Low income, unexepected expenses, family life, etc...
I'm working in YNAB Classic that we bought many years ago.
We've been using it again since January, in an attempt to 'get ahead.' Our income is fairly low and we consistently seem to spend it all. By end of year we've always pretty much broken even, but we'd like to get to some level of ahead. I'd like to not be borrowing now and then repaying ourselves when we get our taxes back, each year. I thought that after tracking our spending for several months I'd see where we could change things.
But I run into snags. Like right now, we have to start signing our kids up for the extra-curricular activities they will do in the fall (and in some cases there are savings if they sign up for the Fall/Winter/Spring all at once and we know they will do all three sessions).
We have holiday expenses each year, we're trying camping for the first time this week (spending as little as we could to start out), we visit family in the USA each summer, we made a Bat Mitzvah last month, etc... everything we do is as cheap as can be done in any case, and by end of year it all balances out. But as it comes up, there's no way to pay for it without using credit cards.
Other than skipping out on all these activities for a year... which I don't think will happen, is it just a matter of shaving off a sliver each month to save until we are ahead of all these expenses?
Is the problem that my husband doesn't claim us on his paychecks so they take the maximum taxes, but we get it all back in a lump sum after tax time (and perhaps our family has grown and expenses have grown too and so that doesn't result in a surplus as in previous years when we were able to save that tax rebate)?
I need to better understand how we can begin to get ahead. Right now we can't allocate as funds come in... we spend more at the beginning of the month than we earn, but then we earn more at the end of the month as well.
If you’re forgoing part of your income by deferring taxes and the annual income is just covering annual expenses then you will experience bumps. If you’re using a float or going into debt only to pay it off when the taxes come in, then you could smooth the bumps by not deferring the income.
Other than that you could look at shaving expenses or increasing your income. It sounds like you’re doing you’re best with expenses and that’s great.
Have you prioritised your expenses so the most urgent get paid at the beginning of the month (when income is low) and the rest can wait until the end when income is higher?
Essentially, I think so. But realistically, its hard to differentiate. Food is a pretty stable amount within a certain range. We have to buy food each week. Our rent comes out later on. Most of our expenses are either paying for a service (kids' tutor, speech therapy, etc.) when it happens, or food where its necessary when we need it, we don't pay electric/water/etc. as its included in our rent.
I guess you are right - deferring that income is causing these bumps.
Why are you giving the government an interest free loan? That's what you are doing when you set up withholdings to give you a large return at the end of the year. Sure it seems like a windfall to get that big lump sum once per year, but you could have been maximizing the efficiency of your husband's salary so much better. That money could have been coming to you every month to keep you from going into debt and paying interest on your credit cards to go on a trip. Have your husband adjust his withholdings so that the paychecks are larger. If you are worried about not having enough taken out for taxes maybe take one fewer exemption than you are entitled to.
To a certain extent, it may be too late to get ahead on this year's extra curricular activities, but if you know that payments are going to be due each August, then beginning August 2018 but aside 1/12 of your estimate of what you will need in August 2019 and then you'll have it all allocated when the time comes. Same with trips. If you go on a family trip to the beach every summer, then set aside 1/12 of a rough estimate every single month in a Vacation category.
Dear Violet. Thanks for the info and if I may,
Its imperative that you use the 4 rules of YNAB and absolutely no going out side of these even if it kills you:)
As hard is it may be, you have to be prepared to keep every thing to a minimum for 12 months or more to get your self in front, only needs - food, shelter, clothing as the priority and the utilities to go with those 3 categories. Ask your self do the kids need the activities in the fall this year? can they go without for 1 year? Leave the holiday also for a year and search for activities that cost nothing. Ask the family to come visit it you instead of going there and so on
Like many we all started way behind with lots of debt and bad habits to destroy when it comes to finances. Its all about getting ahead and reducing your spending as much as possible for a period. No is not forever!
I took my five children on full time 12 months ago and as a single parent going from 95,000 per year to 50,000 per year as an income with 60,000 in debt have found it hard. But with applying those points I have mentioned, i have in the last 12 months paid of 8,000.00 of my debt and provided all that I need to. Yes we have gone without a lot, but a good game of street cricket so squashes the need to go out and buy things.
Yes me an the kids have gone with out a lot. But its only for a short time and I constantly communicate to my kids as to why we can and cant do things, Look ahead and budget for up comings.
Set your categories in your budget, I have 2 (Monthly priorities and True expenses)
Negotiate with you utility companies perhaps? I have setup with mine to pay a weekly set amount to have the amount paid before the next bill comes in and always have a small amount of credit by paying this way when the net bill is due. This small credit is growing and in six months I will be in credit enough to not worry about the bill payment as the dollars will be there
Buy your groceries in bulk where you can, with a view to by same products only in small qty's weekly so you are always topped up and don't have to spend so much. Example toilet roll. I purchased $40.00 worth at the begging of the year and only spend 4 dollars every two weeks on this product to keep a good supply
Hope this helps