How important is aging your money when paying down debt?
Since we started using YNAB at the beginning of the year, we've never hit an age of 30 days or more for our money - the best we've done is 21 days. We've seen major successes thus far, though - especially when it comes to directing our money to where we think it's most important, as well as consciously spending the way we want.
I decided last month that I'd like to aggressively pay off all debt except the house by the end of the year; two iPhone loans, a credit card with a 0% APR until next February, and my wife's car loan. Since we started roughly a month ago, we've paid off a little over $3200 in debt - which is great! But our money age has slowly dropped - currently it sits at 9 days.
How important is getting to this last step of aging your money? Am I being too aggressive when it comes to paying off this debt? Or should I continue on this plan until the end of the year and rejoice when we don't have any more debt except the house to pay off?
What are your thoughts? Thanks!
Aging your money is a byproduct of following YNAB's rules 1 through 3. It's not an actionable goal in and of itself, but rather a function of your, income timing and budgeting and spending habits. If you are following Rule 2, your AOM will increase, but when you spend your Rule 2 funds, AOM may decrease. And there's nothing wrong with that.
I would focus more on successful budgeting and debt paydown. And by that I mean while being aggressive with debt paydown, don't be so aggressive that you are neglecting setting aside money for all of your your expenses, even those that don't happen regularly.
I'm in full agreement with nolesrule . Your AoM should always be considered in terms of your goals. You could have an AoM of 200 days, but if you have an abysmal net worth that is drowning in ever-growing debt, you're not doing so hot.
Our AoM took a big dip when we finally paid off our debts (we did a few really big payments to finish it off), but we felt confident doing this because when we looked at our categories, we knew we had money budgeted for our True Expenses.
And once you get out of debt, you'll be amazed how quickly your Age of Money rises.
This blog post might help you to think about this issue, too: https://www.youneedabudget.com/how-old-is-your-money/
Paying off debt is a top priority for my husband and me, but my husband has a commission-based income. As a result, we are more cautious with our debt payments than we would be if we had a steady income. I wouldn't worry too much about the age of your money. It should skyrocket once you are done paying debt and you're able to put money away for big purchases!