YNAB method mind shift
I'm not too sure what category to put this under. I'm looking for help with the YNAB method, not the 4 rules and their definitions so much. More I've been using YNAB for years, and I'm still living paycheque to paycheque. What am I doing wrong? Do I work on paying off debt first or funding next month's fixed expenses? That kind of stuff. I'm not even sure which of the many resources to check. I can't watch them all with the limited time I have. Help! Thanks
Sometimes the answer is that you just don't make enough money. In order to get ahead there are basically only two things you can do: make more or spend less.
Make more = getting a job that pays more, adding a second job, sell some of your stuff.
Spend less = cut back on discretionary things like eating out. Make sure that you are getting the best deal on your mobile phone plan or vehicle insurance (don't over-insure). If you have a home repair fund built up, does it make sense to increase the deductible in exchange for a lower monthly/quarterly/annual payment? If you pay car insurance monthly, is it cheaper to pay once every six months. Examine subscriptions like Netflix or satellite radio - do you actually use them? Do you use them all consistently? What adjustments can you make to your thermostat to save energy costs (my brother in law always complains about being cold in winter and my sister tells him to wear a sweater instead of a Tshirt and to put on some socks rather than turn up thermostat).
Silver Robot said:
I'm still living paycheque to paycheque. What am I doing wrong?
You haven't prioritize getting ahead. It isn't necessarily wrong, as it's your priorities in play.
If you want to not be paycheck to paycheck, you have to make that a priority. That takes money, which means something of lower importance to you must receive less funding. Basically, you must live UNDER your means rather than AT your means.
If paying debt off is more important to YOU, then that's where your money should go. Remaining P2P is just a consequence of that focus. No one can make that determination for you.
However, you may not fully understand the benefits of being ahead, not having been in that situation. It's not uncommon for someone to make FASTER progress toward debt payoff after getting ahead because they can finally see the bigger picture. One option is to switch focus and see how you feel. Then make an educated decision -- you can always send the "getting ahead" money toward debt if you don't see the value after trying it.
That's a bit of the problem. The "YNAB way" is to align your spending plan (the budget) with your priorities. It doesn't dictate those priorities.
Silver Robot - I just watched this video from the YNAB channel. The summary is to prevent the debt before getting rid of your debt. Look back over the last year, figure out where the debt comes from, save for those things, and then attack the debt. https://www.youtube.com/watch?v=rQm3RcadZAo
Silver Robot said:
What am I doing wrong?
Living paycheck to paycheck can be stressful. I value the peace of mind I get from having an extra cushion. So I've made it a priority to budget accordingly: To reserve some money and establish a cushion.
But those are my values/priorities, and yours may be different. That's totally valid. YNAB doesn't care. It's just a tool for helping you put your priorities (whatever they are) into practice. You may have more of a "YOLO" attitude than I do, and a cushion may not be your priority at this point in your life.
On the other hand, if you feel like your spending hasn't been aligned with your priorities -- i.e. you wish you had a cushion, and regret the way you've spent your money over the last few years -- then you should setup your budget accordingly. Create a "cushion" category and perhaps a goal to fill it over time. If you can't achieve your goal, then you'll need to look inward. Budgeting tools like YNAB can only get you so far -- ultimately it's about self-accountability and discipline, which is probably a topic for another forum.
I lived check-to-check for nearly 7 or 8 years pre-YNAB. It is completely exhausting and utterly dehumanizing to juggle finances like that. My advice is to prioritize getting a month ahead, while still covering your must-pay-for-things each month. Put all the "wants" on hold until you get a month ahead.
For me, the biggest shift came when I got a month ahead - using the current month's income to fund the following month's expenses/savings categories. It took me about 8 months to get to that point by cutting back in lots of little places (food and personal care products mostly, but also insurance and utilities where I could) and also cutting back on extra debt payments. And then I got there a whole lot quicker than I expected by using my income tax refund and stimulus check to push me over the final hump in May/June 2020. Being able to budget an entire month, while seeing the big picture, makes prioritizing much smoother and life a whole lot less stressful. Having that breathing room can not be overestimated!
The second biggest shift was getting in the habit of asking myself, before I spent money, is this purchase going to get me closer to each of the savings goals that I have? The question isn't meant to be a guilt trip, it's an opportunity for me to be honest with the reason why I want to buy something. What am I feeling right now - sad, bored, a little depressed, frustrated (my mood tells me a lot about my spending!)? Is it a priority? Do I really need it? Do I really even want it...?
I also found grouping my categories by priority helped me spend less. All the "must-haves" start at the top, and the "don't really need" things are at the very bottom of the list. If I still have TBB left by the time I make it down to the bottom, then great I can throw some money towards them, but if not then they are not a priority!
Great thread, thank you for starting this topic. I didn't get past paycheck to paycheck until 5 years in with YNAB, and I used it diligently and cut expenses a lot and then more and more. I'm still not very much past paycheck to paycheck. Even though it took yeeeeeears, I'm finally building some momentum. I know YNAB celebrate people who get a month ahead in their first few months on YNAB, but that just hasn't been my reality at all. I'm still totally on board with YNAB because it has meant the difference between continuing to drown in consumer debt and functioning appropriately from one paycheck to the next. And now, 5 years in, moving ahead of that. Maybe I'm a slow learner? But it does work - eventually.
Hi Silver Robot
As you want the quick and dirty version for efficiency sake...
Start with the YNAB resources:
• No1 listen/watch Hannah’s YouTube - her thoughts, tips and demo are pearls of wisdom
• No2 listen/watch to Ben & Ernie (from YNAB) - they tell you how they did it.
• No 3 listen to this Jesse Mecham’s postcast (from YNAB) - he is ‘the master’.
Listen to Jesse’s podcast for relaxation.... (you’ll be learn without knowing it).
Good luck. 🎉
No need to reply - save your time - watch/listen to the above instead 😉 It’s my gift to you 🎁
Silver Robot said:
I'm looking for help with the YNAB method, not the 4 rules and their definitions so much.
The four rules are the method. If you follow them you will get ahead.
Where in your YNAB process do you decide to spend money that you had assigned to grow your net worth?