Negative Net Income

Howdy,

Does a negative net income mean that I'm living above my means???? I'm only $-120 but I wanted to know so that I could maybe adjust? I'm not sure if I'm winning or losing financially.

My age of money isn't good. I'm still trying to figure out how to get out of the paycheck to paycheck? It's not bad and I'm staying on budget for the most part. (Eating out and Groceries seem to be a little higher than normal.) But how do I get things fixed?

Thanks y'all,
Nathan

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  • How do you define "net income"? Assuming you mean expenses are larger than income, it doesn't necessarily mean you're living above your means. I have some months where expenses are 2-3x my income, but that's OK because I've saved up for them in advance.

    Bottom line: if you are avoiding overspending (or covering it if it happens), then you are living within your means. If you are also making contributions toward various things you value, then I'd say you're "winning", as that's what it's all about.

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      • Nathan Dowlen
      • Pianist, Chemical Operator
      • natekittycat
      • 4 wk ago
      • Reported - view

      dakinemaui Oops... sorry for being vague. But yes, expenses are larger than income. Thank you though for the clarification. That helps tremendously. 

       

       Nathan

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  • It means you spent more than earned in that specific month. If you’ve been saving money for something, it’s entirely possible that you will overspend your net income. When I put my down payment on my house, it was more than 2/3 my annual income. But I had the cash. What matters is if you had the cash, not how a single time periods outlay compares to that same period’s inflow.  dakinemaui has explained above how to make sure you have the cash.

    Like 1
      • Nathan Dowlen
      • Pianist, Chemical Operator
      • natekittycat
      • 4 wk ago
      • Reported - view

      WordTenor That makes a lot more sense now. I had to dip into my emergency fund. I had an emergency visit to the Veterinarian. Essentially I was able to cover everything, I think? So I think I'm actually doing well. I'm able to cover everything. Sometimes I wish I had more cash flow... my age of money is so low and it still feels like everything is very tight. But I'll get there. 

      Thank you for the further clarification. 

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      • satcook
      • satcook
      • 4 wk ago
      • Reported - view

      Nathan Dowlen It means you spend more than you made for that month.  I like to look at the yearly average to make sure it is a positive number.

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  • Nathan Dowlen said:
    it still feels like everything is very tight.

    That's very typical when starting to use YNAB. Most people have to plan for their money to cover the past (pay down CC debt), the present (this month's groceries, rent, etc), and the future (True Expense contributions). Thinking about true expenses may even be a new concept for some people!

    The good news is it will get easier. A $900 annual expense due 3 months after starting YNAB will consume $300 in each of those first 3 months. However, after you make it through that first payment, you can spread it out over 12 months, which is only $75 per month. Until then, some things will just have to wait, so prioritize so the most important things do get funded.

    No idea if this is the case with you, but some people also pay more toward debt than they should be (leaving true expenses and even current expenses short). They didn't get into debt overnight, and they won't get out overnight either. It's super stressful trying to force it, but steady & consistent progress gives peace of mind.

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