Digging Out of Perpetual Overdraft

Rose Lee, her husband, Bruce, and her two children, live in a place most of us only dream about visiting–the fertile, temperate, fruit bearing region of Te Puke, New Zealand. When she found herself in debt equal to a month’s worth of her income, she knew it was time to make some financial changes. YNAB has eliminated her financial quandary, helping her climb out of personal debt and begin saving for the future.

Where are you from?

I live in Te Puke, Western Bay of Plenty, New Zealand. Much of the produce you enjoy might come from New Zealand — Granny Smith, and Royal Gala apples, guavas, year round lemons, mandarins, plums, passionfruit, and assorted berries all thrive in the rich soil and pleasant climate here.

What do you do for a living?

Ah, the perennial question. First and foremost, I homeschool my two children; I have done so for just over 8 years. My second job – the one that brings me some money — is taking messages for my husband, who operates a chartered accounting business in an office away from home. Lastly, I call myself a housewife, or home executive. I keep food on the table (with the help of my son,) clean clothes in the drawer, and usable dishes in the cupboards.

How long have you been using YNAB?

I purchased YNAB at the end of January 2007, so currently 15 months.

Describe your financial situation prior to using YNAB.

Purchasing YNAB at a converted cost of $58.39 put my available funds (savings, checking account and credit card balances,) to a net of negative $621.19. I owed more than six hundred dollars and the only thing going for me was that the following day was payday – and then I would only owe $486.23. To be honest, I felt horribly guilty. I didn’t even tell my husband I’d purchased YNAB, I just sneaked around and used it when he wasn’t home. He’s an accountant–used to things balancing. Here I was in the red, and although it wasn’t a large amount by many people’s standards, I owed almost a whole month’s income. I was trying to manage on what I earned, all I had to cover was groceries and gasoline, and I wasn’t even able to do that.

Was there a “pivot point” where you decided enough was enough?

For several years, my accounts had been in the negative more parts of the month than they’d been positive. Some months I could sneak into the credit side for a day or two, but the credit numbers seldom went as high as $100, and only once lasted more than two days in the whole year prior. The emotional strain of trying to conceive (unsuccessfully so far) just added more stress. I needed to simplify, organize, and regroup for the sake of my bottom line and my general well-being.

What made you decide to purchase YNAB over all the other options available?

I had been researching budgeting products for a time when YNAB was suggested to me. The description of the rules made sense to me, (although I could see no possible way of ever being able to live a month ahead of my expenses.) I was a month behind already and it had only taken me six months to get there. Basically, at this point it was desperation, driven by a slightly less expensive product, that forced an ‘instant’ decision.

Describe your feelings two months into using YNAB.

It helped that at the end of January I finally received payment for work done at the end of the year before, which reflected in my overall balance. Watching my balances, which had been negative for so long, finally go above the zero, and STAY there for the entire month of February made an incredible difference and was very encouraging. By March, after just one month, I had gone from being an entire month behind on my expenses to being only one week behind in my expenses. All that progress was excluding the extra payment I had received for previous work, so it was a very exciting time for me.

Describe your financial situation now, 15 months into using YNAB.

I have a buffer (the term ‘buffer’ is explained here), and I still get a thrill watching my current income building for the next month as my pay goes in each week. The other really exciting thing for me is when I check my account balances online the page gives me a net worth figure. For a period of pre-YNAB time, that figure was constantly in debit – I owed the bank. Now, my balance is always in the credit, and I’m enjoying something new. The ’savings’ account is growing as well; it doesn’t get emptied out each month to pay down the cards. I am also contributing to some long-term/retirement savings plans, which are also growing. Hopefully I’m setting myself up well for my financial future.

Have these financial positives manifested themselves in other aspects of your life?

Being free from the financial stress has enabled me to focus on other areas of my life that needed to be addressed. I was able to purchase a fitness system about a month ago and have been getting regular exercise and workouts since. My scales are already showing an improvement. I have also experienced a vast improvement in my emotional well-being and these lifestyle changes have helped me manage issues I’ve dealt with for many years. So yes, I’d say the trickle down effects of getting my finances in order have positively touched many other aspects of my life.