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One month on YNAB (well actually 6 weeks)

So it's now been over a month (closer to six weeks actually) that we have been using the YNAB method. Our second pay period since starting this has come and I'm happy to report the day before payday we were still in the positive. Admittedly we had about $100 less in our account then we did the day before the previous payday, but we had done some school shopping that previously we hadn't done and used up the money in that category. But a previous plan changed.

My wife was planning to go visit some family on the weekend and originally was going to go out on Wednesday but since payday was on Thursday she decided she was going to wait until then so she could pick up some groceries and a few other things prior to going out. We were talking Wednesday after work and she was really wanting to go that night so we took a look at what she wanted to buy and how much was left in the budget. The grocery budget only had about $3 left but we had various other categories that still had money in it, so we went grocery shopping and only picked up what we needed. We also decided to eat out since it was late and overspent our dining out category by about $3. All in all we overspent more then a couple of categories but I just balanced it all with the other categories using rule 3.

When payday came, I just went back in and updated the columns I used to balance the overspending to get them back up to where they were. Although, alternatively, I probably could have just left the columns overspent until the next day since I was going to be paid in just a few hours. As I think back on this the next time, I will just leave them overspent and just balance them on payday, however, I would only do this if it was the evening prior to payday AND there was money from other categories I could have used to cover the overspending. We did not go into the overdraft at all.

Setting Goals

One thing I had mentioned in a previous article was that you can set up goals in the software. This works in two ways, one is you can set personal savings goals with target category balance, target category balance by date or just have a monthly funding goal. The other is you can set up automatic transactions in YNAB in each account that you have money coming out of and this will create funding goals for each of those categories so you know how much to put into each category for the month.

As an example, if you know your power bill is going to be $160 each month and you set up an automatic transaction for the due date, the software will show the categories
available amount as yellow indicating that this category is underfunded until you have budgeted the $160. If you have more then one reoccuring transaction in a category you can easily see all the upcoming transactions on the right side of the screen when you click on a category. If you have nothing selected it will show you the total amount that needs to be budgeted for the month, which was great to give a rough idea of the money that was required for the month which excluded things like groceries as  we don't have a funding goal set up for those categories.

Troubles in Budgeting

So far we have only really had a couple of issues. One was an issue of how to handle cash. So when we take money out and use cash to pay for things how do you handle that? This article here explains a couple of ways to go about it. At first, we chose to use the cash account method and transferred money over to the cash account within YNAB and then when we went to spend the money you take it out of the category it was spent for. This became an issue with tracking purchases and change and I think we were also trying to take the money out of a category when we withdrew which combined the two methods. I'll admit, I didnt fully understand it myself and in the end we have decided to do just a simple cash category. If money gets taken out it gets taken out of that category and we don't track what it was spent on which is fine since we don't use cash that often.

The second issue we had was we were at the store and my wife saw a comforter set that she liked and it was on sale for $60. Payday wasn't for another week and we didn't have a lot of money left in our misc category which we would use as the catch all for things that we don't currently have a category for. I don't like saying no to something my wife wants but in this case I didnt have to as my wife put the item down as while I didnt physically say no my face and my hesitation showed reservations about this. At that moment my wife was feeling smothered by the budget, which is the opposite of our goal, thinking we can't spend money and this item didnt fit in to my budget. I felt bad about it and said it's not my budget it was our budget which didn't make anything better.

I ended up looking at some of the other categories later and we likely could have moved things around to make it work but it would be taking money from other categories like Christmas. This is something we need to get used to and look at the budget to see if a spur of the moment purchase like that is something we could make work. If there wasn't money in other categories already it wouldn't have worked for sure though.

On one hand, prior to the budget, we stressed about always being in the overdraft but bought more freely but as payday approached we would be wondering if it was going to say insufficient funds the next time we went to buy groceries.  Now we're not in the overdraft and able to keep a positive balance and know what's in the accounts at any given moment but we can't buy the things we want. Of course it's not true that we can't buy what we want; it's simply an adjustment of not if we can buy it but when.

The day after this happened was our 14th anniversary. I told my wife that morning I was taking her out for supper which she promptly told me no as we can't afford it. I told her that actually we can since I had built up our date night category in anticipation of taking her out. I budgeted $75 and we spent about $77 with the tip, not enough to say go to a movie afterwards but even then we could have made it work if we did. My parents were down for a couple of days and they ended up giving us some money for supper which covered a lot of our cost which was very appreciated. I ended up paying debit for meal and took it out of our date night category, payed tip in cash and then deposited what was left into the bank and threw it all under the misc category so it had a place and if we wanted to move it around later we could.

My wife was talking to my mom about the budget and how she felt about the day before. She admitted it was a change in mindset, we both were a little more free with our spending and used to doing it that way. If we weren't on the budget and she asked me about the comforter I would have likely just said yes if there was money in the account maybe not remembering a bill or saying that we still have overdraft available to use. We are still infants in the ways of budgeting and just need to get used to it. We know it will pay off in the long run, she even said she looks forward to the $6000 that they say the average YNABer saves in the first year of use. For us it could be more or less that we end up saving but given that we haven't gone in the overdraft in six weeks that alone is saving us money but not in the sense of having a savings account balance but we are now able to put some money away here and there and we are tithing while still maintaining a balance.

I hope you find these articles useful and decide to try it for yourself. Remember, you have not budgeted liked this.

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