How many of you get to the end of the month and wonder 'Where did all my money go???' Maybe some of you don't even make it to the end of the month. I hear a lot of my friends laugh when people talk about living pay check to paycheck. More like paycheck to 5 days before next paycheck. Does this sound like you? It surely was me. I couldn't figure out how I was technically making more than I ever had in my life, but I was still broke.
I was also living in a land called DENIAL about my student loans. Do you know I had never once throughout my collegiate years stopped to add up how much debt I was taking on. I didn't once I graduated either. It wasn't until I realized that they were coming due, and I had no way to pay them that I finally pulled my head out of the sand and added it all up.
It was depressing. Sobering. Terrifying. How on earth was I ever going to pay off that kind of debt? I mean serious debt. Including my car, all totaled up, we were dangerously close to six-figure range. Add that kind of debt, to a single mom making a modest salary recovering from divorce, and well...you have a recipe for a weekend of depressed Netflix binging and not getting off the couch. After all was said and done with the divorce I was months behind on pretty much every bill you can imagine. I was robbing Peter to pay Paul, negotiating payment plans and then renegotiating...I knew I couldn't keep going like that.
I spent several days complaining about my debt to income ration to my cousin. She listened patiently and then once again gently suggested I use a program she'd been using with great success for awhile. She'd mentioned it a few times, but I kind of laughed her off. I thought in my head, 'Oh she's older than I am, and way more established in her career, of COURSE budgeting and debt payoff comes easy to here!' This time though I was desperate. I was willing to do ANYTHING to stop the bleeding. (I've also learned no matter what your age or financial status, personal finance is a tricky thing for everyone.)
So I downloaded the free trial of YNAB. Loaded it up to my computer and my iphone and started the budgeting thing. YNAB is a lot like a...digital envelope system. I knew envelopes with cash in them wouldn't work for me, and I'd tried Mint once before, but this looked interesting.At first I did it all wrong. I didn't understand the 4 rules, I was sporadically recording my spending and it was a mess. Then I took some of their free classes, and it totally clicked. I actually ended up winning a copy of the software in the class I was taking. (It was meant to be I tell ya!)
A little bit about YNAB. It's based on the principles of 4 rules:
- Give every dollar a job - anytime you receive any kind of income, enter it into your budget and give it a job. Every. Single. Dollar. Dollars floating around with no purpose aren't working for you, and it's an easy way to lose track of you money. Resulting in those 'Where did my paycheck go?!' moments.
- Save for a rainy day - Those yearly/quarterly expenses that come up like insurance, oil changes, memberships ect? Save for them every month. By saving a little bit at a time, you eliminate those 'surprises' where you suddenly have to come up with $500. This is also where your emergency fund goes for any other unexpected things that always pop up.
- Roll with the punches - This is my favorite rule. Your life changes, and your budget needs to be flexible too. Does this mean you can take your rent money to buy shoes? No, but if you need to take $20 out of your gas funds for an impromptu girls night that's ok! Your budget has to work with you and for you, otherwise you won't stick with it.
- Live on last months income - Eventually the idea is that you will save up a 'buffer' equal to your monthly income. This will eliminate the stress of waiting for your next paycheck to come so you can pay bills. The money will already be there and it's replenished each month.
So there you have it. My brief sermon on the budgeting system and software that works for me. With the YNAB app on my phone I'm able to quickly glance at my category balances and determine how much I have to spend, as well as enter transactions quickly and easily on the go so I can track and stay on top of my spending. I was able to see just in the first month I was spending WAY too much on fast food and snacks and curb my spending accordingly. I'm no YNAB expert like some of the people you will meet on the forums, but I'm liking the changes I've seen in my financial health just in a few months.
I've gotten feedback from a few readers that they'd like to hear about my financial journey, and its absolutely a work in progress, but if there is anything you'd like me to talk about in future posts or questions you have please let me know!
*I was not compensated to write this post, all opinions are my own.*
Oooh girrrrl you know I love a good budget, and mine is seriously jacked after the holidays. I am going to look into this, because there is NO reason I should still be living paycheck to five days before paycheck (HAHA)
YES. coming from a family who had little and basically lived JUST above the red (and sometimes under) most days, the budget is my friend. people don't really realize that knowing how to save properly is a skill that MUST BE HAD. i make good money but i still live like i did when we didn't have much because it's been part of who i am for so long.
Vodka and Soda
Oh my gosh, Steve would love this! I was a financial mess when we first started dating, and he was having none of that! He whipped me into shape. But, it is scary when you know money is coming in, and you have no clue where it is all going. Just coming out of college was a SCARY time knowing it was only 6 months til you had to start paying back those loans. Hooray for finding something that works for you, and sharing it all with us!
Steve is so anal, that he actually writes his own Excel sheets (because Excel isn't specific enough for him), and they give me a headache!
this sounds amazing. my fiancé and I just seem to be bleeding money lately and want to start working on a budget. i'm going to look into this and see if it will work for us!
-- jackie @ jade and oak
I know I need to do this, but I don't. I should really get on that, huh?
Thanks so much for this Whitney! I recently got a promotion at work which means more money for our family and I've been stressing myself out over how to handle the increase. It's scary to currently be living paycheck to paycheck and have an increase in income which could possible land you in the same cycle. I'm definitely gonna try this.
This makes it sound so easy! I may have to check this out. I get overwhelmed when I think about just flat out trying to save without any help or guidance.
I am taking this budget deal seriously this year! With a trip to Vegas and Mexico planned, I literally cannot afford to spend any extra money on anything else.
Okay, you might have just sold me on this. I NEED to get my butt in gear and change my spending habits in a BIG way.
Thanks for sharing!
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