We came across Kevin on Reddit, where he shared about his first month of budgeting with YNAB. He learned! He grew! And the freedom, oh the freedom! If you’re new to budgeting—or looking for renewed motivation—here are Kevin’s highlights from month one (only one month!) and a preview of what you might expect:
What I Learned From 30 Days Using YNAB:
- There is more awareness of my spending habits. I’m able to delay gratification by setting up categories to fund different aspects of my life (for the most part, I’m no saint).
- I’m no longer afraid of the mail (bills!!!) because I’m allocating funds to pay these monthly expenses.
- There’s $40 in my savings account (it’s a start). I haven’t done this in almost 10 years.
- I have a lot less stress. In fact, it’s like a video game with virtual money, and I enjoy the challenge and critical thinking associated with living on a tight budget (weird, right?).
- I now know everything that’s on autopay. Recently I had to update my credit card information with seven different companies, but because of YNAB, I did it all in less than 30 minutes—and it wasn’t stressful.
- I feel more empowered and more in control of my life, now that I’ve given every dollar a job (and now I shall conquer the world!!!).
After seeing this list, we wanted to learn more about Kevin’s story (Right?! Don’t you too?). So we gave him a call to find out. Here’s the rest of his story:
My Budgeting Story: I Was Up, I Was Down, and Now I’m Getting Back On Track
When I turned 21, I had $4,000 in savings. I was doing great.
But shortly after, it went downhill. I spent the better part of my twenties racking up debt.
I’m 30 now, and I’m getting back on track. I’ve got a job in communications, I play violin professionally in an Americana rock band, and I live with my (awesome) girlfriend.
She and I had been talking about getting a budget for a while. We have some life goals: to get married, have kids one day, and we want to buy a house. But it feels like our debt is always getting in the way. Between the two of us, we have about $20,000 in credit card and auto loan debt. To get married, have kids and a house, we need to get out of debt.
We found YNAB on Reddit. We were both kind of financially reckless, and knew we should probably give it a try.
So, we started. In fact, we just finished up our first month.
Starting Our Budget
When we started our YNAB budget, we connected our accounts, added our categories. One thing that really helped was simply taking the time to go over our monthly statements and finding out what bills came due when.
We put all of the primary monthly recurring expenses in the first Category Group section:
- Rent – 1st
- Electric – 7th
- Phone – 16th
I have them labeled and listed by due date. Before, I was always broke, and knew that if I didn’t have money by a certain date I risked late fees, overdraft charges, and returned payments.
We set up categories for fun things too: going to the movies, buying my girlfriend flowers. Setting up these categories was a psychological win. You feel good about it. It sets you up so you don’t feel guilty when you do these fun things because you know you have the money already set aside for it.
Then we pulled together all our debt and set a date to have the credit card debt paid off in just under two years.
When I had to separate out the interest and fees on my debt, I realized how expensive debt actually was. In that moment, I decided I knew I wouldn’t go any further in credit card debt.
Only Assign the Money You Have
When I was first doing the budget in YNAB, I had set up a mock budget and I was doing all this forecasting into the future of what I would have and would get paid. It was really annoying. I kept screwing things up. Everything I’ve read says don’t worry about forecasting, just assign what you have.
So, I looked at what I had in my account and just used that money. That was really helpful.
It was at that point I realized my expenses were outpacing my income, and I would just keep going deeper in debt if I kept it up. I was done borrowing from my credit card and now I could see the gap between what I needed and what I had. So, I hopped in the car and started driving for Uber again to bring in some extra cash. I wanted to buy Christmas gifts, go on vacation, pay off debt, and I needed to bring in more income to do that.
How I Use My Budget
The other day I went to the grocery store. Normally there’s a lot of stress involved because I’m constantly strapped for cash. But now, I’ve got this budget here, and I know I’m just going to stay within the confines of that. And that changed everything—I wasn’t stressed at all.
I use my budget every day.
I end up using the web app more, because I like all the reports you can see. If I’m out and about I use the mobile app.
Your Perspective Will Shift
Before YNAB, I would look at my bank account and see $1,200. Then I would play a show and make another $100. I thought I was rich! I’d go out, order lobster and shrimp, or spend way more on groceries than I normally would. It’s because I would look at my checking account and see one number.
But now I look in YNAB and I see categories, I see different aspects of my life. I can still get lobster and shrimp, but that means it’s budgeted for and I have waited until I can afford to splurge without sacrificing something more important.
You Will Have Wins (Big and Small)
Right now it’s the middle of the month and I’ve already got next month funded with the exception of Netflix and internet.
It feels amazing.
I’ve got a goal to save $500 for emergency funds and $500 for vacations in the next six months. Even if I only get halfway there, I’m already doing better than I’ve been doing—up to this point I haven’t had savings.
I also paid off a zero-interest credit card that I had fallen behind on. I had a month and a half to pay off $456, but I decided just to pay it off now. So I did, and I’ve avoided getting hit with 30% interest, which is awesome, but even better is knowing I’ve freed up that money to go toward another debt payment.
My Advice to New Budgeters
When you’re starting to budget, don’t get discouraged. I see a lot of people on Reddit that live paycheck to paycheck. They try a budget for a few weeks or a few months, and they’re getting discouraged because they don’t feel they’re getting out of debt quickly enough.
I totally get it—getting frustrated to the point where you don’t want to use the program. You think going back to your old ways will solve your problem. But that can be dangerous.
Right now, I can see the full picture of my finances. I’m fully aware of what I’m spending, what my debts are, and how bad I’ve screwed up financially. Now I have to get myself out of the hole, but I have a plan. I can see where I’m headed and how I’ll get there. Don’t get discouraged—just keep going.
We love hearing stories like Kevin’s! If you’re starting out with a new budget and have some questions, we’ve got plenty of helping hands to guide you on your way. Try one of our free open Q&A sessions with a YNAB teacher!