YNAB You Need A Budget

[GuitarMan]

Thanks to DaveCrom01 at this post: viewtopic.php?f=1&t=4776#p33398 , I finally got a grasp on budget categories that could really tell me where I have to be and how.

I had already been groping and moving toward this kind of organization, but reading Dave's post really opened my eyes. I took off Dave's alphabetized priority groups and spread around them my own groups, which were more topological or functional.

Anyway, the idea is to recognize that there is a prioritization of expenses: Some absolutely have to be paid every month, or other period; they can be predicted to come around and require paying or else you will be out of a house or have your car repossessed or whatever it is. Then there are some that are also mandatory, but whose exact amounts are variable by whatever cause---seasonally, for example, with heating gas, water, electric. And some that are going to occur, but about which you have more, at least some substantial, control.

I put them into YNAB groups by this prioritization, and kept the functional or topological classes by using a category prefix.

So here's how my categories look. This may be too fine-grained for you, but I really needed to know all the ways money goes outward. YMMV.

A - Fixed Mandatory Monthly Expenses
Auto - Insurance
Auto - Loan - Car 1
Auto - Loan - Car 2
Insurance - Long-term care
Utility - Telephone
Household - Pool maintenance
Housing - Association fee
Housing – Mortgage/Rent
Utility - Cable Internet

B- Fixed Mandatory Periodic Expenses
Auto - Milestone maintenance Car 1
Auto - Milestone maintenance Car 2
Auto - Oil change Car 1
Auto - Oil change Car 2
Auto - Registration Car 1
Auto - Registration Car 2
Contact lenses, Wife
Driver's licenses (2014, $30 each)
Grooming - Husband haircut
Insurance - AD&D Husband
Insurance - Life - Husband
Insurance - Life - Wife
Household - Cleaning service
Housing - Home insurance
Housing - Trash pickup

C - Variable Mandatory Monthly Expenses
Auto - Gas for cars
Auto - Tolls
Debt – Credit card payment 1
Debt - Credit card payment 2
Estimated federal taxes
Grooming - Wife
Utility - Husband cell phone
Utility - Cable TV
Utility - Electric
Utility - Gas
Utility - Water

D - Discretionary Mandatory Monthly (or less) Expenses
Groceries
Cat care - food, litter, veterinary

E - Contingent Expenses
Auto - wash
Dry cleaning
Garden and yard
Auto - Repairs
Dental care
Eye care
Medical care
Prescriptions
Appliances, major
Furniture
Home repairs/maintenance
Sprinkler system service

F - Savings
House down payment
Retirement
Security reserve fund
Vacation

G - Discretionary Spending
Business expenses
Carry-out dining
Clothing
Gifts - Birthdays, events
Gifts - Christmas
Household supplies & tools
Personal spending - Husband
Personal spending - Wife
Recreation - Dining out
Recreation - Entertainment
Thanksgiving


(A) expenses are not prioritized at all per se, because each of them has to be paid once a month and the amount will not vary.

(B) expenses are the same, but occur on more frequent or less frequent fixed dates and without varying in amount.

(C) expenses occur without fail, on anywhere from a few days apart to unvarying monthly, semiannually, annually, even every few years (e.g., drivers license renewal), with amounts that are not fixed but within (usually) a range; nevertheless, each has to be done and paid for without fail (or something bad will happen--the electric people will shut off the power, the cat will die, I'll have a huge tax bill on April 15 next year, I'll be unlicensed to drive, etc.).

(D) expenses have a lot of variability to their totals, but will occur and must be paid.

(E) expenses depend on emergent needs, and may not happen in any given period of time, but need to have something allocated to them for that potential need or emergency.

(F) is savings outside the paycheck's automatic savings (whatever one has at the time, e.g., 401k, stock purchase, health savings account, health reimbursement account--all taken out before the net take-home pay that this budget division allocates).

(G) expenses are completely discretionary and highly variable---they can be done without to a great extent and are the least necessary.

[gatherer]

Neat Idea. I need to reorganize our budget.. I think this is an interesting way of doing it.

[crucial]

I did a similiar thing just making a note on each category for the ones that are priorities in Pro budget screen. That way it would put a little note icon flag next to it and I could tell easily that it was important - but I like this idea of categorizing it. Thanks for the idea.

[Malisa]

C - Variable Mandatory Monthly Expenses
Auto - Gas for cars
Auto - Tolls
Debt – Credit card payment 1
Debt - Credit card payment 2
Estimated federal !@#$
Grooming - Wife
Utility - Husband cell phone
Utility - Cable TV
Utility - Electric
Utility - Gas
Utility - Water

D - Discretionary Mandatory Monthly (or less) Expenses
Groceries
Cat care - food, litter, veterinary


(C) expenses occur without fail, on anywhere from a few days apart to unvarying monthly, semiannually, annually, even every few years (e.g., drivers license renewal), with amounts that are not fixed but within (usually) a range; nevertheless, each has to be done and paid for without fail (or something bad will happen--the electric people will shut off the power, the cat will die, I'll have a huge !@#$ bill on April 15 next year, I'll be unlicensed to drive, etc.).

(D) expenses have a lot of variability to their totals, but will occur and must be paid.

Trying to figure out what, within C, could cause the cat to die (other than the heating/air being shut off, then I imagine the cat would not be your top priority) and how all the cat care expenses are discretionary (other than switching from brand A to brand B or waiting until the following month for a non-emergency vet trip). I was going to say that you're confusing the cat and the wife, but even the wife is only getting grooming under category C.

I really like your organization. I took bits and pieces from Dave's post too (thanks Dave). I'm not this fine grained yet but I anticipate that after I get a few months track record (started 7/1) and after Pro is available for Mac, I will do a major overhaul. I'll definitely look up this post. Thanks.

[katsmeow]

Clothing can be done without?!!

Seriously I do understand that a lot of clothing is discretionary. However, some amount is mandatory in our society.

At various times I have gone between doing a budget organized as you do it or one that is more typical subject oriented.

The big problem I invariably run into are things like clothing and food and some other categories. There is a mandatory element to it -- really do need to have some clothing and food. Yet, there is also an element of discretion.

This even applies to some categories such as repairs. There can be a very basic repair that you have to do versus a repair that is longer term or upgrades something that has a discretionary element to it.

[GuitarMan]

Clothing can be done without?!!

Yeah, we're nudists.

KIDDING.

No, clothing can't be done without, but we have some already and what we buy is very discretionary. If we don't buy some clothing (additional!), no one is going to come after us and tell us they're going to shut off the clothing or repossess something.

Yes, there are items that may seem to cross two of these categories. They're not perfect, and I've moved a couple three items up or down. And if anyone has suggestions, I will be reading and adjusting for good ideas.

[mmaustintx]

INTERESTING. I also went and read Dave's thread too...Just for a variation on the theme, my categorization follows Dave Ramsey's Four Walls approach: Utilities (elect/gas/water - not phone/internet), Housing (primary mortage), Food (not household supplies/restaurants), Transportation (gas/oil changes, auto insurance) and Childcare are my ALPHA categories - they get money allocated FIRST. Childcare is the 5th wall - if I don't pay for that, I can't work - If i don't work, I can't make money - and therefore, can't pay for anything else. Then Bravo are my Baby Step 2 areas: Debts 1 through 4 and SNOWBALL is its own category so I can track it month to month. Charlie's categories are Insurances (life, Umbrella), non-essential Utilities (TV, telephone, internet), household supplies, food - restaurants, Blow Money (His and Hers), sinking funds for various items (car regis., school supplies, gifts, travel). The only item that doesn't get filled in order (and I've just summarized most categories) is snowball...every penny not allocated into another category goes into the snowball and gets sent off to our debt each month...

[maryea]

I do something similiar. I have changed mine a few times but I like what I'm doing right now pretty well but in time I may change it again. It is not categorized so much for priority as type of expense.

Currently my master categories are:

1. Giving - just as it sounds.
2. Bills - things we are committed to paying, both monthly and non-monthly. Involves an actual bill although typically not a paper one. Many are auto paid.
3. Cash - we withdraw cash for various things every 2 weeks. I break it down here per the withdrawals but do not track it once I withdraw it other than keeping the categories separate (envelopes, in our wallets). It is easier to keep it as a separate master category so I can tell at a glance how much to withdraw.
4. Household - anything else that is not an actual billed expense and is not usually paid in cash. This could be anything from vitamins to travel expenses.
5. Savings - different sub-categories of savings
6. Retired - categories no longer used but have transactions in them.

[Maggie Magpie]

After being frustrated with my current category organization and reading DaveCrom01's post, then GuitarMan's variation on the categories here......I really liked both, but could relate a little more to GuitarMan's. So I took GuitarMan's post as a guide and reorganized my own. I put each section from A to E in order of priority...eg., the mortgage is the highest priority, so it's in Section A, whereas, Clothing is necessary, but lower priority, so in Section E. But I'm thinking I should move Section D (Savings) up....to Section A, and make Section A, Section B, because "Savings" should be a "paying yourself first" kind of principal. Thoughts, everyone? (It's really hard to do the savings when I'm drilling down on the mortgage....I want out of debt soooooooooo badly!!!!)

Below is my proposed new format. I've changed GuitarMan's word "contingent" to "conditional" because I don't see ANY of my categories as optional, however, I do see these particular categories as "conditional" upon the events of that month that might affect the amount I devote to these particular categories. I'm almost thinking Master Section E may evolve into a form of a "sub-buffer", at which time I might rename Section E "Wack-a-Mole" Sources"!!! Please feel free to comment because I'm hoping to not have to do this again for a very long time. Thanks!

A – Fixed Mandatory Monthly Expenses
Cable/Satellite/TV
Entertainment – fixed
Giving – Fixed
Internet Access
Mortgage
Mortgage Escrow
Prescriptions - fixed

B – Variable Mandatory Monthly Expenses
Electricity
Fun Money – Hers
Fun Money – His
Gas (automobiles)
Groceries
Maintenance, Upgrades, Landscaping
PoolMaintenance
Pets – Vet, Food, Supplies
Restaurants
School – ASP
School – Lunchroom
Cell Phone
Water

C -- Fixed Annual and Semi-Annual Expenses
Car Insurance
Time Share
Automobile Licenses & Taxes
Life Insurance
Motorcycle Insurance

D – Savings
Emergency Fund
Retirement
Vacation

E – Conditional Expenses
Clothing, Accessories
Dentist
Doctor
Entertainment -- variable
Gifts, Birthdays, Christmas
Giving – variable
Hair care, Toiletries
Manicurist
Prescriptions - variable
Auto Repairs, Tires, Maintenance
School – supplies and miscellaneous
Staff – incentives
Summer Child Care

[DaveCrom01]

Hey Maggie!

I don't want to confuse things - as you really seem to have it all making sense - and making sense TO YOU is the most important part of this process I would say.

I think on the specifics of your list, I would only make the following comment on the basis that I have changed a couple of things since I first posted: In your first category, the fixed mandatory, you have things like MORTGAGE and CABLE SATELLITE etc. Reading the discussion that has gone on in the thread, I follow what you are doing. The only thing I would say is that personally, I find it useful to separate the MANDATORY from the REALLY WOULDNT WANT TO GIVE UP. My ALPHA category are those things which I really don't get a say about and have to pay. So basically, by looking at ALPHA, I know what living on survival-wages is in terms of dollar value. it is from this figure that I base things like the size of my emergency lay-off fund etc. Sure, internet is high on my list of things I chose to have (and in my case it's a tool of work, hence my initial classification) - but if the hammer came down on my life and I didn't need it for immediate work - it can be switched off.

The same for your B category. You can cut your fun money, but you can only strive to reduce your electricity - one is an instant "we cut it now" in hard times - and the other is "we do our best to reduce this".

I'm not saying it's better, just that being a bit of a control freak I prefer to have MORE categories that have a SINGLE purpose rather than FEWER categories that are MULTI purpose. You seem to be grouping by categories which make sense to you, and that is great.

Just on a parallel subject, we have switched all our utilities to equal billing. This allowed me to elevate them from the "must pay variable amounts", to the "must pay fixed amount" - it really helped me to see just what our monthly situation is really like irrespective of our highly seasonal variable expenditure.

Cheers,
Dave

[Malisa]

Just on a parallel subject, we have switched all our utilities to equal billing. This allowed me to elevate them from the "must pay variable amounts", to the "must pay fixed amount" - it really helped me to see just what our monthly situation is really like irrespective of our highly seasonal variable expenditure.

I'm extremely thankful that our gas company (heating and dryer only) and our public utilities (water, electric, and trash) both have level pay plans. Pre-YNAB, without it, I don't think I'd have made it through a couple summers in horrendously hot So Cal.

[Maggie Magpie]

Hey DaveCrom01, thanks for your feedback. My emergency fund is approximately 6 months of net income. If something catastrophic were to take place, I'd certainly be looking at extending the 6 months worth into 7 or 8 months by cutting out the "currently necessary" (eg. cable) and making them "absolutely unnecessary".

While I totally understand and agree with you in regards to drilling down on some of my A to E sections to facilitate a better organized "what if" situation, I'd be more interested in learning how to drill down on the sub categories of my 'current' life. For instance, I was also interested in your post (somewhere out there amongst the many) in regards to grocery shopping and food management. There's also a very interesting post in the YNAB+ forums, written by someone else, who is learning about and currently living a food storage lifestyle, as an alternative.

There's always so many ways to improve, isn't there? And that's what I love about YNAB....the ebb and flow of it.


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[DaveCrom01]

Hi Maggie

You're absolutely right. I tend to fluctuate between what you have just said, and what I said. The balance of the "what if current" versus "what if drastic".

And yes, YNAB allows it to be done in such a wonderfully structured way.

As for the cooking, well - i'm in the Bountiful period right now - I have so much stuff growing and the food storage operation is into over-drive. Also, the Legion dinners I cook for are now averaging over 60 people each Friday, and I'm loving finding the common ground and common rules between "bulk kitchen management" and "home kitchen management".

Although, there was an interesting twist at my 40th birthday party the other week - a few people commented on the "wonderfully aromatic Gin and Tonic's" that a friend of mine was mixing up at the makeshift bar on the deck. If you remember my original post, you won't be as surprised as they were that their G & T was being cooled with crushed Basil ice cubes.

Cheers,
Dave

[DaveCrom01]

Hey Maggie

Thanks for your private message.

This is the link I referred to:

viewtopic.php?f=9&t=4930&start=15#p35214

Cheers,
dave