photo: 401(K) 2012
A few months ago, I tried to find something for the Mac, since it is my primary computer, but I wasn’t really impressed with anything. The thought of entering all my past transactions was really almost too much to bear. Everything I tried just seemed to cumbersome, and I aborted the mission.
Last week, I did another Google search and stumbled upon a program called You Need a Budget. I am still using the trial version, but it seems to be the answer to what I have been looking for! I’m really excited – I have a copy on my PC, my Mac, and the free app on my iPod Touch (no smartphones in this house), and everything stays synced through Dropbox. It did take me one of the free seminars to understand the concept completely, but I am really looking forward to having more control over the financial aspect of our lives.
Each month, we charge almost everything to our Discover card to earn cash back, and we pay it off in full each month. We have done this successfully for over 3 years now, so I feel that we use the card responsibly. When I look at the statements, I can tell you, for example, what was purchased from Amazon or Target (when we make these purchases), and we consistently spend less than $50 per month on things that aren’t needed (ie. iTunes apps, a trip for ice cream, etc.). The bulk of the charges are for groceries and gas. Our problem lies in the fact that many months we are cutting it close to cover the bill because:
1. We have to spend extra money for minor emergencies (or major ones). July was a really bad month, for example. We spent $1500 on major car repairs, had some unexpected medical bills and I spent some money to get parts for our leaking toilet and faucet (I had the time to fix them, which is not normally the case!).
2. My income is highly variable. There are months when I bring home more than my husband, but there are other months that are especially lean (ie. I didn’t get a contract to teach the first semester of the summer, and my second job tutoring does not pay in the summer).
My first goals with YNAB are to:
1. Bring ourselves to the point that we can cover an entire month of expenses on the Discover card ahead of time. I really like how we can look to see how much we are spending in each category. I hope to be more mindful about grocery shopping this month, for example, by not buying as much to stockpile. This should help to compensate for our increased gas costs because the kid starts school this month (an hour commute each way, four times a week; I stay in the area while he is in school to save $).
2. Create a positive net worth. We still contribute to our retirement and the kid’s 529 plan despite having debt. With YNAB, I am not factoring in the market value of our home, but I am including our mortgage debt.
I did enter transactions from August into YNAB to give me an idea of where our money was going and to have an idea of where I can make adjustments for September. I also carried our credit card bill from July into YNAB, since I needed to show where our money went in August. According to YNAB, we overspent $4584.82 in July. In August, we overspent $2640.42. Our net worth is currently $-10265.00. I do have a few more accounts to add that will increase our net worth such as a few ING savings account, my business checking account, and our envelopes with emergency money.
I am really excited to begin making positive changes, and I think YNAB is a great match for us because we need flexibility. I like Dave Ramsey’s general approach, but I don’t agree with certain tenets of his plan. Quite honestly, I think it sets people up to be disappointed when the unavoidable emergency happens. I started following Dave Ramsey’s plan, and then my husband’s father died unexpectedly. When things like that happen, it’s impossible to focus with “gazelle-like intensity” on finances; there are obviously more important things in life. I want to be mindful, but not obsessive. I think that YNAB is the tool I need to help me do that.
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