Dealing with large overspend in November

I'm a long time YNABer who is up against their first material overspend since buffering themselves out 1 month.  Combination of large unexpected home related expenses, and down payment for kids schooling.  

I'm looking for advice on the best way to rectify in November, and fix for December on.  


My potential solutions:

  • 1 Month Buffer
  • Deferred Third Check category that I release 1/6 from on a monthly basis
  • Kids on budget College Savings (my kids are 3.5 and 1.5)
  • Annual Subscriptions True Expenses

I've already pulled from all of my discretionary categories.  The first 2 solutions would resolve the overspend (each of them have enough on their own), but the 3rd and 4th bullets wouldn't resolve the overspend without taking from 1 or 2 (or a combination of both).  

How would you YNABers rectify the short term problem?  It's become obvious to me that I need to do a deep dive on some categories to beef up my Home Maintenance Category moving forward.  

 

Thanks in advance.  

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  • I have multiple income events, so being able to budget in month-sized chunks is paramount. My order of preference when sniffing around for money:

    1. Discretionary category (and then do without)
    2. True Expenses (TEs) without a deadline (Emergency Fund, car repair, etc.)
    3. Ride the CC float - it's a 0% loan for whatever I normally make in budgeted CC purchases per month
    4. TEs with a deadline (pick on the furthest out)
    5. Deferred Income category - I'm spreading out the "3rd" check of a bi-weekly pay cycle over 6 months, so I don't have to rejigger my contributions my budget 4x each year
    6. Finance on a CC (to a point) - It's worth it to me to pay $X/month to avoid budgeting individual paychecks. What is $X? Personal call. For me, $10 interest, no problem. $100 interest, probably not. 
    7. Income Next Month category - Beyond mere convenience, it's trivial to deal with new priorities or expense changes when the total budgeted still has to equal my income. Trying to do this when split across months or worse, the ever-shifting bi-weekly pay, is... less than desirable.

    Slight caveat on #4 and #5. If the deadline for #5 is further out than the max TE with deadline (#4), I'll pick on the Deferred Income category before the deadline-TE. The idea is to spread contributions out over a longer period, lessening the impact.

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  • Also, I'd be maxing out the earlier options so the impact to later options is less. For instance, if I'm short by $1500, without any non-deadline TE money, I might ride the float for $1000, pull $400 out of a deadline-TE (leaving contributions I could handle), and then only pull $100 out of the DI category.

    The idea is to minimize the impact to the budget moving forward. The fewer categories that need to change, the better.

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  • dakinemaui how exactly do I ride the CC float?  What would the impact to my budget look like?  

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    • jestarr With a paid-in-full CC, you have the Payment category match the account balance. On the due date, you pay the statement balance, which will leave money in the category for the following month's bill. You can reallocate up to that amount, because you will have a month's worth of normal budgeted purchases to build that up again. It's critical that you continue to make normal budgeted purchases on the card and just pay the statement balance each month. 

      It's actually a good idea to not reallocate that entire amount remaining in the Payment category, since there will naturally be fluctuations in your normal spending. If you don't raise the category enough (via budgeted purchases) to equal the statement balance by the due date, you'll have to reallocate from elsewhere to avoid overspending on your CC payment (or pay less than the statement balance which starts charging interest).

      Over time, you would budget to narrow the gap between Payment category and account balance. Eventually, they will agree which means paid-in-full status has been restored. Obviously, cover any yellow overspending as you move forward, as that increases the gap . That gap is the amount you're floating.

      With the above, all categories are positive and therefore backed by cash at all times, so there's no monopoly money in the budget. Some people try to float more than that -- running a negative Payment category which equates to fake money in the budget -- but I don't recommend that AT ALL.

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  • This won't help you with the current situation, but I have a Large/Unexpected Expenses category. Our monthly budget is based on 2 of my husband's paychecks, so any "extra" income (my very variable income, husband's 2 extra yearly paychecks, etc.) get split between funding this category and paying down our mortgage.

    We keep what I feel are reasonable amounts in our vet, auto maintenance and home maintenance categories (varies from $2,000 - $5,000 depending on the category). Over the past few years I have used the Large expenses category to supplement these when needed - last week a vet bill for $3,500, in the spring a new HVAC system, last summer a basement flood and the year before that a new engine for my husband's car. 

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  • I would want to hang onto my buffer for ease of budgeting. So I guess that leaves you pulling from the other three, if I understand correctly.

    With some of those very long-term TEs, I am still building up my savings discipline, and I worry that if I pull from them I will lose the motivation to ever contribute ever again. So I put an iron bar around my savings for my child, for instance. (but I also don't save much each month in that category).

    I have the same worry about pulling from EFs.

    So when I've gone over budget and can't offset from my discretionary category, I've taken from my property tax TE. I absolutely know I have to pay my property tax, so by taking from that category, it lights a fire under me to get that money restored in my budget.

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