If I had to choose one sentence to describe the YNAB way of personal budgeting, that would be it. Living on last month’s income, I’m told, is budgeting nirvana.

But what if you’re not there yet? Is YNAB only for people who already have a month’s expenses in the bank?

Absolutely not. In fact, Jesse (and the YNAB team) recently re-ordered the 4 Rules, moving  ”Live on last month’s income” from Rule 1 to Rule 4. Not because it became less important; simply because most YNABers will spend months or years living Rules 1 – 3 in preparation for living Rule 4.

In other words, most of us in the YNAB community live check to check (for the time moment). Being a check-to-checker doesn’t make us second-class citizens around here. It just means our relative cash tightness requires us to get a little creative with our YNABing.

For example, as check-to-checkers we’re constantly timing bills, right? We have to stay keenly aware of our bank account balances to avoid overdrawing our bank accounts.

Some new YNABers tell us they can’t buy into Rule 1 (which encourages you to only budget dollars already in your possession) because they need to have their entire month’s expenses in the budget ahead of time to make sure they don’t miss any bills.

Budgeting money you haven’t received yet causes serious problems for check-to-checkers – mostly because it turns your budget into a physical manifestation of the classic “what bills do I have coming up and how much do I have in my checking account” game (one of my all-time favorites).

Good news: you don’t have to budget into the future in order to time your bills. Use your categories to set up a simple bill-timing schedule. Check it out:

Pretty simple, right?

1. Set up a master category for each of your paychecks.

2. Include the bill’s regular amount and date due in the subcategory name.

3. As checks come in, budget according to the schedule.

Diligently following Rule 1 sets you up to follow Rules 2 and 3, which will eventually carry us all to Rule 4 – ultimate budgeting bliss.

We’re a profitable, bootstrapped, growing company. We create beautiful personal finance software that’s changing how people think about their money.  Our software is named “You Need a Budget”, but everyone just calls it “YNAB”.  For years now, lots of people have been buying YNAB and then telling their friends how awesome it is.  (Google us and you’ll see.)  We’ve got desktop, iPhone, and Android apps. And we’re currently working on the iPad app.

Now we want a Web App

Our desktop software is great, but our customers would love to access YNAB on the web too. We’re already hard at work on our Rails-based REST API that will take care of the difficult stuff like occasionally-connected data synchronization between our various clients. So, much of the back end is covered. Now we want to write a Javascript app that does everything client-side, and uses the API to send the data back and forth. That architecture would have a lot of benefits, like letting us wrap it and deploy it on the desktop, or letting folks use the app even when they’re offline.

And that’s where you come in!

You’ve got significant experience architecting and building large, Javascript-centric web apps, and you’d like to work with us on a full time (40 hours/week) basis.  If you’re international, your status would be as an independent contractor. If you’re stateside, you can be W2, or independent contractor as well. It’d be your call.

This app is going to be our bread and butter. As its lead architect, you will be laying the foundation for our web and desktop efforts for years to come.  After reading that, you’re hopefully thinking, “Wow! Cool!” And then, if you’re really experienced, you’re probably thinking, “Oh, wow…that sounds like a lot of responsibility!” And you’d be right. But now you’re probably already back to thinking how much fun this is going to be…

You would be:

• Architecting and co-developing a Javascript-centric web app that has many features of our existing desktop application. (We’re pretty excited about Ember as our framework at the moment, but we’re approaching it with an open mind)

• Working with a small development team (~2 other client-side devs, a server-side API dev, and a designer) on a regular basis. Our teams are small (our whole company only has about 12 full-time employees, and the CTO is writing this job post), but we get cool stuff done.

• Mentoring your teammates on how to develop a maintainable app in Javascript

• Working from home most of the time, and working with us in person (or at someone else’s home) occasionally.

• Talking with our other desktop, iPhone, Android, and Rails developers (we’re all friendly) to make sure we’re all on the same page.

You’re the one we’re looking for if you:

• Are a confident, humble programmer who would thrive on a small, remotely based team.

• Have already written large-scale Javascript-centric web apps.

  • Major bonus points if you’ve written a web-app that’s been deployed to the desktop (Chromium Embedded Framework, XULRunner, etc)

• Have experience with development apart from the web. Our ideal candidate now lives and breathes web tech, but perhaps had a former life in another language.

• Know more languages than just Javascript/Coffeescript.

• Have experience with at least one of the major modern Javascript frameworks other than JQuery: Ember, Backbone, AngularJS, Dojo, Sproutcore, YUI, etc, and have an informed opinion about some of the others.

• Understand the value of a strong test suite

• Have an informed opinion about Javascript vs CoffeeScript

• Are suitably paranoid about security. We don’t deal with bank account credentials or CC numbers, but you should act like we do.

• Geek out about automation, continuous integration, and continuous deployment.

• Dislike reinventing the wheel and consequently enjoy finding a library that does *just* what you were about to code yourself.

• You stand out amongst your fellow geeks by being a great communicator and all around “nice person.”

• Are familiar with distributed version control (Git, Mercurial, etc).

• Have excellent debugging skills

• Have great architecture software design skills. Many of us will be learning about Javascript architecture by reading your code, so it should smell good.

• Understand the balance between shipping regularly and getting things right

• Like to optimize/profile

• Understand how to use in-browser developer tools to great effect

• Are at home on the command line

• Write code that is easy for other programmers to understand and use

• Use descriptive variable names

• Have excellent spoken and written English (we’re an international team, so accents are fine!)

• You’re self motivated and thrive with directions like:

“Now that you understand the constraints, how do you think we should go about writing this component?”

“Woah, looks like we have a bottleneck when we’re iterating over a few thousand transactions in this sample data file. Can you look into it?”

You get Bonus Points if:

• You live anywhere remotely close to Texas, Switzerland, Maryland, Sydney (Australia), or Italy. (That makes it easier for us to get together on a regular basis).

• You do back-end stuff too. Devops, deployment automation, Rails, etc

• You’ve written some open source stuff, or made some good contributions to an open source project.

Major-Triple-Gold-Star Bonus points if:

• You already use and love YNAB

More about how we work:

• We all work from home. We don’t track time, but we do get stuff done. If this is your first “at home” gig, let’s talk. We were nervous too when we made the shift out of an office.

• We like to use “the best tool for the job”, and here’s a sampling of what we use now:

  • We communicate on Skype, HipChat, Google Hangout, Basecamp, email, and occasionally real phones.

  • We use BitBucket for source control (we use Git and Mercurial)

  • We track our tasks in Assembla

  • We handle Bugs and Customer Service in FogBugz

• We meet each other in person sometimes to work on big tasks or get started on large projects. (We like each other, so this part is fun). We’d do that with you too to get everyone up to speed quickly.

• We don’t track vacation, but we believe it’s good for you to take some, and think you know best when a vacation is needed!

• We’re profitable, and we wouldn’t hire you if we weren’t. We’re in this for the long haul.

• We budget for the business like we do in our personal lives. We’ve been saving up to hire you, so if we stopped making money tomorrow, we could pay everyone for a good long while.

• We’ve got 12 full time employees and a number of part time people too.

• We make a huge, positive difference in people’s lives.

• We have a 401k where we contribute 3% of your salary and it vests immediately.

• We don’t provide health insurance, because we’d rather have everyone shop around and settle on a plan that fits their specific needs.

• When you do cool things, we pay you a bonus. Unfortunately, there’s no 30-page document describing our bonus system.

• We are bootstrapped. Initial funding was $63 for AdWords. We’re really glad AdWords used to be inexpensive.

• We give birthday gifts.

• The full-time team meets once every 18 months or so for a fun meetup. (Our last one involved wilderness survival training, ziplining through trees, and surfing)

• We’ll give you a YNAB T-Shirt (and not one of those XXLs that companies can never be rid of)

To apply:

• Your cover letter can be your email. No need to send something separate.

• Send your resume in PDF form.

• Don’t forget to include links that make you look good! Twitter, LinkedIn, Stack Overflow, GitHub, BitBucket, etc.

• Please include links to things you’ve built, and describe your role in building those apps.

• Include “Let’s build a web app!” in the subject line of your email. If you don’t, we won’t read your email.

• Applications should go to: YNAB-YNAB0743@applications.recruiterbox.com

• Also, please complete the following questions. All told, they should take you less than an hour, and will save us a great deal of time in the long run.

1) What Javascript MVC framework(s) are you most familiar with?

2) What Javascript MVC framework(s) are you most excited about?

3) What aspect of Javascript trips you up the most, or what language feature do you most often wish it had? (If you are using a variant like CoffeeScript or TypeScript, you can answer with the aspect you were happiest to avoid or the feature you were happy to finally have.)

4) If you were interviewing a prospective Javascript expert to join our team, what one or two concepts would you ask about to make sure that the developer really understands the nuances of Javascript rather than only knowing how to Google, copy and paste. (There are plenty of good answers here. I’m trying to figure out what knowledge you value and believe can help identify the experts out there.)

5) Fork the following JSFiddle and follow the instructions:

    http://jsfiddle.net/Taytay/k4ryh/

    Send us a link to your answer (your fork of the Fiddle)

• Betterment automatically prepares me for retirement.
• My credit card pays itself off automatically every month. As long as the “check” doesn’t bounce, I’ll never pay a late fee or credit card interest again in my life.
• My mortgage, student loan payment, insurances, utilities and other monthly bills come out of my checking account on their own. I send no paper checks – so I don’t have to remember them.

But automation only gets you so far – which is my main beef with “60/40″ or “80/20″ budgeting plans. The idea is that you’ll save 20% or 40% of your income off the top, allowing to do whatever you want with the remaining 60% or 80% of your income.

Yes – I see real wisdom in automatically saving such a big percentage of your income. Following this plan for a few decades could set you up for a great retirement.

The problem is most people aren’t immediatley in a position to save such a high percentage. We’d have to work to increase our savings rate over time.

And how do you increase your savings rate? By minding each dollar and planning carefully. In other words, by using a real budget.

Using a budget isn’t an exercise in restriction or deprivation; it’s an opportunity to raise your awareness about where your dollars flow. As you increase awareness, you’ll get more life-value from each dollar.

60/40 and 80/20 budgeting plans sound great, but the advice seems impractical to me. If you flip the concept on its head, you’re telling people “go ahead and ignore 60% to 80% of your finances, and everything will work out fine.” It just doesn’t sit well.

But, hey, I realize you might not like the idea of a traditional budget. Here’s a little secret – the right kind of budget doesn’t tell you not to spend – it tells you to spend every last penny on your current and future expenses. Sound interesting? You might want to check out our 9-Day Budgeting course. You really haven’t budgeted like this before.

YNAB makes it easy to set and achieve savings goals. I find the tough part is knowing exactly what I want to save for.

Sometimes it’s as simple as putting two goal categories in your budget, and having them compete for new dollars as they become available.

But I have tons of goals, real needs, and passing fancies floating around in my head at any given time, and I want to be more purposeful about how I save, and for what.

I’m starting a Wants List – a spreadsheet – with the following columns:

• Goal
• Estimated Price/Cost
• Easy to Buy Used?
• Frequency of Use
• Is it Awesome?
• Key Features
• Contenders
• Reviews

There are no hard and fast rules about how to use the Wants List – the point is simply to capture your goals and fully consider their value relative to each other. Here’s how I’ll use the columns:

Estimated Price/Cost will be (obviously) be a range from low to high.

Easy to Buy Used? forces me to research the possibility of buying the thing from a person else instead of a retailer. It’s not something I’m used to, but the merits are obvious.

Frequency of Use lets me consider how often I’ll use (and benefit from) the goal, and may lead me to a) scrap the goal altogether or b) realize that, while awesome, it makes more sense to rent the item (I’m looking at you, offroad toys).

Is it Awesome? is a continuum that runs between “No big deal” and “Gray matter all over the walls” (because the awesomeness made your brain explode). Is it Awesome? should be a source of lively discussion and debate between interested parties.

Key Features will be an evolving list. As I shop and read reviews, I’ll get a better sense of which features matter, and which perks are worth the increased cost.

Contenders is the running list of makes and models that could satisfy the goal.

Links to Reviews will be a library of good advice on the purchase, also helping me discover questions I didn’t know I should be asking about the product/experience.

The Wants List is a home for any goal that requires you to save up or prepare in advance – whether it’s a new TV, a vacation, or the goal to quit your job and become self-employed.

My guess is, after the lesson learned from the comments, that Mark will likely do the same. I anticipate he’ll write a follow up post, and likely title it in some extreme way again. ;) Enter Mark:

With tax day nearly upon us two months behind us, it’s about time I filed my 2012 return.

I was still self-employed last year, so I can deduct my health insurance premiums. Writing down my total premiums paid for the year made me just a little sick: over $8,200.

Eight thousand two hundred dollars??

In 2013 I’m on pace to pay close to $9,000 in premiums.

The monthly tally:

Mark: $167
Kate: $301
Son: $127
Daughter: $148

Total: $743

Wondering what makes my family so expensive? Two things:

I’ve never shopped health insurance. It never occurred to me that the kids and I might be over-covered until recently; I just took my insurance agent at his word (not implying he did anything wrong – I should have been more proactive in finding the right plan).

Our infertility. Because we’ve been through infertility treatments (like IVF), Kate is automatically denied private health insurance. Adding insult to injury, the kids and I can’t even get a family policy without my wife because of the infertility. When I applied about a month ago, we were denied based on the possibility that my wife and I would do further infertility treatments in the future which could result in a higher risk pregnancy and multiple births.

And that’s why we have a 1:1 ratio of policies to people in our home.

Well, this madness has to stop.

The kids will still have their own policies, but I’ll be moving them to a higher deductible ($10,000) plan that will cost about $36 per month per child. The policy I’ve found allows up to four office visits per year for $35 each. It also carries some prescription assitance, so we’ll be comfortable with the kids having coverage. Moving from their old policies to the new ones will save us $200/mo in premiums.

I’ll drop my health insurance for the time being. I’ll choose to play the odds because I consider health insurance a bad bet given my circumstances.

We’ll also drop Kate’s coverage. Because of the infertility, her $301 only buys her a spot in the Utah high-risk insurance pool, so everything except major medical comes out of our pockets.

Dropping Kate’s and my coverage puts the entire $470 back in the budget. We’ll take $100 or $125 of the savings and start building up a ‘Medical’ rainy day fund.

What About the Affordable Care Act?

This calculator estimates my family’s post-Obamacare annual premium at $11,137. Depending on my income, tax credits could cover 25% to 30%.

If Kate and I choose to stay uninsured under the new law, we’ll have to pay an annual penalty (unless our total premiums exceed some percentage of our income).

In other words, I can’t say how the Affordable Care Act will affect today’s decision to drop coverage. I’ll have to evaluate again next year.

In the meantime, I’ll be playing with an extra $400 to $500 per month in my budget, which comes in handy.

Comments? Any self-employed people out there who’ve chosen to be uninsured?

On our last night in Santa Cruz, we ate at at exceptionally nice restaurant whose name I’ve already forgotten (maybe a teammate will jump in and help me out).

As we got ready to order entrees,I had my eye on two options:

• Some sort of filet of beef.
• Blackened lamb with bread pudding and some other fancy sounding stuff (you can tell I’m quite the foodie).

The filet felt like the safe option, but I like a little culinary adventure now and again. I left my meal choice to Sage, our server.

“Sage, I’m trying to decide between the filet and the blackened lamb.”

“The blackened lamb.” It wasn’t a suggestion – he barely looked up from his notepad as I folded my menu and handed it to him.

“Good enough for me.”

“How would you like it cooked?” Sage asked.

“I don’t know. How would I like it cooked?”

“Medium.”

“Medium it is.”

Sage moved on to take Julie’s (Jesse’s wife) order as George (YNAB developer) turned to me and said “You’re a chef’s dream. All week I’ve been nitpicking every meal choice, customizing this and that. When it’s your turn, you ask the server what he/she recommends and then take it straight off the menu.”

George is right – I almost always let the server order for me.

Here’s my logic:

I rarely try a restaurant without reading Yelp reviews beforehand. If the place isn’t well-reviewed, I’m not going to eat there in the first place. In other words, I go in knowing plenty of other people vouch for the quality of food and service.

Whoever came up with the menu items did so with years of experience and experimentation. If the chef thinks mushroom bread pudding (whatever that is) goes well with blackened lamb, it’s likely she/he has tried it with other things and settled on the published pairing.

In decent restaurants, the service staff know what they’re talking about. Sage, in particular, was more than willing to discourage the group from certain menu items while enthusiastically recommending others. He’d obviously eaten the food himself and seen countless patrons react to it before us.

If my goal is an enjoyable meal out, am I likely to outperform hundreds of previous patrons, the chef, and the server? Will I end up with a better experience by customizing my order than I’d have had by simply taking them at their word?

My money is always on experience. During the many delicious meals out last week, my method didn’t fail me (so says my bathroom scale, anyway).

How does this relate to budgeting?

You’re here; you’re using YNAB. You have at least some notion of how your financial life works and how you want it to work. You want a tool that bends to your habits and opinions. That’s great – YNAB flexes easily in spite of its bias toward the 4 Rules.

But here’s what I’d tell you:

Tens of thousands of people have embraced the YNAB way of managing their money and reaped the benefits.

As an experiment, order off the YNAB menu for a while.

Follow our recipe for a while, and see where it takes you:

• Budget to zero.
• Enter your transactions in real time.
• Reduce the number of accounts in your life.
• Make your budget your reality.

Hey, I get it. Many people reading this are what we’d call “super users”, meaning you’ve been at this YNAB thing for years, your workflow is nailed down, and your financial life is blissful. That’s perfect. This message is geared toward newish users who are still trying to wrap their heads around the whole budgeting thing and trying to learn the software at the same time.

Another great quote from George’s days as a skydiving instructor:

“You’ve got to learn to do it right before you can learn to do it wrong and get away with it.”

(Yeah, he was talking about packing parachutes.)

Step 1: Find Your Discretionary Categories with Nice, Round “Budgeted Numbers”

For example:

Pets: $50
Restaurants: $150
Groceries: $600
Fun Money: $40

Step 2: Shave a Small Percentage Off the Budgeted Amount

Pets: $44
Restaurants: $136
Groceries: $588
Fun Money $37

Big impact on any individual category? Nope. Freed up cash? $35.

Step 3: Allocate Freed Cash to a Big Goal 

Add it to your monthly mortgage, credit card, or retirement savings category. Then give yourself a big pat on the back.

Will Category Shavings Make a Difference to Your Goals?

A win is a win. Check it out:

• On a $300,000 mortgage at 4% interest, and extra $35 payment each month saves over $11,000 in interest over the life of the loan – not to mention cutting 16 months off the life of the loan.
• On a $10,000 credit card balance at 18% interest, an extra $35 per month saves $1,000 in interest and gets rid of the debt eleven months earlier.
• Adding $35 to your monthly retirement account at 8% interest for 20 years adds an extra $20,600 to your nest egg.

Life-changing amounts? Probably not, but  a win is a win. You’re adding efficiency to your budget, employing a small percentage of your dollars in higher paying positions.

If your income is stable-to-growing (cost of living raises, bonsues, etc), go through this exercise every six months, gradually increasing your “get ahead” number. Be constantly on the lookout for ways to sneak your dollars into more productive categories.

(If your income isn’t “stable-to-growing”, I’m sure you’re used to this game – minus the fun part where you allocate freed-up cash to a big goal. I feel for you – hang in there.)

*Thanks to YNAB education lead, Erin, for the post idea.

Every Tuesday and Thursday a neighbor girl stays a couple hours with the kids while Kate runs errands and enjoys time to herself.

Once a week she’ll pick me up and we’ll go for a burger or a burrito – a quick weekday afternoon date that typically costs us $15 to $17. (I don’t include the cost of the babysitter because that’s happening whether we go out or not.)

Nobody’s at our regular burger joint at 3:30pm on a Tuesday afternoon. We eat, chat, sip a milkshake. It’s a great time.

After spending almost nothing eating out in April ($76 for the whole month), we decided to go back to one of our favorite local pizza shops in early May. It’s not the most expensive restaurant in the world, but you easily spend $50 if you go for an appetizer and dessert (which I do).

During the meal, I asked Kate a question:

“It’s fun to be back here, isn’t it?”

“Yeah, it’s fun.”

“Would you rather do this once or do three of our afternoon dates?”

“Three of our afternoon dates. No question.”

I said I felt the same way.

Kate’s answer was an epiphany: we’ve always said we enjoy a nicer restaurant, but as we weigh our costs and alternatives, we realize we might not enjoy a nicer restaurant enough to make it worth the lost alternative.

As you spend, pay less attention to direct costs and more attention to alternative benefits.

One nice meal out doesn’t cost $60 – it costs three $20 meals. Is that worth it? Maybe; maybe not. But evaluating the foregone alternative will make you a happier, more conscientious consumer.

*As a post-script, Kate and I also occasionally skip the $60 meal and the $20 meal and go for a couple-mile walk along the river near our house. Let’s hear it for free alternatives with equal or greater benefits!

Yesterday I saw three cases dealing with importing transactions:

• One user was trying to import six months of data from his checking account. YNAB’s inability to let him rename small batches of payees frustrated him.
• Another person’s bank didn’t offer any of YNAB’s recommended file formats for download, so he was fighting with a csv file, trying to get it formatted properly for YNAB.
• Another particularly upset user berated YNAB for its lack of “direct connect” functionality, explaining how we’re “pretending” it’s programmatically difficult in order to avoid dealing with data security laws.

Here’s the deal: YNAB prefers manual transaction entry. Why? Because it keeps you close to your budget – allowing you to own every purchase as you record it.

I understand the desire for automation, but in YNAB’s case it could hurt more than help. Besides, how much does manual transaction entry really cost?

In the month of May I recorded 94 transactions* in my budget: 31 in my checking account and 64 on my credit card. Let’s say my transaction count is unusually low, so we’ll assume double my number. 188 transactions, or about 6 per day.

*YNAB’s Scheduled Transactions feature handles 16 of the 94. I like using scheduled transactions for fixed, recurring expenses like my mortgage, car insurance, etc.

With the relevant account and YNAB open on my desktop (or on my phone), it takes me about 20 seconds to enter a transaction, including a descriptive memo. Entering six transactions manually would cost about two minutes, or approximately one hour per month.

Manual transaction entry doesn’t waste that hour – it becomes an opportunity for reflection and correction.

Fixating on historical data and fighting with the import process caused at least one of my failed attempts at YNABing. As soon as I wrapped my brain around the idea of only budgeting money I currently had, and entering my transactions manually, budgeting became easy and fun.

The smart people who run this operation may someday build direct connect functionality into YNAB. But if they don’t – it won’t make a bit of difference to my budgeting happiness.

Yesterday’s post generated over 6,500 words of comments. As Erin put it in YNAB’s internal chat:

“You smacked the beehive, then dipped yourself in honey and jumped in.”

Indeed I did.

And now for the follow-up.

Rather than extend the debate, let’s walk through an imaginary budget coaching session where the guy and his budgeting coach talk about the consequences of paying for the trip with borrowed money.

I did my best to incorporate points from both sides of yesterday’s debate into the dialog. I’ll be curious to hear whether I covered the bases (if you can power through the 1,300 words of this post).

Guy: “So, I guess I’ll have to put the last $1,000 for that trip on my credit card.”

Coach: “Yeah? Sorry to hear that.”

Guy: “Yeah, well, you see the numbers right there in the budget. I scraped together all I could, picked up extra hours at work – even sold my road bike. I’m still $1,000 short, and I’m not missing that trip.”

Coach: “Fair enough. Let’s make sure you track it correctly in YNAB. You’ve charged the $1,000 to the card. See how it shows up there in ‘Pre-YNAB Debt’? That’s your credit card balance. Now what?”

Guy: “I’ll pay it off fast. I bet I can have it gone in two or three months.”

Coach: “Yeah, maybe. But remember – this trip cost $2,000, and you started planning for it four months ago. You couldn’t save $500 per month to avoid the debt in the first place.   Even paying it off in three months will take $333 per month – and we’re not even dealing with the monthly finance charges.”

Guy: “Yeah, I guess you’re right. I’m not sure exactly how much I’ll be able to pay per month. But I definitely want to pay more than the minimum.”

Coach: “Good – if you just paid the minimum every month it would take 9.5 years to pay off the balance, and you’d end up paying over $900 in interest on the original $1,000 loan.”

*Assumes 18% interest with minimum payment of 2.5% of the current balance.

Guy: “I didn’t realize it would be that bad if I just paid the minimum. It adds up fast.”

Coach: “Yes, it does – which is why you’ll want to get rid of it as fast as possible. The only way we can guess what you’ll be able to pay on the credit card is to look at your past budgets and see where the extra payments would fit.”

Guy: “Well, back when I realized this trip was coming up, I started cutting back as much as I could and came up with $1,000 in four months. That’s $250 per month. Seems like I can have this balance gone in four more months.”

Coach: “Yeah…maybe. But where did that $1,000 come from, exactly?”

Guy: “Well, like I said: I cut back on some spending, picked up a as many extra shifts as I could, and sold my bike.”

Coach: “Right – are you sure you’re going to be able to replicate those savings? Is it always that easy to get extra shifts at work, or was it unusually lucky? Do you have another bike to sell? Are you sure you’re going to be okay with the reduced spending in other categories for the next four months?

What about emergencies? Did you have any unexpected expenses in the last four months? If something came up while you’re paying off the credit card, would you still be able to keep up your accelerated payments?”

Guy: “Uh. Well…”

Coach: “Right. That’s the tough part about using credit cards. If you were to save the money in advance, there would be no question. Could you still have an emergency in the next few months? Yes. Might that emergency require the use of your credit card? Yes. Some people might say you shouldn’t take this trip until you have the money set aside AND an emergency fund in place. I’m not going there, but you can see the point, right?”

Guy: “Yeah, but it seems like you’re telling me I shouldn’t take the trip – that it’s a dumb thing to do.”

Coach: “That’s not what I’m saying at all. I’m asking you to walk through the possible consequences. What you’re really doing here is elevating the trip to emergency status. On paper, it seems like things will work out. But you need to be aware of the risks:

First, you’re playing with a loose definition of emergency. If your trip with your friends is an emergency, what else fits the same definition? A night out with co-workers? New skis? A last minute trip to Vegas with your brothers?”

Guy: “I don’t know. I guess I hadn’t really thought about it. I was just going to use the card this one time. I really don’t want to miss this trip.”

Coach: “I hear you. But you probably realize there’s always going to be something you don’t want to miss. A trip, a new toy, new furniture, new car. There’s always going to be something shiny staring you in the face, and there’s always going to be a way to rationalize the purchase. So, where do you draw the line?”

Guy: “I guess I don’t know.”

Coach: “And that’s the second way this can go really badly for you. If you aren’t totally clear on the consequences of casual credit card debt, you find it growing. I know from experience. The credit card you’re using for the trip – do you use it for everyday stuff too?”

Guy: “Yeah, because I get airline miles when I use it. But I pay if off every month.”

Coach: “Every month?”

Guy: “Well, most of the time. I never carry a balance more than a couple of months. If I can’t pay it off right away I usually manage to pick up some overtime to get things back to zero.”

Coach: “Hold on. You mean you have to use your overtime work to pay off your credit card now and then?”

Guy: “Yeah, so? I’ll just do the same thing with this trip. That’s how I know it will work out alright.”

Coach: “It might work out fine. See, you’re already playing the charge-it-up-and-pay-it-off-later game. It’s “working” in the sense that you’re not carrying big balances for long periods of time. But now you’re going to spike the balance with an extra $1,000.

You’re planning to pay it off with overtime pay, but you’re already in the habit of using your overtime pay to zero the card from your everyday use. Do you see how that’s a problem?”

Guy: “You’re saying I’m expecting the ovetime pay to do two jobs: pay off my occasional spending sprees and pay off this trip.”

Coach: “Right. Which means a) you won’t pay off the trip as fast as you thought, and b) any change in your income, or any other emergency, could get you in serious trouble.”

Guy: “You think I should stay home.”

Coach: “I hate credit card debt. I’ve been there. I don’t ever want to go back. But my top priority is having you use your budget to spend consciously. If missing this trip will make you resent your budget to the point you quit on it, I want you to take the trip. If you treat this debt like the emergency it is, and stick with your budget, things will work out fine in the long run.

On the other hand, If you think you’re ready to draw a line in the sand and say no to the credit card balance, I’ll be thrilled. But it’s your money, and your life. I just want you to let your budget work this and all other financial decisions.”

Guy: “I hear you. I’m going to have to think hard about this.”

And…scene.

In my opinion, if Coach had launched into an anti-credit card speech as soon as Guy said he was going to charge the trip, the learning opportunity would have been lost.

How would you have handled the conversation?