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

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  • I'm new to YNAB and finding the method challenging, too. I can't understand the budgeting lights system or the figures in the black bar.  My figures are all in there but I can't analyse anything.

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      • jenmas
      • jenmas
      • 1 mth ago
      • Reported - view

      Jeremy Dent What are you trying to analyze?

      YNAB is an envelope system - receive money, put it in an envelope (category) based on your priorities (what obligations do I have before my next income event? What future expenses do I know I need to prepare for?) until To Be Budgeted reaches zero. Stop. Spend money based on the category available balances. When you receive new income, repeat.

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    • Jeremy Dent, are you using the app or the desktop?  By budgeting lights, do you mean the green, red, and yellow numbers for the budget categories?  What black bar are you talking about?  Can you post a screenshot of it?

      The "lights" warn you if there's a problem, potentially a problem, or everything is ok.  Red means you have overspent in cash and you can't trust your budget category balances.  Yellow with a little credit card icon next to it means credit overspending.  Yellow with a little clock/pie means you don't have enough for an upcoming expense from that category, or you haven't reached your goal for that month.  Red at the top means you budgeted money you don't have.

      In the example below (this is in the "default" colour scheme):

      1 - I have budgeted $50 more than I actually have (big red number at the top)

      2 - I have budgeted $75 for my electric bill, $50 for water, and $25 for groceries but if I spend all that then I will put my account into overdraft by $50 dollars.

      3 - The yellow "$0.00" next to Internet means that there is an expense coming up, or a goal set up that is not fully funded yet.  It's not a problem yet, there is time to fund the category before creating debt.

      4 - I have overspent my grocery budget by $15 dollars in cash.  That needs to be resolved right away because I don't actually have that cash, but it's already out of my account.

      5 - I needed gas, but I had to put it on my credit card so the yellow number with the little credit card is warning me that if I don't resolve that I will increase my debt.

      Does that help at all?

      Like 1
    • Jeremy Dent What are you trying to analyse?

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      • jemmeroni
      • Digital marketing
      • jemmeroni
      • 1 mth ago
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      Silver Robot When we overspend a budget Category item, there doesn't seem to be a way of itemising this Category on the panel on the right so that we see what items have caused the overspend.

      Like 1
      • jemmeroni
      • Digital marketing
      • jemmeroni
      • 1 mth ago
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      Silver Robot Our big numbers at the top just don't make sense. Maybe we've tagged some figures incorrectly or categorised things wrong. We have multiple income sources at different times of the month and two of us using YNAB.

      Like 1
    • Jeremy Dent The only number at the top that matters is To Be Budgeted. Make that $0 and use category balances for guidance. Check balances BEFORE spending and take from lower priority categories when needed. If there no lower priorities when the category is short, then don't make that purchase.

      Edit: your incoming money should be categorized as Inflow:To Be Budgeted. The only inflows that should not be categorized as TBB are for returns, rebates, refunds, or reimbursements.

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    • Jeremy Dent https://docs.youneedabudget.com/article/203-unpacking-to-be-budgeted this article might help you find out why your numbers aren't matching up

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      • jemmeroni
      • Digital marketing
      • jemmeroni
      • 1 mth ago
      • Reported - view

      dakinemaui Sorry, I can't make sense of what you say based on our entries. For some of our income, I can't find a relevant category. We are both paid quite well and yet there is s huge budgeting deficit. Mayhem!

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      • jemmeroni
      • Digital marketing
      • jemmeroni
      • 1 mth ago
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      Silver Robot Still bewildered but working on it. Our budgeting is over £2,000 out. A couple of hundred I could understand...

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    • Jeremy Dent said:
      For some of our income, I can't find a relevant category.

      Again, for all income outside of those few "R" exceptions (returns, etc.) the relevant category is Inflow:To Be Budgeted.

      The fundamental premise of YNAB is to make a plan when you get money, use the plan to guide spending, and possibly revise the plan when you realize it could be improved. Repeat. The To Be Budgeted (TBB) number will be $0 when your plan includes all the money you possess. All the other numbers are details that can be ignored since you are using the bottom-line number (TBB).

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  • 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).

    Like 5
    • jenmas  I'm doing all these things.  I started a direct sales business in addition to my "day" job (I work shift work and very few actual days)  I'm doing the 34-day reset so I've cut out eating out (one area I can definitely improve, etc... 

      Where do I put my focus?  How do I figure that out?  I feel like I've been tracking my expenses and WAMming left, right and center but without direction.  Where are the resources for that kind of thing?  Do I get a month ahead and not worry about my debt for a while (just don't add to it and keep paying the minimums), do I pay the debt, then focus on getting a month ahead?  Do I build an emergency fund first?  Do I do a bit on all three at the same time? 

      I'm not expecting anyone to answer all these questions for me, but for someone to point me to the resources that will help me determine my priorities the YNAB way.

      Like
      • WordTenor
      • Not throwing away my shot.
      • WordTenor
      • 1 mth ago
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      • Reported - view

      Silver Robot 

      Silver Robot said:
      I feel like I've been tracking my expenses and WAMming left, right and center but without direction. 

       You shouldn't be tracking or WAMing. Find the money first: if you need to spend, pull from another category first. Even if it's one you'd rather not WAM from. You don't even need to do much other than that: check the category, move money first. This is the blogpost about that: 

      https://www.youneedabudget.com/find-the-money-first

      If you are diligent even for a short while about spending from your categories and recording the spending as it happens, it will build the muscle of spending within your means, no matter how small your means are. 

      Like 2
      • jemmeroni
      • Digital marketing
      • jemmeroni
      • 1 mth ago
      • Reported - view

      WordTenor What does WAM mean?

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      • WordTenor
      • Not throwing away my shot.
      • WordTenor
      • 1 mth ago
      • Reported - view

      Jeremy Dent "Whack a Mole." It's a term invented by one of the masters of the YNAB method, Patzer, who has unfortunately passed away. It means to move money from one category to another to cover either overspending after you've spent, or moving money before you spend, because it can be like the arcade game--you fix category A but now you have to fix category B. Technically we also use WAM to mean moving money before you spend, also. But when I'm saying "you shouldn't be WAMing" I mean, "Don't wait until you have a bunch of overspending to move money." 

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    • Silver Robot said:
      Do I get a month ahead and not worry about my debt for a while (just don't add to it and keep paying the minimums), do I pay the debt, then focus on getting a month ahead?  Do I build an emergency fund first?  Do I do a bit on all three at the same time? 

      Depends on how much your debt is and how risk-averse you are. Big debt? Maybe refinance it and pay it down aggressively. Not that much debt? Perhaps getting a month ahead will help you avoid future debt.

      To me, getting a month ahead and building a small emergency fund (maybe $1,000 or a few hundred $) are essentially the same thing. I would even put more onus on getting a month ahead, because you know how that money is going to work for you.

      Building a proper emergency fund (3-6 months worth of expenses) is a big ask when you have other things going on, so I would put that on the back burner until you have the first two things figured out.

      If you have increased your income and still feel you're paycheck-to-paycheck, then essentially your income-to-expense ratio is probably still high. I'm not a fan of doing things like the 34-day reset because it doesn't speak to your priorities. In order to spend with awareness and make an affordable, happy lifestyle for yourself, you'll need to make sustainable changes. Only you can review your expenses and categories from the past year and ask yourself, "How important is this thing to me? If I reduce this or eliminate it completely, will I be fine or will it shatter me?" When I was paying down debt, I reviewed every single expense, monthly payment, and annual subscription, and was surprised to find how many things I actually didn't care that much about.

      There are a lot of things we spend money on that we take for granted. I've found Mr. Money Mustache to be a helpful resource. He can sound a bit intense, but an outsider perspective can be useful to just look at things with fresh eyes:

      https://www.mrmoneymustache.com/2013/02/22/getting-rich-from-zero-to-hero-in-one-blog-post/

      Like 1
      • jemmeroni
      • Digital marketing
      • jemmeroni
      • 1 mth ago
      • Reported - view

      WordTenor Thanks.

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      • Katejo
      • katejo
      • 1 mth ago
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      WordTenor I didn't know that Patzer had passed away. How long ago was that (approximately)?

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      • jenmas
      • jenmas
      • 1 mth ago
      • Reported - view

      Katejo I believe it may have been spring/summer of 2019 (or at least that's when we found out).

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      • Katejo
      • katejo
      • 1 mth ago
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      jenmas Thanks Jenmas

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    • Silver Robot I read someone here say, pick a focus, any focus. That helped me a lot. I picked my EF first. Then I got more comfortable with that and picked my debt as a focus. I just paid off my debt and now my focus is building up more for true expenses. I write down my focus under each month's name and maintain the focus until I feel like switching. But having ONE focus works better for me than all the focuses. So I can make some headway, somewhere at least.

      Like 4
    • Ivory Storm sounds good! I might copy that.

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      • Bruce
      • Software Engineer
      • Bruce
      • 1 mth ago
      • Reported - view

      Ivory Storm I think I need to be a little more focused too.  Thanks for the reminder.  I've been at this for almost 2 years now, but I was looking at the next couple of months and at least based on goals and scheduled transactions, the underfunded quick budget is requiring more than my money expected to be coming in.  I think I've got too many goals for too many TEs.  I need to focus on one, get it built up, and move on to another.

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  • 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.

    Like 3
    • dakinemaui sound advice, my debt load is fairly minimal right now, why not try and get a month ahead see how it goes. . .

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    • Silver Robot Here are two specific workflows that I recommend for getting ahead as well as staying ahead. The second one is optimized for "getting ahead" which has an obvious and quantitative measure of progress. The first approach is a bit more efficient for the case where you're able to push all income into next month.

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  • Silver Robot said:
    point me to the resources that will help me determine my priorities the YNAB way

    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.

    Like 4
  • 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

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    • Salmon Storm Yep, gotta stop the bleeding. I would address the known True Expenses immediately after the monthly expenses.

      I would also get a month ahead (budget all income in next month's area) before growing an emergency fund. (Being ahead is useful NOW, while the EF is only useful in the event of an emergency. It's also a simple matter to use the "getting ahead" funds if the emergency couldn't be covered by taking from other current-month categories.)

      Where does consumer debt reduction fit in? Like anything, it should depend on the value (benefit vs. cost). Being a month ahead has a cost when you have interest-bearing debt (because you could have sent that money to the CC instead of holding on to it). You're effectively buying the increased clarity and convenience that comes with being ahead.

      What's the cost? It varies from case to case. Ballpark it as 0.083 * Interest Rate * sum of expenses occurring between your first check and the end of the month. For 20% APR, and $500 in expenses paid AFTER the first check is received, the cost of being a month ahead is about 8 bucks a month. Personal call if the benefits are worth paying that.

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  • Silver Robot said:
    What am I doing wrong?

     Possibly nothing.

    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.

    Like
    • Melissa
    • Routinely questioning every assumption I have about my budget, my spending, and my savings habits.
    • todays_mel
    • 1 mth ago
    • 7
    • Reported - view

    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! 

    Like 7
  • 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.

    Like 1
  • 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

    https://youtu.be/gUYd2B5Q8es

    • No2 listen/watch  to Ben & Ernie (from YNAB) - they tell you how they did it.

    https://youtu.be/2ygVh7scHS0
     

    • No 3 listen to this Jesse Mecham’s postcast (from YNAB) - he is ‘the master’.

    https://open.spotify.com/episode/27VZflwf7Lc1W7qcxQrdh3?si=FcdDZpwGSkyKbGIsp2scJw

    _________________________________________________________________________________________________________

    Bonus section

     

    Listen to Jesse’s podcast for relaxation.... (you’ll be learn without knowing it).

    https://open.spotify.com/show/0784MlYJkguddHefDmCyxK?si=FJBqh82FQ7K2PM6yr_wmVg

    __________________________________________________________________________________________________________


    Good luck.  🎉 
    No need to reply - save your time - watch/listen to the above instead 😉  It’s my gift to you 🎁 

    Nettie.

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  • 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?

    Like 1
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