The Last Frontier of Organizing – Budgeting with YNAB

In most areas of my life, I’d say I’ve always been fairly organized – maybe a little too organized if you ask some people. My budget, however, is one area that has lurked like a terrifying junk drawer in the back of my mind for as long as I can remember.

I want to start by saying that I realize I’ve been luckier than most to have gotten where I am without student loans. If it weren’t for that, I know I would be in a completely different situation financially, and I probably would have been forced to confront my financial situation sooner. I realize this is not the norm for a number of people, and I truly can’t imagine how difficult it must be to get by on a daily basis while also dealing with the amounts of debt I’ve seen some of my friends and family talk about.

With that out of the way, I will wholeheartedly admit, I’ve made a number of mistakes financially over the years by acting as if the money in my bank account was Schrodinger’s cat, and despite having a well-paying job, I still fell victim to credit debt, a car loan, a mortgage payment I could just barely afford, and impulse buys galore which ultimately resulted in me living paycheck to paycheck.

I’ve always had plans to pay off debt. I understood how debt payoff worked, but no matter what I tried (ahem… Mint…), I never became one of those success stories of paying off thousands of dollars worth of debt in 6 months.

This year, one of my goals was to really get serious about a budget. I decided to retry You Need A Budget, or YNAB as its users like to call it. I’m happy to say, this time finally clicked. Happy may actually be an understatement. If it weren’t for being in quarantine, I’d be singing its praises to everyone I meet. Until then, this post will have to do.

As a former Mint user, my #1 piece of advice for anyone trying YNAB has to be forget everything you know about managing your money with Mint or anything else.

If you’re looking for a place to start, I can’t recommend their videos and Nick True’s videos on YouTube enough. I have to credit them for retraining my brain for the YNAB way. (The book is also a good resource.)

I think of YNAB as a sort of “reverse” Mint. Instead of looking at your transactions to see how you’ve spent your money and trying to budget from there, YNAB asks you to look at the money you have right now and plan out exactly how you need to spend it down to the very last dollar – Give every money a job, as YNAB likes to call it.

The key to this is you’re not budgeting the money you expect to earn for the month, only the money you have available right now, which took quite some time to wrap my head around. Budgeting for all my expenses as I typically would have with Mint resulted in quickly being told I was over budget. I had to stop thinking in terms of hopeful money, and more in terms of what my actual money needed to do first and foremost until I got paid again.

By giving every dollar a job, suddenly things didn’t seem so grim. In fact, they looked surprisingly manageable. In fact, I could clearly see just how much money I had leftover after bills rather than mentally calculating whether I had enough for every purchase. I began to set that “extra” money aside for actual jobs (my car’s next oil change, my fiancé’s birthday, our wedding…). Suddenly opening my budget was less like opening a junk drawer and more like finding $100 in the couch cushions every time.

The YNAB website says that “On average, new budgeters save $600 by month two and more than $6,000 their first year.” I’ll be honest, I didn’t learn this until after I started seeing it mentioned on the YNAB subreddit. Had I seen it before I started, I probably would have dismissed it as a typical marketing ploy. I still want to, and yet in the first two months of using YNAB, I was able to find money to pay off not one, not two, but all THREE of my credit card balances in full (almost $4000). Of course, a big portion of that is due to a couple of windfalls (including tax refunds and a stimulus check) and not going out due to the current state of the world, but without YNAB, I’d have without a doubt blown that money on something stupid. Instead, I was able to use it to further my goals. (Oh, by the way, speaking of goals… Mint’s goal function had me thinking it’d be a struggle to pay off ONE card by next January…)

The other crazy thing is I paid off those card balances while still using those cards for bills and other expenses. This is IMO the real genius of YNAB. YNAB treats credit cards like debit cards, meaning you’re expected to budget for any spending (even credit card spending) with money you actually have. Once you spend in a budgeted category, YNAB automatically applies any that money to the card’s payment to cover your balance. This is what lets you account for paying off the existing balance AND any continued spending. As an example, say I planned to pay $400 towards my existing balance, and also charge $60 in groceries. As long as I’ve already budgeted $60 for groceries, YNAB will move that $60 of real money I had set aside for groceries to cover the additional charges on the card, increasing my total available for payment to $460. This was huge for me.

Debt repayment aside, YNAB has shown me the importance of setting up sinking funds for all my long term expenses, and yearly subscriptions, and other recurring expenses that I hadn’t included in my budgets before. Anytime I come across a subscription renewal or big-ticket item I will need down the road, I add it to the budget now. Not only has this forced me to come to terms with my subscriptions and recurring expenses, but I can also now budget for them little by little over the course of a year rather than having to come up with the money all at once.

I realize money’s a touchy subject, and budgeting is a little different in terms of topics I’d normally cover here. That being said, I’m curious if this is something you’d like to hear more about on the blog. Right now, I’m thinking it might be interesting to see how my categories stack up in YNAB, and how I typically budget a paycheck. Let me know if this is something you’re interested in or not in the comments below.

Also, if you’re interested in trying YNAB, you can score an extra month for free using this link.

Photo by Fabian Blank on Unsplash

{February Topic: Finance} Using ReadyForZero to Pay Off Credit Cards

My most important goal in life right now is paying down my credit card debt. Now, I’ve mentioned in previous posts that I’ve been lucky enough to escape having a car payment and college loans. For that, I’m truly thankful. I can’t imagine having to deal with student loans or car payments on top of what else I owe like most of my friends. However, after graduating, I got a job that paid a fairly decent salary with little to no bills because I lived at home. In short, I made stupid decisions and money burned a hole in my pocket to the point that spending a couple hundred dollars on a Michael Kors bag or new clothes every month became regular purchases for me rather than something I saved up for.

Looking at my transactions in Mint, I somehow managed to rack up nearly $40,000 in transactions on credit cards in about 4 years. To my credit (no pun intended), the balances of those cards never exceeded more than a couple thousand dollars at any given time, but it’s not what the balances were, it’s that I had become comfortable with having balances on them in the first place. I bought whatever I wanted rather than what I needed. Looking back, I cringe at all the interest I’ve paid because I wanted to buy “stuff.” Even more cringeworthy is that most of that “stuff” I bought I probably don’t even use or have anymore.

Now that I’m trying to be a “responsible” homeowner, and am solely responsible for all the bills, I have no choice but to be mindful of my spending. The first step of that involves getting out of my habit of relying on credit cards.

On a regular basis, I keep three cards in my wallet:
My debit card, which gets used for most purchases.
A low interest credit card for routine bills, which I pay for at the end of each month. While I work to get my savings back in order, emergency expenses like the dishwasher I had to replace are also going on this card. (My goal is to build my savings back up so that these expenses can be paid for up front.)
Another credit card from a different vendor just in case they don’t accept the other cards I have since both my other cards are the same.

Unfortunately for me, that very last card, with the highest interest rate, is the one carrying the highest balance at the moment making it my first priority in my payoff plan, which brings me to a service I recently stumbled upon called Ready For Zero that makes putting a payoff plan together a piece of cake.

Like Mint, it’ll ask you to connect your accounts. From there, you tell it what you’re able to pay each month toward your credit card balances. With that amount, Ready for Zero will factor in your minimum payments and interest rates and tell you how much you should pay toward each account each month. However, it doesn’t stop there. Ready for Zero can estimate when you’ll be debt free and even plots out your payments on a graph. I like graphs so this is something I really enjoy.

My favorite feature, by far, has been seeing how much I pay in interest daily because of the balances I’m carrying. It’s a simple number that people don’t pay much attention to most likely because it’s often buried away. Watching that amount decrease with every payment triggers a little celebration in my head, and when it goes up, I actually feel it. It may be only a dollar or two, but that’s money each day I would have rather spent on something else.

Oh, by the way did I mention ReadyforZero is free? If you’re looking for an easy way to visually help you pay off your credit cards, this is fantastic. Definitely check it out.

Until next time,

Andrea

{February Topic: Finance} Keeping Track of My Money with Mint

For February, I’m going to be focusing on finances.

For getting an incredible overview of my finances, I turn to Mint. By connecting all various bank accounts, credit cards, my mortgage, and even some manually updated loans like the one for my orthodontic work, I can quickly see where my money is going.

Mint has a quite a few features that make it worthwhile for me:

1. Creating a Budget – Because Mint has access to every transaction across my accounts, it can not only tell how much money I have coming in each month, but also what I’m spending. Because of this, Mint already had a pretty good idea of what my monthly spending looked like. I just needed to make a few adjustments to get my spending in alignment with my financial goals. After the initial set up, Mint takes care of the rest with minimal effort on my part. Occasionally a transaction will get categorized incorrectly and I’ll need to adjust it, or my mortgage payment will be processed a day or two early causing it to look like I’ve exceeded my mortgage spending. A feature I’ve been enjoying lately is the ability to set up spending categories to rollover to the next month or span across multiple months which I find useful for things like groceries or gas where I tend to spend more or less depending on my plans. Mint really makes it easy to see how much income you have, how much you’ve budgeted, and what’s left over. They even suggest ways to use that left over money like paying off credit cards or reaching your goals sooner.

2. Notifications – The obvious use case for notifications would be if I’m coming close to or have exceeded a spending category on my budget. I love Mint for this alone, but it also notifies me of large transactions or when my spending is abnormal. These notifications has saved my butt on more than one occasion, like when a disgruntled JCPenney support rep charged my credit card without authorization or the morning I woke up to find that my credit card had been used to pay for someone else’s several thousand dollar college tuition balance.

3. Graphs – I’m a sucker for graphs, and Mint has graphs for everything. Given that I’m focused on paying off my remaining debt, the two I use most are Debts Over Time and Net Worth Over Time. Watching the debt fall and the line on my Net Worth gradually increase is beyond satisfying, and Income Over Time is nice way to jog my memory as well. Since I’ve been tracking things with Mint for so long, I can literally see each promotion I’ve ever received on a graph.

4. Available Wherever I’m At – None of this would be useful if I couldn’t access it whenever I needed to. Whether I want to quickly check my accounts from my phone using their mobile app, get a quick notification using their desktop app, or view everything online, Mint makes it super easy to get the information I need wherever I’m at.

The one feature I’d love to have in Mint that actually worked as intended is their Goals tab where you can select a goal like paying off debt or saving for an emergency. The idea is that Mint helps you plan these things out and tracks your progress. Sadly, my Pay Off Credit Card Debt goal has never worked quite right despite reaching out to Mint.

In my next post, I’ll discuss what I’m using instead of Mint to help with paying back my credit card debt. Stay tuned.

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What’s on My iPhone 6 (December 2014 Edition)

It’s been over a year since I posted my first “What’s on my iPhone?” post, and that means I’m due for an update.

I still use the same general organization – frequently used apps on the first page with the last row empty, folders on the second. Moving to an iPhone 6 also gave me an additional row for apps on each screen.

I’m actually shocked to say that many of my “frequently used” apps from last year have lost their spots on my home screen. Calendar, Yahoo Weather, Things, and Fitbit have all been retired for other alternatives. Clock, Calculator, Camera+, and Light have all been replaced by swiping up to reveal the Control Center introduced with iOS 7. My dock however has remained the same.

Onto my new (and improved) home screen.

As you can see, Calendar has been replaced with Fantastical. Although I prefer how Apple’s Calendar icon shows the date, I prefer Fantastical’s quick entry and Today widget. Yahoo Weather has been replaced by the default Weather app (having stock apps replace third party apps doesn’t happen too often). Things has been replaced by Omnifocus (No surprise there.), and Fitbit has been replaced by Jawbone (after switching from the recalled Fitbit Force to the Jawbone Up24). The apps in this row are are the main apps I check throughout the day to know how my day’s going.

The next row of apps is entirely new. Day One, a journal app, is a recent addition (I recently switched from Momento.) Habit List tracks my daily routines. Waterlogged tracks my water intake, and Mint tracks my spending. In a general sense, these are my “tracking” apps that keep me on track.

The next row of apps is media-related. Keeping their places on the home screen are Reeder and Pocket. Downcast, my podcast app of choice, and iTV Shows, for tracking my favorite shows earn the 3rd and 4th spots.

The third row of apps is sort of a grab bag of miscellaneous apps that includes the only game on my phone, Threes, an app I can’t live without, 1Password, my favorite GPS app, Waze, and a folder of remote apps (Nest, Smart Glass for the Xbox One, Wemo, and Screens, a VNC client.

The final row includes the phone app, the App Store, and Settings.

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On the second page you’ll find a similar collection of folders before.

The Apple folder still exists but includes more apps now that Apple keeps forcing me to keep more of their apps on my phone. This is really just a folder to hide all their apps I don’t use.

The Files app contains a few different apps now, and truthfully Files isn’t much of a representative name anymore, but I haven’t found a better name. This folder holds Google Drive and Paprika (my absolutely favorite recipe manager), Blackboard Mobile Learn (for my classes). The other three apps, Scanbot (which I got for free), Momento, and Diptic, are likely on their way off my phone because I just don’t use them.

The health folder primarily contains guided meditation apps I’m trying out to help me fall asleep. If you have any suggestions, feel free to pass them along.

Media is a combination of my former Watch and Read folders and now contains Fliks for managing my Netflix DVD queue (Netflix if your listening, I’m still angry you removed that from your own app.), HBO Go, IMDb, Kindle, Netflix, SwagbucksTV for earning quick Swagbucks, SportsCenter for updates on my favorite teams, and WatchABC for streaming to my new Chromecast.

The next three folders could realistically be combined in some form, but I haven’t worked it out yet. My $ folder contains all my financial apps, and Save contains apps like Checkout51 and Ibotta. Shop contains Starbucks, Amazon, and cPro for Craigslist.

Social contains all my social media apps: Alien Blue for Reddit, ESPN’s Fantasy Football app, Goodreads, Instagram, Pinterest, Paper by Facebook (this app lets me keep Messages and Facebook in one app rather than two), Tweetbot, and Yammer (for work notifications).

And last but not least, my Utilities folder which holds more miscellaneous apps: Deliveries (for tracking packages), Drafts, DUO Mobile (2-factor authentication), #Homescreen for posting to homescreen.is, IFTTT, Launch Center Pro, QRReader (on it’s way off my phone), Swype (a third party keyboard that makes up for how badly I type on my phone) and TextExpander.

I’m always curious about how people organize their home screens, and to my surprise I find a lot of people end up with similar set ups to mine – mainly the first page of actual apps with a second page of folders. Leaving an empty row at the bottom of the page is also common.

So how do you organize your home screen?

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