A YNABer's Journey from "No Clue" to "Debt Free" and Brimming with Awarenes


I received this email (already quoted part of it in a post just an hour ago) and got permission from Henry to post the entire email. It’s an introspective gem and is full of insights into the psychology behind money.

— enter Henry —

Sorry for such a long email, but, the truth is my wife and I did buy it,
but under her email address instead of mine for our PC at home. I did
buy the iPhone version of it also, which is what I mostly use. However,
I would like to eventually get another copy of YNAB for my Mac at my
office, so I can check out our budget during my lunch hours. But for
now, this is working for us.

I love getting these emails. I read all of them, and even email my wife
snippets of them, you know for the occasional Ah-ha! moment.

We started out much as you did, not a clue as to where our money was
going, and fortunately we didn’t even have a credit card – not due to
avoiding credit, but simply because we were so poor, it didn’t even
occur to us to try to get one. Who would approve one for us? Well, we
were pretty naive, and unfortunately later discovered it was actually
pretty easy, much too easy to get one.

It was a bit of a roller coaster, and like you, our first attempt to
understand where we were going financially involved spreadsheets, as I’m
very familiar with them and use them at work. It just seemed that life
was dragging us around, and we at least wanted to know where to – even
if we couldn’t control it. It just became clearer and clearer that if
you have no plan to get anywhere, it’s the same as having a very good
plan to go nowhere, and you’ll get there every time, without fail.

Watching and tracking our expenses, using the pretty charts and graphs
was educational, letting us know what our apparent priorities in life
were. It’s like we were strangers to ourselves. If someone were to ask
us, what are your priorities, what are trying to get out of life, we’d
have to answer back then, “Wait, I have to check our spreadsheets. It’s
in there. Ah, right here. See, we’re into the here and now, apparently –
and apparently, we have no plan to ever stop working or being able to
retire because evidently we wish to work every day until the day we
actually die – and we really, really seem to like eating out for some
reason – but alot. And movies, we seem to enjoy movies and pizza and
traveling, and motels, lots of motels. We like lots of food, see the
grocery category?” This was no budget, just a list of what we spent, and
brought to vivid life with colorful charts and graphs.

The truth is, we weren’t really asking ourselves those kinds of
questions, what were our priorities, what were our goals. We were always
just living in the moment, spending until the money was gone, and then
only after the fact (forgetting whether we enjoyed our choices or not)
we could look back and see what we did thanks to our handy dandy
spreadsheets. I guess maybe we hoped the bright future in our
imaginations would somehow just magically materialize out of nowhere
somehow. So we sort of just drifted in the moment, spending on what we
could afford, until the money was gone. But what we could not answer was
“why did we do that?”. Maybe it was just “because it was there, right in
front of out faces, at a time when we still had money left in the bank.”
It’s strange that we also drove that way. We bought a $1,000 car, pretty
dilapidated, and it would stain your clothes to get in it, the black
rubber lining around the windows was becoming like tar and it would get
everywhere. But we only drove it when we could afford gas, and when we
ran out of gas and we also ran out of money to buy more gas, then we
just stopped using the car. A good deal of our normal mode of
transportation was still primarily walking or the bus. Driving around
was just a sort of luxury or convenience.

But the way we lived at the time, it was sort of like wandering around
aimlessly without a plan, having some money to spend, but not knowing
what you want or what you want to do. A shopping mall comes up, not that
you planned to go there, but it’s just somewhere to go, it’s “on the
way”, and no real plan to spend, but since you have money and you’ve
just spotted something that strikes your fancy at THAT MOMENT, you buy
it. Now you’re broke, so you can rest and go home. The money pot is
empty and you have to wait until you can fill it again. You go home and
just hang out. No thought of budget.

Strange, in hind-site, those early aimless years. All that mattered was
the we were in love, had each other, and felt so free as new grown-ups,
newly-wed grownups. We felt we could do anything we wanted and didn’t
have to ask anyone’s permission, for the first time ever! The only thing
was, and as it turned out, we really didn’t know what we wanted. We
explored, everywhere, or at least anywhere our feet could take us –
parks, railroad tracks, neighborhood stores, wherever.

Our first attempts to be “smart” and financially reasonable was just to
try to get the very cheapest for all the basics in life, a kind of
simple math- cheapest place to live (scary neighborhood), cheapest way
to travel (bus or walk), cheapest way to eat our main meals (absolutely
no nutritional rationale, will maybe minimal). That way, we knew we
could afford at least the basics of surviving and then anything left
over was ours to spend – on whatever random thing happened to cross our
path. Very simple.

We thought that was pretty smart, leaving wiggle room in our paycheck
for our inevitable mistakes and life’s surprises. The only thing was
that our planning was very short-sighted. To our thinking, life would
only present a possible surprise within a given pay period. If no
surprise came up, then we could spend every last dime available because
life’s next possible opportunity to surprise us would wait until the
next convenient pay period. That next pay period, we’d wait a reasonable
time, check if life was coming at us with any surprises within the pay
period, and if not, then we’d use/spend/waste the wiggle room of funds
any way we pleased. After all, we had passed that pay period’s chances of
a surprise.

And the strange thing was that we felt, or at least I felt, somewhat
successful, spending every dime, emptying the account every month,
knowing that HAD there been some minor disaster, we would have had that
extra $200 or so to attack it with. But it seemed only reasonable to
spend the account to empty because that was what money was for –
spending – on things we wanted.

I can laugh at myself now, but I felt so smart back then.

Of course this never really worked. This never would have lasted. First
of all, “surprises” seemed to be more the norm rather the exceptions
that they were SUPPOSED to be. Everything was always rudely surprising
us. And that extra $200 a month didn’t really cover many of those
surprises – it just didn’t seem to stretch as far as I thought it
should. We began to understand, slowly and painfully, that surprises
could be very “unreasonably” expensive and that we did not have nearly
as much wiggle room as we thought we had.

Second, and this was haunting question, did we even enjoy spending the
money we HAD spent? Something we bought would just lose it’s luster a
few days later, and this movie or that ended up not being how we really
wanted to spend our time or our money together. But what else was there
besides our routines, our new-found “traditions”. This was our new-found
freedom, and yet we were beginning to feel not so free. Were we wasting
money? Were we wasting time? And what the heck did we want anyway?

It turns out, we never really stopped to ask those questions. It was
just let’s get married and spend the rest of our lives together. Love
will take care of everything because now we’re free, free for the first
time ever! Ah, yes, free also to fall on our faces – fortunately, it
never came to that.

But there was stress, and vague dissatisfaction, and general annoyance
because it just didn’t seem to be adding up – or maybe the universe
wasn’t being fair with us, or something was off. The scary thoughts came
shortly after, when we began realizing “we’re on our own now.” My
thought was that everything had to make some kind of sense, so if things
weren’t working, there had to be a logical way to understand the
problem. That’s when we started the spreadsheets. We decided that we’re
just going to be honest with ourselves, look at ourselves, I mean really
look, and track what we spend and see what we do, how we spend our time,
what we spend money on, the works. And we would write it down that
somehow that should give us clues and would maybe even show us the
problem outright.

We weren’t going to decide anything yet, we weren’t going to change
anything yet – just track and record and be honest with ourselves. We
were surprised of course – actually shocked. We began to think, “Was
that really what we wanted to do? Was that really so important to us?
That was really more expensive than it was worth.” etc. We began to see
how we spent money, what was “apparently” important to us, and that we
had essentially no plan for the future. Maybe I should have felt a
little shame perhaps because some of those things- we really shouldn’t
have bought in the first place (of course, always in hind-sight). I
mean, we really should have know better, right? We were adults now – at
least we thought we were. We were of legal age at least – that seemed
grown-up. Or maybe I should have at least thought “Okay, now I’m going
to work on this with some conviction! I see the problem! It’s as plain
as day! Our diligent tracking and recording has paid off nicely! It was
all worth it!” Right? Is that what I thought? Is that what I did? No,
not so much. Instead, I looked at it, and admitted, quite flatly, “Yep,
there’s our problem. Right there. Plain as day.” Then I went right on
ahead like nothing had happened.

What was that? Some kind of denial, or mind-reality disconnect? How
could we simply see the problem and not be compelled to at least try to
solve it? And why didn’t the problem outrage us more? Why didn’t we even
think of any way to approach it or tackle it or even discuss it – to
discuss possible solutions? It almost seems like some kind of
self-induced insanity. It’s kind of like realizing that the pain in your
foot is caused by a large thorn that’s quite obvious in fact. You look
at it, take note of it, measure it, and say, “Yep, there’s the problem.”
And then promptly keep on walking on it. Ouch! step. Ouch! step Ouch!
step Someone could even point it out and say, “Hey! You have a thorn on
your foot!” Then you answer, “Yea, I know, it really sucks” nodding your
head in full agreement. Ouch! step Ouch! step Ouch! step

Well, to be fair to us, I guess just seeing the problem wasn’t quite
enough to give us a clue as to what to do. A solution was not
immediately apparent to us. Someone with new-found freedom doesn’t
easily want to suddenly jump to the conclusion of self-restraint. And
maybe our new-found confidence in our self-reliance and independence was
just too fragile to endure even our own self-criticism. I don’t know,
but maybe we were just like children, feeling small, insecure, but
stubbornly clinging to the things that made us feel “normal” – our
new-found “traditions” and routines. Maybe they comforted us, reminded
us that we were together, on the same side, on the same team, for better
or worse. And if we picked the wrong path, even a doomed path, then at
least we’d pick it together.

But surprisingly, those early years, of surviving on such little income,
was not our real financial difficulty – as it turned out. Amazing! No,
in fact, there were much bigger and much worse financial challenges the
world would throw at us later. Looking back at those early years seems
like it should have been so easy.

Enter, the credit card. dramatic music

What happened next was kind of odd, almost surreal. I can’t really
explain what happened as it seems like such a blur. It all went so
quickly. From credit cards, to student loans, then store cards. My
salary kept going up incrementally, but we always managed to WAY
overspend any pay increases. We were digging our financial hole – and a
huge one at that. What we were doing at this point would make ALL our
previous financial ignorance and/or irresponsibility PALE into
insignificance. We were really hurting ourselves now – only we weren’t
feeling any pain. Maybe that’s the scariest part. Because all the while,
life is actually feeling pretty good. It’s kind of like someone is
beginning to push a knife into you, and the only time you feel the pain
is when you look at how much in debt you are. Look away, and suddenly,
no pain. And there is so much fun to be had with credit and debt! So
many moments of temporary joy. It became so easy to just look away.

But you do have to look someday. Guaranteed, someone will shove it in
your face to remind you. You inevitably have to pay. And then you
realize you were spending someone else’s money all along.

The years go by, I guess pretty much as for anyone else, with ups and
downs, panics and near-catastrophe. For some reason, it just takes way
to long to realize “It’s our own fault.” So, time to get serious, with
lots of false starts, and each time we say, “Okay, this is it! This
time, we do something about the problem! We’ll even (dare we say it?)
BUDGET!”

There’s no escaping it. We are now fully responsible for ourselves, and
since we were actually better off financially than almost anyone else we
knew, there really was no one who could bail us out of any trouble, so
best to try to stay out of it. But how? What is thing budget thing, that
seems like it should be such a strong tool or weapon even. A shield, maybe?

We’d try, I mean really try, make good faith efforts to make budgets
and then stick to them. The making of them was always so much easier
than the sticking to them. All we knew to do was to live the most
austere kind of life we could tolerate, and that helped some… for
awhile. But it doesn’t feel very good and at some point, we’d reach some
kind of threshold beyond which we could no longer tolerate and just
forget the whole thing. I mean just flat out give up.

But just because you give up, doesn’t make things better, doesn’t
magically make problems go away. So we’d make a little progress, create
the illusion that everything should be looking up soon, fall back to bad
spending habits, and start all over. Panic, strain and sacrifice, give
up, spend freely, repeat. Good times and bad times came in cycles, and
it was almost predictable, you could almost say, “Here in a few months
you’re going to get desperate again, fall down, pick yourself up,
struggle until you can’t, breath for a while, spend money lie water,
then get desperate again.” What month is it, or year? Is it the month to
get desperate again? Is it a desperate year or we on a good year part of
the cycle? It’s almost hilarious, except that it’s not funny.

But at least we were trying. We’re weren’t terribly organized and didn’t
really have a way to make any sense of any real kind of plan or
strategy. But we were trying. Maybe that’s the only reason nothing
terribly catastrophic happened to us – we kept trying, maybe only
half-heartedly at times, and maybe not consistently, and maybe not in
the best strategic manner. But we were trying. In our own way, we were
trying – not necessarily because we wanted to, but rather because life
had sort of forced the issue on us. Maybe even back then, there must
have been something deep inside of us, some sort of survival instinct,
some small voice urgently demanding, “Failure is not an option”.

So at some point, we accept that we don’t really know what we’re doing.
We begin to research. And that opens a whole new world to us. We try
various plans, “other people’s” plans because we don’t really have a
very good one… apparently. Books, professionals, self-help advice,
ad-nauseum – with varying levels of success and/or disappointment.

We eventually got there, or at least became debt-free – except for the
mortgage. But even with that, we managed to refinance from a 30-year to
a 15-year mortgage and also from a 7.25% interest to a 4.25% interest
mortgage – and we’re also planning on paying it off in 7 years – so some
good progress even on that front. No more credit cards, student loans,or
debt of any kind (other than the house). Our car and van (we have kids
now), we paid cash. We actually followed (are still following) our own
customized version of Dave Ramsey’s financial peace plan. It actually
shares some very similar tenets or processes as YNAB (such as giving
every dollar a job), so it’s a really good fit for us.

We only recently discovered YNAB. But, by then, we had already dug
ourselves out of debt, had a fully-funded emergency fund, and a pretty
good budget in place. We were previously using MS Money, but dealing
with balance forwards was always a pain and messy. I really like YNAB.
It works so well for what we’re wanting to do. Pretty simple to use,
virtually self-explanatory, fits in well with our financial plan and
approach to budgeting, and is virtually omni-present. I have to admit,
the simplicity to use is a real bonus.

Honestly, something online would have probably worked for us, but YNAB
really fits the bill. I guess what we’d been looking for was something
that we could use from anywhere we happened to be. From home, on the
road, from our pocket devices, and from work (during my lunch hour). So,
now we have YNAB installed on our family PC at home, with the YNAB file
stored in a Dropbox folder. And I have YNAB (for iPhone) installed on my
iPhone which I keep with me at all times and sync it every morning
before I go to work. And someday, we’ll even save up enough funds and
budget to buy another copy of YNAB, but for my Mac at work and I’ll set
it up to access the shared YNAB file in the Dropbox folder. Then we’ll
be pretty much all set.

And I love the AWESOME way YNAB carries forward balances for specific
budget lines. One thing we could do, for example, is if we wanted to
purchase something- an item that’s say $100 or so (we don’t like impulse
purchases anymore), we could make a budget category for the object we
want and budget maybe $20 or $30 per month for it – and we don’t buy it
until the funds are adequately built up for it. I mean, we could already
afford it, if we really wanted, but this would give us time to really
make sure this is what we want to do (something like delayed
gratification). We don’t have to have as much spending uncertainty or
insecurity (wondering if we’re doing the right thing, being responsible,
truly considering our purchasing decision, etc.) because if we get to
the point where the funds are finally built up for the purchase, and we
still want to buy it (and not put the funds towards anything else
instead), then we’ll know that we really do want it, that this is what
we really DO want to do with our $100 instead of using it on something
else, so we’ll buy it; having given ourselves time to reflect and time
for other possibilities or opportunities to surface and present themselves.

It’s been a long road and an interesting financial journey so far, and
we still have more financial adventures to have and more discoveries to
make; but this time, we’re taking YNAB with us.