Starting with YNAB
I've been using the YNAB 4 before, and have changed over about a year ago to the "new" ynab...
It's great software, and with the app it works well... I just don't fully get it, or do not correctly apply the "rules".
We have quite a bit of debt outstanding, and we only get our salaries coming in, so the rules are only budget with the money you have, but I don't seem to get it, or to apply it correctly.
How do you know, that you are dealing with your debt, and that you manage to have enough for the bills etc.? There are these yearly bills and monthly bills, and I just don't seem to get the idea of applying it correclty.
Hopefully you guys can give me guidance and start to apply it correctly this time, I need to tackle this, and get to a healthy financial state and more importantly not to worry each and everyday about stupid money.
Firstly it depends on how you are paying your debt down. Is this by monthly payments or such like? If so, you would include these in your monthly budget. So, you get your salary coming in, that will go into "To Be Budgeted". You then budget amounts for your monthly payments, along with the rest of your budget. So you will have to work out what things cost you each month, for things like rent/mortgage, energy, food etc. The yearly bills should be divided by 12 and that amount budgeted each month as well, which should build up a fund to pay those bills when they come round. Account for everything and anything left over, if you are lucky to have it, you could put into an emergency fund or some kind of savings.
As you are budgeting for each category, the amount in "To Be Budgeted" will reduce until you have accounted for everything or it has reached zero, which means you have no more money left to budget with. If you overspend YNAB warns you and "To Be Budgeted" turns red - if this happens then something else has to be reduced to keep your budget to within what you can afford. You may have to play around with category budgets from one month to the next until you get a budget that is workable for you.
I hope this helps - it's just a quick summary of how it works. Let us know if it makes sense and if it raises any other questions for you. I see that you have been using YNAB4. Did things work for you in YNAB4 and it's just the new YNAB that you are struggling with, or is the budgeting process generally?
The yearly bills should be divided by 12 and that amount budgeted each month as well, which should build up a fund to pay those bills when they come round.
When you are first getting started, you may not have the full twelve months to save up, which means you'll have to set aside more money during the first cycle.
Thank you both first for responding, really appreciated.
Ynab 4 was working well, but putting things into actual work and sticking to it is sometimes hard. Situation changes and then things (finance) changes, which caused me to take out 2 loans to help family getting through difficult period.
Now, this has also caused issues in my finances together with my gf, but that terside, due to these debts, and creditcards, each time I start, my balance already starts at a negative amount.. So I am lost in how to get through this, or to budget correctly..
Hopefully this explains things a bit.
You can have negative balances in YNAB, this is often the case with for example credit cards that you are paying down over a period of time. I think it's essentially the same with loans (someone more experienced than I am may be able to give you more information on this).
How are you paying the loans down? Do you pay a certain amount monthly to each loan? If so, are these payments paid out of your income each month? Are the loan payments plus all your other expenses affordable from your income each month?
Apologies if I am missing the point here, but it might help to understand in what way you are having trouble in "budgeting correctly". Can you give any examples of the difficulties that you are facing with your budget?
Well, it's still kind of affordable but we're a bit behind with things, and I don't exactly know where to start, what to do first, and then there is money available, and it's hard to set this to the rules according to ynab, afraid that there is not enough, or I pay the wrong bills...
Eventually I end up looking at it each time, and day by day, do you understand where I amc oming from?
The payments are monthly, and coming from the account.
Hi Spring Green Hammer !
This thread definitely has some great advice in it!
Have you seen this blog post on Creating a Budget Template? It is one of my favorites and I think it could be a great help here. It walks you through scheduling your known transactions and settings goals for your categories that may fluctuate here and there. You can also add Goals to your debts to help tackle them.
Budgeting is planning, but for it to work, there has to be a plan. That blog post should help clear things up for you! :)