Scared to close accounts

Still trying to wrap my brain around this budget app. I need to consolidate about 8 extra savings accounts. I am bad at spending what is in my checking account and not having money for xyz later when due, (mortgage, new car, taxes).  Everything tells me here I should consolidate:

SO, any suggestions, I am closing one account today, baby steps. But I am scared one wrong move in the budget by accidentally moving money from one place to another and poof, it is "gone" . I am sure with time I will figure out this new system and have faith in it, but I have saved for 5 years for a car & a big pile of cash in a savings account I don't want to disappear.

I feel like I am "starting" to get it, but still very nervous. Especially when I try to look back to figure out why I am suddenly short or over on a budget, there seems to be no easy way to go back and look why.

Any and all suggestions are appreciated, I probably need to watch more videos and read more articles, this is a radically different budget app than anything I have ever used, but I like it.

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    • PhysicsGal
    • Nerdy female homo sapien
    • physicsgal
    • 2 mths ago
    • 3
    • Reported - view

    I think you have it right, it's all about baby steps.  One of the key things is that you, if you use your budget and not your account balances to make spending decisions, then it doesn't matter where your money lives.  It took me about half a year before I stopped wanting to have separate accounts for my emergency fund, etc.  It was a matter of building up that trust in myself that, having stuck with my budget for this many months, I could continue to do it in the future.  So be patient with yourself, both in learning to stick with the budget and in learning to let go of your accounts used for keeping money away from yourself.  As a becomes second nature, b will happen without stress.

    Like 3
    • WordTenor
    • I have the honor to be your obedient servant
    • WordTenor
    • 2 mths ago
    • 8
    • Reported - view

    Before you make changes in your account structure, get good at using the budget. Look at the budget before every spend. Add transactions manually every day. Do this for 14 days straight. If you miss a day, start over counting from 1. 

    By the time you do that, using the budget will be a habit. Then closing accounts will be make natural sense to do, because managing them will become cumbersome. 

    When I started with YNAB I had about 6 savings accounts and 4 checking accounts. I had a credit card with a balance, and enough in savings to pay off the card. Over the first three months I used YNAB, I got myself used to not spending from my account balances, and slowly shifted all the funds into just two savings accounts, and eventually closed the rest. I closed all the checking accounts and opened a new one at my brokerage. Then, after assuring myself that I could afford to budget for my true expenses, I went ahead and also paid off the credit card. But I didn't do any of that as my first step. I got used to YNAB, first. 

    Like 8
    • WordTenor I have to concur with WordTenor, here.

      I wouldn't change your accounts structure until you can trust your budget and feel comfortable with the software. 

      Yes, it will be more work if your accounts are not consolidated, but if you're not sure exactly what the software is doing or you're not consistently using the method, you're also not maximizing the benefit, and you run the risk of confusing yourself about what is available for what.

      After you get comfortable with using the software and method, then you can ditch your previous structure.

      Like 3
    • Bruce
    • Software Engineer
    • Bruce
    • 2 mths ago
    • 2
    • Reported - view

    You seem to have the right understanding of how it works. I think the main thing you need to think about is you need to have enough in your checking account to cover all of your expected MONTHLY expenses (THIS month).  

    Example.  I use my CC mostly, (for points) to pay most bills, and all in person transactions.  There are a few (like my car insurance) which I can't put on my CC, so those come directly from checking.  So, in my case, I have about 4 or 5 transactions that come directly from checking, the rest from CC.  So for this month, I need to make sure that I have enough money in checking to cover all my direct payments from checking AS WELL AS my CC payment (from last month's transactions, which are due this month).

    So, basically I have my check come into my checking account, and it sits there covering any charges, and CC payments, and every couple months, I end up moving some of the money to savings, in order to get better interest.  Then 2 times a year, when my car insurance is due, I may need to move some money back from savings into checking, so I'll be able to cover the insurance payment (remember, that can't come out of my CC).

    Sorry, hope this was understandable, and not too long.  I had a bunch of savings accounts when I started too.  If one was for "car replacement",  then create a category called "car replacement" and put that money in there.  Then you can consolidate the money from that savings into your main savings, and close that account.  Do the same with "income replacement" and whatever else those accounts were used for.  The "purpose" of the money is now determined and defined by your categories, so it doesn't matter what account it's in.

    Like 2
  • Spending when you have multiple deposit accounts on budget is a TWO step process:

    1. Can I afford this?  Check category Available amount. If insufficient, but sill important, reallocate from a lower priority category. (Rule 3)
    2. Can I pay from this account? Check account balance. If insufficient, transfer from ANY other deposit account.

    Use of a paid-in-full CC can mitigate this complexity. Assuming sufficient credit ceiling, the answer to #2 is always yes. That means you only need the full,  two-step approach for bills paid from Checking -- including the credit card payment. The running balance and scheduled transactions make evaluating sufficient account balance over the next few weeks easy. Oh, and the rewards on the CC purchases don't hurt either. 😉

    Like 6
    • TechieM2
    • IT Professional and General Geek
    • techiem2
    • 2 mths ago
    • 2
    • Reported - view

    As others have said, once you get used to the budget system and using categories rather than account balances you can start consolidating.

    Just make sure to be aware of any automated transactions into/out of the account and get those moved to another account before you fully empty it and close it.  This may take some money juggling to get done, but once you start simplifying it makes everything easier.

    Like 2
  • Agree with others that fewer accounts is better. It took me a while to adjust to this as well. Here is a link on the YNAB documents section about simplicity and fewer moving parts. https://docs.youneedabudget.com/article/1132-simplify

    Like 2
    • HappyDance
    • YNABing consistently since 2014
    • HappyDance
    • 2 mths ago
    • 10
    • Reported - view
    Mr. Ed said:
    I am bad at spending what is in my checking account and not having money for xyz later when due, (mortgage, new car, taxes). 

    You start using YNAB, and using your category balances to make spending decisions, and in no time you'll be saying, " I used to be bad at spending and then I got YNAB and used it, and, if you still have a lot of accounts, I think you'll probably also say, "Holy Crap! All these account transfers are so annoying!"  I know, because that is exactly what happened to me on both statements.

    In addition to the good advice you've already received, I would add this suggestion, because it was a game-changer for me:  commit to never overspend a category with the vague thought that you'll figure it out later.  Go ahead and overspend, but figure it out before you spend. If you need/want to overspend a category:

    • a. find the funds to supplement the category first and adjust your budget, or
    • b. if you can't physically do the change in the moment, at least think it through and make the decision mentally about which other category is going to sacrifice the corresponding amount needed before completing the spend.
    Like 10
  • One more thing that nobody said it seems: keep all your accounts but put them on budget. And read: https://www.youneedabudget.com/the-relationship-between-your-budget-your-accounts-its-complicated/ Until you absolutely understand it.

    Your savings accounts will not have one job anymore. It won't be savings account A to save for project X, savings account B to save for project Y... If you want to keep it this way, there lies madness. The job of your savings accounts will only be: create interests. The job of the money in your accounts will be determined by your budget instead.

    Like 3
      • Superbone
      • YNAB convert since 2008
      • Superbone
      • 2 mths ago
      • Reported - view

      Ceeses I would say that savings accounts in YNAB do have one job. That is to gain more interest than they would in checking. That's it.

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      • PhysicsGal
      • Nerdy female homo sapien
      • physicsgal
      • 2 mths ago
      • Reported - view

      Superbone I just started using an Ally checking account (switched from a rewards checking account that became too much work for too little reward) and I'm actually glad to have two savings accounts there still, though one of them had had a balance of $0 for awhile and I was planning to close it, because a savings account can be used for overdraft protection for my checking, in case I ever mess up my math on my account balance (likely, I'm spacey sometimes).  But having a separate savings account for the bulk of my savings to earn higher interests but be safe from being accessed by a fraudster using my checking account is a great idea IMO.  

      Anyways, I'm now using 2 savings accounts for that reason not for any administrative personal finance reasons on my part. 

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      • Superbone
      • YNAB convert since 2008
      • Superbone
      • 2 mths ago
      • 1
      • Reported - view

      PhysicsGal Of course that's fine. I don't have any overdraft protection accounts. I always keep a minimum of $1000 buffer in my checking. I haven't over-drafted since I started using YNAB 12 years ago now.

      Like 1
      • HappyDance
      • YNABing consistently since 2014
      • HappyDance
      • 2 mths ago
      • 1
      • Reported - view

      Superbone said:

      ...  I don't have any overdraft protection accounts. I always keep a minimum of $1000 buffer in my checking. I haven't over-drafted since I started using YNAB ...

      Same with me.  When I figured out that I could leave extra in my chequing account because I no longer made spending decisions based on the account balance anyway and I no longer budgeted by account, I was able to eliminate overdraft protection services from my bank, which meant I could have a zero-fee bank account.

      A zero-fee bank account is a big deal. What did having overdraft protection cost me? A monthly $14.95 (or was it $16.95?) that will add up to thousands not spent on nickel-and-dime bank fees.

      Like 1
      • PhysicsGal
      • Nerdy female homo sapien
      • physicsgal
      • 2 mths ago
      • Reported - view

      HappyDance It's pretty cool because it's a free "interest bearing" (0.1%) checking account with a free choice to link my savings as backup, just in case.  I doubt I will bounce a check and need it, but it makes me feel better knowing I have it there. 

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  • WordTenor said:
    Before you make changes in your account structure, get good at using the budget. Look at the budget before every spend. Add transactions manually every day. Do this for 14 days straight. If you miss a day, start over counting from 1. 

     Funny you should say this WordTenor, I've been having difficulty getting a regular budgeting schedule, I was just starting to think of doing it each morning to start getting in the habit.

    Thank you so much to everyone for your replies each one spoke to me and helped me. I love the reinforcement I'm getting to not just close all my accounts and consolidate immediately. And I love that you're suggesting I get fully comfortable with the software first. That's kind of how I was feeling but then I felt like maybe I was just not getting something. I really appreciate this validation and all the words of encouragement.

    I love the education they have at YNAB, and the easy light-hearted way they present it.

    Now I have to figure out if I have enough money to buy a new pillow because my feather pillow fell apart in the washing machine yesterday. I used to think certain things were just essential and I had to buy them no matter what. But I'm going to end this now and go look at my budget and see if I have the money, or can move it around somehow........ It's a new era.

    Like 1
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