YNAB You Need A Budget

[sarahs219]

Hi all,

Here's the situation: We've been using YNAB for over a year now, with a lot of success in our goals. We have not been using a buffer this entire time so I have an elaborate spreadsheet that helps us time things properly as far as due dates go. I liked this b/c it kept us focused and required us to stay on top of things. I'm just plain tired of doing it that way now. We are in a much better place now and while I don't want to relax on following our budget I think it's time to relax a bit on the tedium.

To make this transition I want to discuss my logic to ensure we are doing this right! DH doesn't use the program so he can't check me on it.

Here is my plan:

1. Our monthly take home pay is $8,326.06 most months, some months more, but this is the base number. I want our buffer to be this number, this is more than enough to cover expenses and put the rest towards our goals. I want to make all of these decisions on the first, not as the money comes in.

2. We currently have $6,000 sitting in our emergency fund category that I would like to use as part of the buffer

3. On the 31st of August we are both getting paid with $4,163.03 coming in that day. August was a 3 paycheck month for me.

4. I want to use this income from 8/31 to zero out any overspending and finish our August budget for things being paid on the 31st, this will leave $2,589.34 in excess on August 31st.

5. I want to use the $2,589.34 and $5,736.72 from our emergency fund category to create the buffer for September (2,589.34+5,736.72=8326.06).

6. On September 1 I want to budget out our entire month of bills due in September, fund our lumpy categories and then decide what to do with the excess.

7. I will allocate all of the paychecks earned in September to "Income Available Next Month"

Does anyone see an issue with this logic? I cannot see anything wrong with it but I may be missing through the trees here so any confirmations or red flags would be greatly appreciated!

[Patzer]

Here is my plan:

1. Our monthly take home pay is $8,326.06 most months, some months more, but this is the base number. I want our buffer to be this number, this is more than enough to cover expenses and put the rest towards our goals. I want to make all of these decisions on the first, not as the money comes in.

2. We currently have $6,000 sitting in our emergency fund category that I would like to use as part of the buffer

3. On the 31st of August we are both getting paid with $4,163.03 coming in that day. August was a 3 paycheck month for me.

4. I want to use this income from 8/31 to zero out any overspending and finish our August budget for things being paid on the 31st, this will leave $2,589.34 in excess on August 31st.

5. I want to use the $2,589.34 and $5,736.72 from our emergency fund category to create the buffer for September (2,589.34+5,736.72=8326.06).

6. On September 1 I want to budget out our entire month of bills due in September, fund our lumpy categories and then decide what to do with the excess.

7. I will allocate all of the paychecks earned in September to "Income Available Next Month"

That looks like a good plan to me. You've obviously put quite a bit of thought into how much of a buffer you need, and where it will come from. You ended up deciding that you could put $2,589.34 of August's last paychecks into Income for September, and fund the rest from your emergency fund.

Implications:

1. This will use most of your emergency fund. I infer that rebuilding the e-fund will become a budget priority for you going forward, until it is back at a level you're comfortable with. I like the way the incentives you're giving yourself work with this.

2. You have a good estimate of what you need as Income for September. Reality may diverge from that estimate. If it diverges one way, you have execess funds that can help rebuild the e-fund. If it diverges the other way, you end up playing Whack-a-Mole or eating into your brand new buffer. Either way, you've been using YNAB long enough that you can probably deal with things.

3. If I were in your position, I'd probably maintain that spreadsheet for one more month just to be sure that what I thought I was doing worked out the way it should. Once I saw a month working as expected, the spreadsheet would gather dust.

It won't be perfect, but it's quite good. More importantly, you have the knowledge and are in a position to make it work. Go for it!

Patzer

[Joel]

It sounds like it will work. Keep in mind that a buffer only means marking your paychecks as Income for next month. So long as you do not need to mark any of your september paychecks as for this month, you will always have a buffer moving forward. (Even if that buffer amount increases or decreases as your paycheck amounts change)

[sarahs219]

I saved my current budget file as an example file and went through all the motions to verify what I want to do is what is actually going to happen. All looks well.

I think a difficult part of this transition will be in my way of thinking. Certain categories have always been budgeted on a 2 week basis, everytime I get paid these categories get X amount of dollars (mainly eating out, groceries, gas, fun money). For some reason this is creating a mental block in my head but I'm sure as the first month under our buffer progresses it will all become much clearer.

I talked it over with DH last night and just explained how this transition will reflect in our accounts. For example, our savings account balance will decrease a bit and our checking will increase and show a higher balance than normal. Turns out he never logs into our savings account so he has no idea what's in there. He said do whatever will make my life easier. He's a keeper right?!

I infer that rebuilding the e-fund will become a budget priority for you going forward, until it is back at a level you're comfortable with.

We are going to sit down tonight and go over our September budget to decide what to do with our excess cash. We have a wedding to go to in Hawaii in January that is going to take a chunk each month up until then but the rest I think should go towards our emergency fund.

I can't explain the feeling this transition is giving me. I always thought the buffer would be a nice thing to have but never made it a priority. The past few months I've been feeling like our control was slipping on our budgeting and that we weren't using our money as efficiently as we could be. We were staying within our spending limits mostly, and still accomplishing things, but it just felt out of control. I think having this buffer will put us back in control. I feel a huge weight has been lifted in that I don't have to time our bills to our paychecks anymore. I think I was focusing so much energy on that timing that I may have been missing some oppurtunities to make better decisions.

I think the hardest part of this world of a buffer will be to let the money sit. I'm hoping it's worth the wait!

[blackdiamond]

I think you're right on track. I suspect that you opted to live for a month on the bare minimum you could get by with a little bit less, but it'll all work out in the end. Your buffer isn't a set amount going forward as it'll always be the sum of the previous month income. Sometimes it higher and other times it's lower.

You'll enjoy the change. Enjoy and congratulations.

[DonGately]

It looks like your reasoning is sound and you've obviously put a lot of work into the transition. Great work! Once you begin budgeting a full month at a time I think you'll really appreciate the benefit of having a full buffer in place and even more so when the next extra paycheck month rolls around. Even though you'll be drawing your emergency fund down to create the buffer the buffer will help cushion the blow if something does come up. Good luck with the transition.

[liandor]

I am impressed and inspired by your achievement!!!

[moonangel12]

I saved my current budget file as an example file and went through all the motions to verify what I want to do is what is actually going to happen. All looks well.

I think a difficult part of this transition will be in my way of thinking. Certain categories have always been budgeted on a 2 week basis, everytime I get paid these categories get X amount of dollars (mainly eating out, groceries, gas, fun money). For some reason this is creating a mental block in my head but I'm sure as the first month under our buffer progresses it will all become much clearer.

I talked it over with DH last night and just explained how this transition will reflect in our accounts. For example, our savings account balance will decrease a bit and our checking will increase and show a higher balance than normal. Turns out he never logs into our savings account so he has no idea what's in there. He said do whatever will make my life easier. He's a keeper right?!

I infer that rebuilding the e-fund will become a budget priority for you going forward, until it is back at a level you're comfortable with.

We are going to sit down tonight and go over our September budget to decide what to do with our excess cash. We have a wedding to go to in Hawaii in January that is going to take a chunk each month up until then but the rest I think should go towards our emergency fund.

I can't explain the feeling this transition is giving me. I always thought the buffer would be a nice thing to have but never made it a priority. The past few months I've been feeling like our control was slipping on our budgeting and that we weren't using our money as efficiently as we could be. We were staying within our spending limits mostly, and still accomplishing things, but it just felt out of control. I think having this buffer will put us back in control. I feel a huge weight has been lifted in that I don't have to time our bills to our paychecks anymore. I think I was focusing so much energy on that timing that I may have been missing some oppurtunities to make better decisions.

I think the hardest part of this world of a buffer will be to let the money sit. I'm hoping it's worth the wait!

I've just recently had the same realization. Things were getting ugly each month and I couldn't get out of the cycle. I did a trial upgrade to YNAB4 that caught some biggie errors that went back 2+ years so I just started over. I didn't know where to start so I decided that this time I was going to do it "right" and see if that strengthened those seriously weak links in my budgeting (they have always been there, it just took over 3 years for them to finally break and make themselves known). I wiped out what was our "Emergency Fund" and was able to pull together a full buffer - yay! It's a huge relief and mentally things are so much clearer when looking at our finances. No longer do I have to do the math or think through things to such an extent. Good luck!