From Podcast #166, Punching with the Rolls (which on second thought was an awful title), the one in which, we talk about Rule 3 because it can be a little bit tricky if you’re budgeting with a partner.
You Need A Budget, in all its wisdom, does not let you get away with just willy-nilly overspending on categories. We make you pay for it. We make you pay it back.
So, you have all your category balances just flush with money and then there’s some overspending, and that naturally has to be paid for somewhere. You can have it just deducted from next month’s available — and we’re actually working on changing that slightly because it can cause problems, constantly deferring repayment to the next month. But the money has to come from somewhere, and what we really want you to do is adjust and roll with the punches (Rule 3); we want to make sure that you’re changing your allocation as you gather new information.
Discuss It First
What’s tricky, when you’re budgeting with a partner, is sometimes one person kind of sends a category into a nosedive. The best approach when you’re about to harpoon a category is to discuss it first — you shouldn’t have big surprises in terms of overspending. Now, there’s degrees of magnitude, obviously. So, if you’re going to overspend groceries by $2 and it’s March 30th, I mean, really, it doesn’t matter. BUT if you are at the department store and you’re going to overspend by $200, maybe that does matter — that would matter to me.
Just last month our clothing budget was massively overspent and I was doing the whole reconciliation thing — getting stuff caught up and ready to roll for our budget meeting — and I called Julie in earlier than I normally would and I said, “So, what’s this?” Turns out it was a lot of shoes and they were bought through Zappos. Right? Julie loves Zappos; she likes to brag that she’s a VIP customer of Zappos. She buys all the kids’ shoes from them, gets one day shipping, they try them on, and if they don’t fit she ships them back; she doesn’t have to take five kids to a shoe store, which would be maybe, maybe physically impossible.
No More Surprises
So, what happens with that is I see this massive charge come in, I see it’s from Zappos, I don’t really know what’s happening and then she tells me, “Oh, it’s on its way back — we returned the lot of them. I just… you know, was taking a stab.” That made sense.
A little quirk that I’ve mentioned to friends, I think Julie may return more clothes than she actually purchases. I don’t know how that works, but I feel like we are just kind of a separate warehouse for Nordstrom or whatever other store. We just kind of hold things for them for a while and then we send them back, and then we hold more for them… And I don’t charge them anything for it — I don’t charge them for the floor space or anything. But that’s how it works.
Communication is Key
So, I checked on that massive overspend and it was fine. You just want to give your partner a heads-up when some big overspending is coming. Maybe you need some consensus, some… I don’t want to say “permission” because that would misconstrue what we’re going for here.
You need consensus, where you agree, you both agree, “Oh yeah, this is necessary, we’re going to overspend here and we’ll move money from category A and B to cover this overspend in category C.” No surprises when you’re overspending because you’ve got one of you that’s really into the budget and really likes to see everything in the green, and then you’ve got the other person that suddenly makes a little bit of red and it… at this subconscious, like deep, deep lizard-brain level, for the person that loves the green it drives them bonkers.
And Then More Communication
So, respect that and try and not create those surprises. Overspending necessitates more communication — that’s all there is to it.
Until next time, follow YNAB’s four rules and you will win financially. You have not budgeted like this.
This episode aired March 30, 2015.
For more about how to stop living paycheck-to-paycheck, get out of debt and save more money, faster — subscribe to the You Need A Budget podcast today!