The police officer, school teacher, engineer, firefighter, attorney, doctor, professor, designer, manager and rocket scientist all have one thing in common: they’re killing it financially with YNAB.
I'm Ray and I'm a stay at home dad. My educational background is in finance and, long ago, I used to be a financial planner. I could teach it and preach it, but trying to live it proved more difficult. I have a beautiful wife who is a Quality Assurance Manager for Tyson Foods. We have four children.
In 2003. Our financial situation was good, but our family life was not. All work and no family time is not how we wanted to raise our new family (all kids under four years old). We made that bold step to go down to a one income family for the sake of having a parent at home full-time. It was a good decision, but one that came with a powerful, painful lesson. Our decision led to my wife taking a job with Tyson Foods in the United States, so we sold our house packed our bags and headed South...debt free and with $80,000 dollars in the bank (from the sale of our home).
We continued our normal spending habits and, five years later, awoke to the realization that all our money was gone. Not including our house, we were $32,000 in debt ($20,000 for car and $12,000 in credit cards). Painful lesson #1 learned: it's easy to adjust spending upwards, much more difficult to adjust it downwards. It was early to mid 2008 when this reality hit us like a ton of bricks. With my background as a financial planner, I had taught and counseled people how to get out of these situations before. My wife and I put our collective feet down and determined to reverse the situation.
Well we tried, and we failed. After over 18 months of concerted effort, trying everything in the world the experts recommend, from putting your credit cards into a safety deposit box, to only paying with cash, we ended up a further $8,000 in debt. I could not believe it! With all my training and with all the tricks I had read about, learned and taught and with all the HARD EFFORT I had expended, we were still further behind than when we had started!I know what you are thinking, why did you not try budgeting? I did. I had a budget. It went something like this..... monthly income $4,000, Mortgage $1,200 car payment $400, Utilities $300, Insurance $300, groceries $600 and entertainment $400 leaving $800/month to put on the debt. That means our credit cards after 18 months should have been paid off; instead we were an additional $8,000 in the red. Despite our best efforts, we were drowning and needed help. REAL Help.
I knew I was missing something. I purchased Quicken and downloaded it. The problem was, when it was up on my screen, I felt like I was in the cockpit of a 747. There was too much information, too much unfocused information. It was a tool, but not a plan or a methodology. I needed specific help, specific budget help. I did some more searching on-line and came across an article recommending YNAB and checked it out. I was excited. The learning process was straight forward with YNAB. It was very focused on one thing; getting my finances under control. That's the program's purpose. I had just finished trying to wade through Quicken, with all its menus and options and distractions. It was like a tool with no teacher. YNAB felt like a teacher with the tools.
YNAB has brought an incredible calm to the financial storm we've been fighting in earnest for the past 2 years. How? Let me explain. YNAB showed us what had been sabotaging our efforts the previous 18 months of trying to get our finances under control. What was sabotaging us? The little things. The annual car registration fees, the unexpected gifts to buy for birthday parties the kids were invited to. The printer ink and photo paper at Wal-Mart you buy when you are getting your groceries, the two or three, unexpected doctor visits because the kids got sick etc. All those little things together put huge dents in our finances. What's great is that now all those things have a category and dollars assigned to them. Our budget won't change at all the month we have to renew our registration, or in December for Christmas, because dollars are being set aside, given a job for those tasks every month. There are no waves on the horizon.
We are in our 4th month of using YNAB and we've paid off over $9,000! (My wife got a good Christmas bonus which helped, but even with that, THAT'S AMAZING!). Even better than that, we've reached the goal of having one month of unassigned dollars in the bank account at the start of the month, so even if something completely out of the blue--that is major--comes along, we have some wiggle room. So we went from living paycheck to paycheck five months ago, juggling money between accounts so nothing bounced, to having $4,000 unassigned dollars in the bank at the start of each month and having paid off $9,000 in debt. I sleep better and I lost 12 pounds, over Christmas no less! Our kids get an allowance now, which they love! Now we're assigning dollars for a family summer vacation, which we have not done in years!
Even if something completely out of the blue--that is major--comes along, we have some wiggle room.