YNAB You Need A Budget

[vinceoneill]

I have only just started to use YNAB, but felt I should share my first BIG finding.

Like most people, I have been merrily buying what I THOUGHT I could afford, sorting out bills when they arrived, dipping into overdrafts when needed, paying interest and feeling everything was just fine.

Now, I see that I have been overspending all the time - and the reason - Credit Cards! They lull you into a totally false sense that 'oh well, it's just a little this or that', but there is no way to keep a running total unless you have either an AMAZING memory or note EVERYTHING.

Whilst constructing the YNAB accounts and registers, it became very obvious what has been happening. The remedy, I have zeroed all but 1 credit card which has a high balance (£4,500) but is running on a zero % deal until August next year. I have set tight budgets for EVERYTHING (Xmas this year is £150 and NO MORE), but this means I can clear the final card and be left with only the Car Loan and Mortgage. Next will be clearing the loan, and then I will see where I go next. Should take around 12 months to get there.

I now find myself in a strange position - out around shops and my partner says 'oh, did you want a coffee and sandwhich' and I reply 'no thanks, got plenty at home and I have not budgeted for that!'. It's strange just now, but will soon be the default.

Thanks to YNAB, I know EXACTLY where I am financially, which is the ONLY way to see where to go!

Vince

[macduncan]

Great to hear Vince! We gave up credit cards about a year and a half ago as we are following Dave Ramsey's Total Money Makeover book plan. It took us quite a long time to get our spending in control and realized like you said, we were way overspending (this was pre-YNAB). Anytime there was an opportunity to spend, we would take it! Not now, having the Dave Ramsey plan and YNAB together is the ultimate package!

Heh yeah, our kids and friends have gotten used to us saying "it's not in the budget". Awesome.

Great to hear you are already having success!!! Keep up the great work! A suggestion, do make sure you build in a little "blow off" or "fun money" every once in awhile so you stay motivated! It's like working out and eating well, you can't always go without dessert!

Take care and good luck!!!

Bill

[woodnboats]

Way to go, Vince!!!

I started onthe YNAB Way October 2008, and while we had never been in credit trouble, always paid our bills on time, and lived as we chose, we had several times over charged up big credit card debts and then paid them off with refi's or inheritance or some such.

We realized then that we could never retire unless we did two things:
1. retire the $14,000 credit card debt we had (0% interest, to be sure, but still having to be paid each month)
2. DON'T LET IT HAPPEN AGAIN!!!

What to do? Enter YNAB. At my daughter's suggestion, I convinced my wife to try something we had never done before, in 38 years of marriage; start a budget, and live within it.

My daughter had really managed to mess herself up with credit cards, bounced checks and lying to herself and others (including us!) about her situation. Along came Dave Ramsey and YNAB. Now she's "straight", and about as much fun to live with as a reformed smoker (just kidding, she quit smoking too! )

As a result, we started budgeting on YNAB, and paying off that credit card at a rate that would allow us, by adding a $6000 cd I owned to the total, pay the whole thing off last month when the interest rate would have gone to 12%. In addition, we built a buffer, rebuilt our sunroom and started an IRA for my wife with the maximum $6000. We could have done it all along; we just didn't know where the money was going, so we let it go.

We now have only two active credit cards, and they are paid each month. Why two? One is a Costco AMEX which gives me low gas prices as well as cash back.

Why the second card ? It's an MC from Kroger, which gives cash back on groceries (our biggest expense), and is accepted everywhere, unlike AMEX. We use it for just about all our other purchases, especially on-line.

Why any cards at all? Like it or not, and I know this upsets the Ramseyites, fewer and fewer retailers are accepting checks, and having been burned badly once by a debit card (which also are not always accepted), I don't want to use one again until there is more protection built in against fraudulent use. My credit union was very sympathetic when some clown in Pakistan got the number and bought $2000 worth of phones on ebay, but they took it to be a legitimate transaction and took the money out of my checking account. So sorry Fortunately, ebay made it good. With a credit card, I can check my account every day (which I do), and am only liable up to $50. Cash, of course, is almost impossible to use to any great extent, and is harder to reconcile on YNAB (no "third party" account to catch you when you forget to enter a transaction), and is anonymous if it is stolen or mislaid.

BUT YA GOTTA PAY 'EM OFF EVERY MONTH !!! I just hope the gummint doesn't keep "reforming" the industry to where the grace periods go away.

In the final analysis, without self-discipline and a commitment to live responsibly, no software or Plan will work for anyone. But if you make that commitment, and excercise that self-discipline (not self-denial, self-discipline) YNAB will make the job much easier.

Good luck, Vince!

We know you can do it.

Kirk

[TLBauer]

In the final analysis, without self-discipline and a commitment to live responsibly, no software or Plan will work for anyone. But if you make that commitment, and excercise that self-discipline (not self-denial, self-discipline) YNAB will make the job much easier.
Kirk

I think that this is really the key point: self-discipline!

Of course, this was not something I had before I found YNAB. Anytime the wife or I wanted something, it was pull out a debit or credit card and buy it. It was not until I realized that I was being charged $800/month in interest on credit card debt (and wondering where all the money to pay the bills went -- uncontrolled debit card usage) that I woke up and decided to do something about it.

I must say, getting the spouse on board with a budget plan is probably the best thing that you can do to insure your success. It's very difficult to plan and execute a household budget if only one partner is willing to commit to it.

I think the second most important thing that you can do is give yourself an allowance! This, by far, has cut out all of the uncontrolled debit card usage. When you have to pay for something that you want out of the cash in your wallet (or purse), you tend to think more carefully about whether or not you just have to have it. We pay for personal things like haircuts, trips to the nail salon (the wife), and lunch outings with the gang from work out of our allowance. What we don't spend in a month, we put into our "stash" and save for those special items that we want to purchase. This one thing - giving ourselves an allowance - has done more for controlling our spending than anything else.

Next, we had to learn NOT to use the checkbook balance as a guide for how much money we had to spend. Now, we look at the balances in our budget categories. If it's not there or we can transfer something from another category, then the purchase has to wait! It's that simple!

We have three credit cards that we use ... but everything put on them goes into the budget or it doesn't go on the card. That way, when the statement comes in, I can write that check knowing that it's already covered! We put everything that we possibly can, including the utility bills onto our AMEX card. In so doing, I am able to fully fund my wife's garden activities for the entire year from points earned on our AMEX and Visa cards. I don't even have a budget amount for lawn and garden any more....

It can be done ... I am counting down the days (Feb 20, 2010) until our last credit card with a balance is paid in full ....

[tking28]

Hi, for the first time in my life Im really trying to set up and stay on a budget. I am having a very difficult getting everything straight, mostly in my head. I want to be self-disciplined, but I fall short. It seems like every week Im going back to the registers, adjusting my balances and starting over. I really dont know where the problem is, but I know its not with YNAB. I can see th benefit and long-term success thats there, I just cant seem to get my head around it. Its very frustrating because I have all the tools. Maybe just some support is what I need. Is there a "support group" that I could sign up for.

Thanks, Tim

[jjsouth]

I'm pretty new to this forum, but the people here are great. Just great. Lots of understanding and non-judgmental advice.

When you're first starting to use a budget, you should expect lots of adjustments in categories. You haven't known what you were spending on things in the past, so you shouldn't expect to get it right from the very beginning.

So when you say you go back to the registers and start over, are you erasing transactions? readjusting category balances? If you're comfortable providing more details, I'm sure everyone can help you more.

[bookman413]

I think that this is really the key point: self-discipline!

Of course, this was not something I had before I found YNAB. Anytime the wife or I wanted something, it was pull out a debit or credit card and buy it. It was not until I realized that I was being charged $800/month in interest on credit card debt (and wondering where all the money to pay the bills went -- uncontrolled debit card usage) that I woke up and decided to do something about it.

Well, you had latent discipline, but you didn't have tools and structure (budget) in which to express it. In other words, with no concrete goal and with no way of driving yourself towards the goal (YNAB and your budget) , any discipline was irrelevant and could not gain traction or direction.