounts.  In an effort to understand the people I am working with, I always ask the purpose of each account.  When it gets right down to it, many times people are using accounts to budget.  “The money in this account is for XYZ.”

Why are we so hyper focused on accounts?  Because if you do not have a budget – you do need some structure to manage your money, and accounts are the structure that society provides.  (See?  You are secretly craving a budget!!) Everyone has a few accounts, and we are in constant contact with them. Money goes in and out all the time.  If you are using an account for a specific purpose – more than likely – you are trying to budget through accounts.

It can be really hard to let go of that structure, but the budget can simplify things for you if you let it.

Let’s say you have two checking accounts as mentioned above – one for bills and one for everything else.  If you create categories for the bills – and everything else – you could easily have one checking account.  Track WHAT the money is for in the budget.

In fact to take this a step further, when you finally go to spend money, checking the account balance is no longer even necessary.  Check your budget instead!  Let’s say you have budgeted $300 for groceries and your total account balances are $1000.   It doesn’t really matter what account you use for the purchase. You can hand over cash, a credit card, a check, a debit card – the budget doesn’t care HOW you pay for this.  The budget needs to know that it was for groceries.  The point is that $300 is what you have set aside for groceries.  Your other dollars ($700 of them) are busy doing other jobs!  So you cannot spend all $1000; your allowed amount for groceries is $300 and it’s the budget, not the bank balance, that tells you so. 

Do you have multiple savings accounts? Condense that down to one!  Set up savings categories on the budget to track your savings goals.  Instead of having a savings account for emergencies, and a seperate one for vacation, and yet another one for property taxes, set up a master category for savings, and  sub-categories for each of those things.  This is what the budget is for!

Honestly, if I could find a checking account that paid a great interest rate, I’d have one account and let my budget take care of everything else.  Because ultimately, accounts are just storage containers for our money.  (Dollars by location)  The budget is where we keep track of WHAT our money is doing.  (Dollars by job)  When it comes right down to it, the budget doesn’t care WHERE your money is.   You can keep it all in pennies in a sock drawer if you want – as long as you tell the budget what you spent those pennies on.

Can you imagine how simple things would be with one account?  Think about it.  No transfers, no wondering how to move things around.  Look over your existing accounts and ask yourself “Am I using this account to budget my money?  Could I take care of this by creating a category instead?”

Simplify your life.   Trust your budget.  Close some accounts! 

YNAB Webinar Woes

Hey there folks,

It’s been a somewhat challenging couple of days for YNAB Webinars, so I thought I’d post an update so people know what happened.

I had two classes scheduled Wednesday evening. About 15 minutes before the start time, severe thunderstorms rolled through my area of Maine. I was able to warn those who’d signed in before class started that the weather was bad and I might lose power, but that was only about a dozen people. At 7:30PM EDT, promptly at the start of class, my power went out. It was out for 10 hours. It was frustrating to know people were waiting for me not knowing why I wasn’t there.

The weather was beautiful Thursday so I thought things would be fine. But about half way through my first class last night, my internet went down. It turned out to be a service disruption to the entire area.

Everyone involved should have been notified by now, but in case you weren’t, please accept my apology. I don’t want anyone to think that’s how we do business around here. If I’m not at a webinar, it’s because it’s completely out of my control. But I still feel awful that people were waiting and probably confused as to what happened.

The Wednesday night classes were rescheduled for Monday and registration is posted on the coaching page. I’ll reschedule the other ones when I do the August schedule in a few days.

Please register again if you were registered before, and feel free to join us even if you weren’t signed up. This was a very unusual occurrence and hopefully things will go just fine from this point forward.

Thanks for your understanding.

~Erin
YNAB Coach

Dearly Beloved, We are gathered here today to convert your spouse to budgeting.

Quite often in Webinars, I’ll finish explaining a concept and ask for clarifying questions. As the questions roll in, I’m occasionally asked “How can I get my husband to buy in?” or “My wife spends everything in the checking account and never checks the budget. What can I do?”

Each time I get the question, I’m reminded of an article I read years ago written by Amy Dacyczyn, who authored a very popular book on frugality called The Tightwad Gazette. Her article was about converting your spouse to a more frugal lifestyle, but I’ve always thought the advice might apply to budgeting.

So I finally dug out the book – which I highly recommend by the way – and thought I’d share her main points with you, and elaborate a bit on how they might apply to converting your spouse to budgeting.

I hope that you find something useful to help you move forward with your spouse.


1. Establish some financial goals you can both agree on.

This seems to me like a good place to start. You may not agree on everything, but perhaps your family is saving a down payment for a house, or trying to pay off some credit card debt. You might try asking your reluctant spouse what their financial goals are, and try finding common ground from there.


2. Gather evidence.

YNAB makes this suggestion very easy to implement. As time goes on, you’ll have a lot of financial data to look back at. It’s be easier to address spending leaks if you can point to the actual transactions that created them.


3. Discuss Budgeting at a “good time”.

Discussing things when everyone is in a good mood will lead to much more productive conversations. It’s probably not best to approach your spouse when you are very angry and he or she is feeling defensive. Start the conversation from a positive place.


4. Stick with the facts, avoid blame.

When discussing a specific concern, just state the facts.

“We agreed we’d make a $100 payment on the credit card bill. You bought a $50 video game. We only made an interest payment on the debt.”

That way, it’s about the facts, and not about who’s right and who’s wrong. It’s more difficult to dispute the facts.


5. Be the leader.

If your spouse won’t stick to the budget, you should still try. Lead by example. Your efforts alone may not solve everything, but some budgeting is better than no budgeting.


6. Request small changes rather than sweeping reform.

If you want to lower the “Eating Out” category by $200, start by agreeing to lower it by $50, and work from there. Or perhaps you might ask your spouse to wait one month to purchase something they really want. You aren’t saying no, you’re just saying not quite yet.


7. Give your spouse some freedom.

I’ve seen many YNABers do this successfully. Simply set up a category for each of you, and agree on an amount you can afford within your budget.

For example:

Fun Money – HIS – $50
Fun Money – HERS – $50

Each person can spend their amount without having to answer to the other person at all. Since it’s an amount you’ve agreed on and budgeted for, you can spend without worry.


8. Be patient.

Change takes time. I personally found it easier to stay committed to YNAB after six months had gone by and I could really see some positive change. It may take a while to turn things around financially, but if you are leading by example, some things are likely to get better. At that point hopefully your spouse will begin to see the benefits of budgeting and buy in a little more.


9. Give positive reinforcement when possible.

This is good advice in all situations. If your spouse does manage to stay under budget in a category, or bring you receipts so you can enter them, that’s a step in the right direction. Celebrate that!

I recognize that these tips may not solve all your issues in converting your spouse, but I thought there might be something in there that’s useful to some of you. If you have some tips of your own that worked with your spouse, feel free to share them by commenting on this post.

~Erin
YNAB Coach

Our iPhone app update was just approved!

Our iPhone app update (1.1) was just approved by Apple, and will be available on your phone within the next 24 hours. This is good news for a few reasons. First of all, it fixes a bug that was caused by the new iPhone OS that I mentioned in an earlier post. So, definitely get this app update as soon as possible so that your iPhone app continues to work well when iOS 4 is released by Apple on Monday.

Most importantly however, it adds a number of new features that I think you’ll really enjoy:

  • An unlock code to prevent anyone from accessing the app on your phone unless they know your code. (It’s optional if you don’t want it)
  • Streamlined syncing: The sync passcode stays the same between runs, and the next version of YNAB for desktop remembers your passcode between runs as well. This means that 95% of the time, nothing has to change, and you can just hit “Sync now”. The app also lays some groundwork to make it discoverable by a new version of YNAB so you don’t have to type the IP address. I have the prototype for that code running on my machine, but it will be a while before it’s released since it relies on AIR 2.0, and we still need to figure out our AIR 2 upgrade story.
  • Transfers – you can now create transfers on the iPhone
  • Flags – You can flag transactions as you enter them now

Enjoy!