YNAB You Need A Budget

[maryea]

I have already posted to this thread but wanted to update it now that we progressed a bit with the steps. I couldn't stand to build the buffer as long as I had debt...that's just me...but we were working hard on Step 2 (paying off debt) when I started YNAB and I just couldn't quit. So we paid it off...have been debt free since May. We have been debt free before in our lives but this is probably the longest we have ever STAYED debt free! I think this would have happened even without YNAB but YNAB definitely made it easier to keep to our budget which enabled us to get it done. We would have paid off our debt either way but what I can't believe is how many other big things we have paid for with cash along the way as well as paying off debt! And I do believe YNAB really helped us do it.

By Oct 1st we should have our fully funded buffer too...I decided to go with one month's worth of income. Seemed easier/clearer that way to me. I was re-reading my posts above and I understand the benefits so much more now about having a buffer! I had to laugh when I read my answers to Mudie. I still don't think I could have put it before the debt but I am definitely glad we will have a buffer!

As to Dave Ramsey's plan...we are still on track. We consider the buffer Step 3 a and we will just keep going saving our FFEF. We will also be saving for a newer car (ours is 14 years old) and YNAB is going to help us do all of this!

[vmi1991]

background:
We have $1,000 in a Baby Emergency Fund.
We have a full buffer making life soooo much nicer for the fourth month.
We are snowballing the snot out of our debt, but it will be at least another 29 months before Baby Step 2 is completed.

So...this is the question:
Sinking Funds/Rule 3/Rainy Day Funds

we currently have
property taxes, real estate taxes, tax prep fees, car registration, renewals (professional lic., costco, gym), and a small sum (<500 each for car and home repairs) {edit: xmas for the kids, xmas card mailing list, general giftign throught the year) }

While doing BS 2, are these sufficient? I want to really nail the debts, but I don't want life nailing me again either.
Insurances are a monthly debit.
Should we have a fund for deductibles? (Health insurance covered via FSA and no expenses after deductible is met).
How much really should be put in repair funds? 2 vehicles 95 and 98...95 has new engine and tranny.

Thanks for your thoughts,
George

[maryea]

I would have a sinking fund for anything you are not comfortable with cashflowing in any month...esp if you could have more than one thing come up that month. we are currently on step 3 and by May or June should be on step 7 (kids done with college and on own, house paid off and we are already retired), but so far we still only have 3 sinking funds...christmas, property tax and graduation gifts for grandkids. Everything else we cash flow during whatever month it is due...if necessary we take it from our snowball/savings deposit.

[abacus2]

background:
We have $1,000 in a Baby Emergency Fund.
We have a full buffer making life soooo much nicer for the fourth month.
We are snowballing the snot out of our debt, but it will be at least another 29 months before Baby Step 2 is completed.

So...this is the question:
Sinking Funds/Rule 3/Rainy Day Funds

we currently have
property !@#$, real estate !@#$, !@#$ prep fees, car registration, renewals (professional lic., costco, gym), and a small sum (<500 each for car and home repairs) {edit: xmas for the kids, xmas card mailing list, general giftign throught the year) }

While doing BS 2, are these sufficient? I want to really nail the debts, but I don't want life nailing me again either.
Insurances are a monthly debit.
Should we have a fund for deductibles? (Health insurance covered via FSA and no expenses after deductible is met).
How much really should be put in repair funds? 2 vehicles 95 and 98...95 has new engine and tranny.

Thanks for your thoughts,
George

I would fund your categories to the minimum of your known expenses without building them towards an ideal "cushion level" while on BS2. So for example in the car repair category fund for oil changes, tires, and any other maintenance or repair you know is imminent, but the random something broke unexpectedly and cost $100 to fix should come out of the current months budget or the baby emergency fund.

[MALMomma]

In a sense, we're kinda following DR's plan. Long story short, we had a buffer, used it to pay off a CC, still have CC, still have no buffer. But since we slashed our budget the end of February, we have new plans - as shown in my siggy. FIrst priority is that $1000, which we'll have in April (3 paycheck month). After that, not touching that $1000, we're gunning for the debt. Should be able to have all $14K paid off by December latest. Now I know that DR advises to stop all contributions, etc., but we're not going to that extreme. In fact, once DH's promotion goes through, we're pumping up his 401K to 10% (from 6%). As long as we can stick to our plan of having the debt gone by December, we're fine. We're not in dire straits, so really no need to take away from our future.

After the debt is gone, we'll work on that 3-6 months of savings - but that's going to be coupled with saving for a new house. 2012 is our target date for relocating from Philly to Raleigh. We'd like to have a sizable down payment so that 1) we can drop our loan amount, 2) drop our monthly payment amount, and 3) have some built in equity in the home.

At some point after the debt goes bye bye, we'll also pump up his 401K to 15%. Not sure when we'll worry about college. We still need to figure things out for that.