Transitioning to One Income…Reaching Goals

Describe your financial situation prior to using YNAB.

When I was 6 months pregnant, the ad agency I worked for folded during the economic downturn when the tech bubble burst. We decided it was really a blessing in disguise because both of us had wanted to figure out a way for me to stay home for a while with the baby. We just turned my layoff into a way to jump start us down the path we had been toying with but didn’t have the courage to go down yet.

We looked at all the numbers and decided that it was entirely possible for me to stay home. I had received a small inheritance about that same time that certainly made the decision easier. It was not nearly enough money to replace what I made in a year but it was enough to pad our emergency fund and make us feel more comfortable about me taking some time off.

How did the transition to one income initially work out?

Over the next few years, I started to realize that despite the fact that we were doing everything “right” financially (in a house we could afford, driving older cars for as long as they would hold out, paying off credit cards every month, etc.) we were still missing something big. Between the adjustment to one income (approximately 40%), huge medical bills for our aging animals, and a six-month period where my husband’s employer cut all employees salaries by 10% across the board, we were rather quickly bleeding away all of our savings.

At this point I was still going through the motions of “pay yourself first” and putting money into savings. But every single month, that money plus some would come back out to pay monthly expenses.

I could not understand how we could be following all the personal finance “rules” and still be coming up short or awfully close to it every month. I was starting to get worried that we would not be able to reverse the drain on our savings account before it was all gone. I had been a stay at home mom for a while and knew that I was not ready to go back to work.

I was beginning to panic a little, tired of having the same conversation with my husband the last week of every month about how we needed to not spend anything for the rest of the week because there wasn’t much left in the account. I finally came to the inevitable conclusion that I needed some sort of budget to get a handle on things. And budget had always been a very big, bad word to me. [Editor's note: We take offense to this.]

What was your first impression of YNAB?

Skeptical.

Was it tough for you to get your head around the YNAB Methodology?

Part of what I love about YNAB is that it is so intuitive. I really had almost no learning curve at all. I set everything up for our first month’s budget one afternoon while my kids were napping. I learned a lot over the course of a couple of months about the budgeting process, but the software itself I figured out pretty much in the course of a couple of hours of playing with it.

How were things after one or two months using YNAB?

I have to say that the first month was a challenge for me. YNAB was so detailed that it sort of fed into the OCD part of my personality and I became a little bit obsessive and controlling about money. After spending a month with the program though and closing out my first zero sum budget I had an amazing sense of freedom. At first, I felt very tied down and restricted by having a budget (which had been why I was always so resistant to do one).

That resistance disappeared a month or two into using the program when I realized how much power I had over our spending now…I had control over it instead of the other way around. Knowing where the money is going is way more freeing than hoping the money is going where it needs to go.

And now, about a year into using YNAB, how are things going?

It took a few months to turn the ship around. However, in the time that we have been using YNAB, we have paid off our car (a 4 year loan that we paid off in a year and a half) and are on track to have our emergency savings account fully funded in the next 3 months (we will have put $6000 into it since using YNAB). We have started funding our IRA’s again - that had lapsed in the past few years.

Large, one-time bills no longer throw an entire month’s budget off because I have planned for them all year. There is no stress around them at all now.

The best part….there has been absolutely no lowering of my quality of life. I always associated a budget with a diet-like sense of deprivation. I was sure that it was going to be torturous and miserable.

Turns out that I feel the absolute opposite about it. I still get to do the stuff I want–the stuff I value–and now I don’t have the panic at the end of the month of how we are going to get through a week with only $20 left in the checking account.

YNAB has given us information about our money that we needed so that we can make decisions that make sense and ADD to our quality of life.

Have these positive financial aspects popped up in non-financial areas of your life as well?

Well, my husband and I sat down and had our first discussion in 13 years of marriage about goals. Not just financial goals…it included things about what we might like to do in reirement, our philosophies about paying for college for our kids etc. These are things that involve money but are not exclusively financial. We had never really sat down and had specific conversations about these things and it turned out we have very different ideas in some areas. These were all easier to talk about with our finances under control and a clearer picture of how we can save for things like college and retirement.

Is there anything else you’d like to share?

I have to say that I am really stunned by how much of a difference YNAB has made in our financial life–even for someone that wasn’t in debt and seemed to be doing the right things. Without major sacrifice or hardship, we stopped floundering around and being stressed and now feel like the goals that we (finally!) talked about are really achievable.