Unexpected $945 budget-busting expense.
So I was making progress. Now I realize I failed to pay my 2018 taxes (e payment didn't go thru). So I have a $945 bill that I paid from checking---and that busts the budget.
Now, I will get a $1,000 state refund, balancing things out. But it will take a while, a month.
Do I lean on credit cards for the month? I don't see how to adapt to this shock.
YNAB Advice: Negative budget $945 from one of your credit cards. This will free $945 to be budgeted elsewhere. It may cause that card’s category to go negative; that’s okay in this case.
Budget the money where you need it and do as much of your spending as possible using that card. If, at the end of June (aka Sunday) the card’s category is still negative, make July’s budget for that card equal to the negative. So if it is -654.32 on Sunday, you’ll budget -654.32 in July.
When you get the refund from the state, budget $945 to that credit card’s category.
Personal finance advice: This is why almost every personal finance plan has you put some amount in emergency savings before trying to do anything else. If you had a small emergency fund, even of $500-$1000, this bite wouldn’t hurt so bad.
I would make your next move, beginning with the $55 that will be left from your state refund, setting aside a small emergency fund for the future. Many find that $1-2000 is appropriate before moving on to tackle other issues. That may take awhile if your finances are tight, but just because it’s hard doesn’t mean it should be neglected. You’re already using YNAB and that means you have the drive—you can do it!
I think I've figured this out. The fuller scenario is that I thought I'd pay (or had paid) the federal taxes by credit card, then simply pay it back when the MD refund came in. But for speed and to save fees, yesterday I paid the money out of my checking account, so it messes with my YNAB budget.
I don't have a liquid emergency fund built up yet. I do have a $3k emergency savings in a mutual fund, but since it's accumulated over time, there are capital gains taxes for tapping it. I could have done that, though.
Here's what I did: I am saving for a private-school tuition fee in December, and have $1,500 or so in there, so I'm just going to shift money from there till the MD refund comes back.
I don't really see one could build up an emergency fund FIRST, before dealing with bills that are coming in regularly, if you have a tight budget and are still paycheck to paycheck.
Long-term plan (this fall) is to sell the house and move to an apt, to get out of a heavy mortgage and recoup some equity. I'm recently divorced and unwisely kept the house.
Do you have an emergency fund. You should have one of at least$1000. This is a Dave Ramsey baby step 1 but even if you don’t ascribe to DR it’s a good idea. We have a $1500 emergency fund which we’ve had to tap into a couple of times. When you get the $1000 state refund you can top up the emergency fund again