Where has the zero gone? YNAB podcast

How to Stay Out of Debt

This mental shift will help you stay out of debt for good.


This post originally aired as a podcast episode. Every week, Jesse covers a new topic. Click here to listen to more episodes.

If you’ve gotten out of debt, congratulations! And now, you want to stay out of debt. There’s a shift in mindset that will be extremely helpful in avoiding new debt—and that’s using the power of zero.

We’re currently in the era of easy credit. It started in the 50s with Diners Club cards and now with the booming popularity of credit cards everywhere, it’s very easy to never worry about the number zero.

Zero? Yeah. Zero—standing by itself. As in, the money’s not there—you have no resources. It’s over until new money comes in. And zero—well, it’s the secret to staying out of debt.

Running Out of Money Has Lost Its Meaning

That concept of zero, it’s essentially just been thrown out the window. People have zero dollars to pay for a car, yet they buy a car. They have zero dollars to take all their kids to Disneyland, but they go to Disneyland. It’s like: “Ack, we don’t have that much money. Well I mean, gosh, who cares?” You just blow right past zero. 

And we deal a lot with the numbers on both sides of zero. When we have a lot of money—whatever that means—when we have money to the right of zero, on the positive side, we’re spending it paying rent, mortgage, utilities, doing all that stuff. We live paycheck to paycheck, just like everyone else.

But not if you’re following the Four Rules of You Need a Budget and you’ve been doing it for any length of time. Honestly, for most people it takes just four months to break the paycheck-to-paycheck cycle. When you’re looking at financial stability, that puts them ahead of 80% of the adult population here in the United States.

So back to that zero—most people get really close to zero, then they just walk right by it. Where has the zero gone? Why don’t we talk about having no money? Because we don’t have to deal with having no money anymore. We don’t have to realize there’s no money left.

The Missing Piece: Scarcity

Here’s what we’re missing: scarcity. I love scarcity. I love it. Because scarcity breeds creativity. 

It invokes a strength deep inside you. With scarcity, you take action—because what else can you do?

But zero. That’s the scarcity-est. Is that a word? I’m not sure. I don’t think so. But there’s no number that represents more scarcity than zero. Zero means you have nothing left. In monopoly, that’s game over. But in life, if you want the shoes, it’s not game over at all; you just charge it. You can walk right past zero. And I feel like we’re doing ourselves a huge disservice.

I’ve said this before but you’ve got to realize that if I had not bumped up against scarcity—this is my own story—my company (YNAB) wouldn’t exist. I was in grad school and my wife, Julie, wanted to stay home with our firstborn. I realized we didn’t have enough money to do that—I wouldn’t be able to finish school without borrowing money, and I did not want to walk past the zero into that negative territory. And by want, I mean I wouldn’t. It was a non-negotiable. It wasn’t an option. 

Treat Debt Like It’s Not an Option

So when you treat debt like it’s not an option—going past zero, just nonchalantly strolling past to say, purchase a mattress. C’mon. Sleep on a cot. I know they’re not that comfortable. But, for a little while, it’s fine. You’re building different muscles, right?

I don’t mean actually sleep on a cot, but I mean, I kind of do. It’s just getting into that mindset where you might run low on money and realizing you’re not going to die, you can learn to adapt. And then let the creativity and motivation start kicking in. 

When we walk past zero, the motivation slips right out the door. It’s like, “Oh, I can do this. I don’t need to do anything differently.” I need shoes, I buy shoes. Motivation walks out one door, creativity walks out the other door, and willpower just vanishes. Poof.

Instead, just say it’s not an option. We’re not going into debt. Nope.

As soon as you’re serious about saying no, your brain starts working out another way, because walking past zero isn’t an option. 

I Started YNAB Because I Said No to Debt

For me, that creativity ended up being selling a rinky-dink spreadsheet (yep, it was the start of YNAB). It brought in enough to cover our rent ($350/month) and, well, it’s grown from there.

I didn’t start a business because I had an entrepreneurial dream. I started a business because I needed to make $350 for rent. And why did I feel that need? Because I was running out of money and that zero was in my face. I couldn’t just walk past it, ignore it, or cover up the wound with a very temporary band-aid that was a very cheap, a very logical, and a very normal student loan. 

Just the Push You Need

When you run into situations in your budget where you’ve run out of money, get comfortable with that feeling (and I’m not talking about medical debt, that’s a whole different ballgame). But when you’re talking about consumer debt, realize, “You know what, yeah, life’s gonna go on.” We’re not going to buy that car we wanted to buy, we’re gonna fix the old one. We might even need to push-start that sucker, and life will go on. Get comfortable with the idea that you can bump up against zero and stay to the right side of it.

It may be just the push you need to get those creative juices flowing, to tap that willpower that’s down not even that deep inside you, and to unleash your own brain to find solutions to get as far to the right of zero as you possibly can.

Follow YNAB’s Four Rules to get out of debt and stay out of debt for good. It’s a whole new way to look at your money. You’ve never budgeted like this before.