YNAB You Need A Budget

[SWH]

My wife and I both get paid on 9 month contracts (we're teachers), and each month we set aside a portion of our income to pay ourselves during the summer. It seems obvious, but is this in keeping with Rule 2?

Second question: We are paid most of our income at the end of the month, on the last business day. (There's a small amount that comes during the month from a part-part-time job.) We've been using this amount for the next month's expenses. Are we already living by Rule 4?

Thanks!

[malisab]

Hello from another two-teacher family.

I'm not positive if you're using old rule numbers or new rule numbers. I'll start with the buffer rule (old rule 1/new rule 4). You will get answers on both sides of this. Are we fully buffered since we get paid the end of the month and are able to pay all of our bills at the beginning of the month? In that sense, yes. Will we potentially get down to the bottom of the barrel cash-wise since we are really only getting paid a few days ahead of paying our bills and not a full month? Possibly. But as you said, you save for your summer months, so you are not cash poor, except at the end of the summer. Would it be nice to have another month's worth of cash in the wings, sure. Is it feasible/the best use of that cash? Only you know that answer.

When you ask about setting aside summer savings, I'd think you mean 'give every dollar a job' (old rule 2/new rule 1). If that's what you mean, then yes, you're giving those dollars the job of waiting until summer and being your summer pay. But based on you referring to the buffer rule as rule 4, I guess you mean 'save for a rainy day' (old rule 3/new rule 2). In that case, saving for the summer is only a small part of it. There are also things like registration, home repair, auto repair, etc. etc. Since I'm paying back debt, I don't save for as many of these things as I'd ultimately like to. But since I've lowered my interest rate on all the debt we have, come the start of next school year I'm going to start saving for more of them.

I'll add that this is the first year since we've both been teaching (my 9th year, his 3rd) that we didn't work summer school. It's the first in about 6 or 7 years that I haven't worked it. It's been great. I don't anticipate working it ever again. YNAB will help me with my choice not to. (DH would have liked to since he coaches through the summer so has to be at school anyway, but with budget issues, he didn't get it this year.) We're not going to be exactly where I wanted to be at the end of the summer (I was planning that neither of us would work it, but I also was planning it exceedingly tightly since I really thought he would be) but we're light years ahead of where we've been in years past.

Welcome.

[SWH]

Malisa,

Thanks for the insights. I'm brand-new to YNAB, and have just downloaded the software, so it's all new rules to me.

I didn't mention our credit card. We ALWAYS pay it off every month, and only put regular and planned expenses on it. Effectively, though, this means that January's income pays for January's CC expenses - certainly a violation of (new) Rule 4. Need to work on that one.

[malisab]

I didn't mention our credit card. We ALWAYS pay it off every month, and only put regular and planned expenses on it. Effectively, though, this means that January's income pays for January's CC expenses - certainly a violation of (new) Rule 4. Need to work on that one.

yeah, if you don't have the cash in bank to pay cash/debit card at the time (just using credit for rewards, protection, convenience) I'd probably work on that first.

[CaptainCupcake]

I read the comments from US teachers with (a little) bewilderment.

I work in the government teaching service in Victoria, Australia. We're paid fortnightly, every fortnight of the year, including over the summer break. It this regularity which has led to my attitude to the buffer: I don't really need it, so it's a lower priority than debt repayment and emergency fund.

While I'm not a teacher myself (being education support/faculty) I know that the pay arrangement is essentially identical for those that do teach here. I don't envy your budgetary position at all. (A smiley face didn't seem quite right here)

All the best for you and your budgets over the summer break.

[malisab]

I REALLY like getting paid monthly. That I feel is a benefit, not a detriment. Of course YNAB would help make it like I got paid monthly if I didn't, but I credit being paid monthly for my bills being paid regularly in hard (read: stupid) times.

We can choose to get paid 12 months instead of shorter. But that amounts to them holding on to money that you could have (read: earning interest that you could earn). It's like overpaying your taxes to get a refund or using the level-pay plan on your utilities. We used to get paid 10 months. When we started going back to school WAY earlier last year (it had worked it's way back from Labor Day...first weekend in Sept, to the beginning of Sept, to the end of August, then we jumped to single digits in August, this year we go back the 10th) we now get paid 11 months. The funny part is that with budget reductions and furlough days, we probably won't work a day in June in '10-'12, yet we'll still get paid the end of June. So they're still holding on to a month's worth of money we've already earned.

I like 11 months. 9 months would be hard. That'd be a lot of cash to be sitting on, for me right now. 10 months was hard, but I could do it now. I like 11.

[CaptainCupcake]

I hear you.

Maybe it's just the devil I know, but I like fortnightly. YNAB has me budgeting for two fortnightly pays per month, but there are two months in every year we get paid three times - this month is one of them, in fact. That extra cash can therefore be budgeted against pretty much anything I like. As a result, I get to pay off $3000 rather than $600 off that pesky car loan this month. ( Not that I get paid $2400 per fortnight, I'm just playing whack-a-mole to make up the extra cash so I can see the three magic zeros. The psychological lift will be worth it. )

[lebdavidson2]

My husband gets paid for 8 months. (but this summer he has some extra contract work. Yay.) Bouncing checks in the summer was my original reason for starting YNAB. We had enough money, but we didn't have a plan about where it should be when. Now we do have a plan.