YNAB You Need A Budget

[OKors]

Hello,
I'm a new user and quite frankly have never used any budgeting/finacial software tools.
We're at a point where we need as much help as we can get. Things are rediculously tight and to say we live paycheck to paycheck is an understatement. Let's just say I'm glad my bank has good overdraft coverage

We're expecting our tax return in the next couple weeks; at which time I will start my budgeting program using YNAB.
My question is, since I'm starting from scratch; what would be a smart way to distribute this tax return (approx $4k) in order to achieve this buffer and maintain this buffer.

A bit of background may help:
We're behind on a good portion of our bills: Power Co., Internet, Homeowner's association dues, etc. These are all reoccuring bills that have gotten paid late or delayed but eventually they've all fallen behind.
Next, my wife's car just took a crap so now we're down to one car and since I'm the sole income I have priority of the vehicle in order to get to work.
Then of course there's the big ones like our personal loan, Credit card (not plural thank god), and mortgage.

Normally during tax time we take care of any overdue bills and get everyone caught up and off our back. Then take care of other household priorities, and what's left we throw at whatever the high interest loan or CC is.

Is this the smartest way to distribute our tax return? Instead of paying a big chunk on a CC or loan should I be working on a buffer?
Will I be ahead of the game using YNAB by distributing my tax return this way?

Ultimately, I'm not familiar with how the program works so any and all advice going forward will be appreciated.

PS, why is the forum censoring the word "TAX"?

[gborland]

PS, why is the forum censoring the word "TAX"?

I think it's a rather juvenile attempt at humour. Perhaps it was funny at first; now it just makes forum posts hard to read.

[virago317]

Personally, I would take care of the overdue bills first, and then work on the buffer. You can use YNAB without a buffer (while still living paycheck to paycheck), and in fact it works really well -- it took me more than a year before I had a buffer. You need to make sure your home/HOA payment is caught up and your utilities aren't about to be shut off, and all of your family's other basic needs are covered, before you start saving for the buffer.

[virago317]

PS, why is the forum censoring the word "TAX"?

I think it's a rather juvenile attempt at humour. Perhaps it was funny at first; now it just makes forum posts hard to read.

You can go into the forum settings and turn censoring off if it bothers you. Doesn't bother me so I haven't tried it, but others have mentioned that there is a setting somewhere.

[virago317]

One more thing... if you are getting a $4,000 tax refund, you may want to adjust your withholding to better fit the actual amount of taxes you owe. It seems like it would be much more useful to you to get that $4,000 in your paycheck instead of giving the government an interest-free loan until next year when you get your refund, so you can more easily pay your bills, etc.

[malisab]

One more thing... if you are getting a $4,000 tax refund, you may want to adjust your withholding to better fit the actual amount of taxes you owe. It seems like it would be much more useful to you to get that $4,000 in your paycheck instead of giving the government an interest-free loan until next year when you get your refund, so you can more easily pay your bills, etc.

...but then DON'T plan on the windfall next spring.

[OKors]

One more thing... if you are getting a $4,000 !@#$ refund, you may want to adjust your withholding to better fit the actual amount of !@#$ you owe. It seems like it would be much more useful to you to get that $4,000 in your paycheck instead of giving the government an interest-free loan until next year when you get your refund, so you can more easily pay your bills, etc.

That's a very good suggestion, although we've (my family) went through this once before a couple years ago when I adjusted my withholdings. We ended up not getting nearly the return we expected- which we've come to rely on at the end of the year to play catch-up.
I know, its seems rather counter productive but for now this is just the way we have to roll. Why? because we don't have a good budget strategy (yet), so no amount of 'a couple extra dollars' per paycheck is going to get us ahead. It will evaporate just like the rest of the paycheck does.
Once I have a firm budget in place I believe then I can more affectively manage those extra dollars.

BTW thanks for your other suggestions!