Painfully Saving Cash While my Debt is Staring me in the Face

Okay. We've done really well the last couple months and FINALLY have a balance in our checking account above $1,000. Yay!!!

So what's the problem? 

It's SO PAINFUL to see cash sitting in my checking account when I also see the $6,000 line of credit balance, and the $16,000 credit card balance, and the, lets say....$180,000 student loan balance all accruing interest!

But, I'm doing my best to follow the YNAB way. The cash sitting in our account is for the taxes we'll need to pay in a couple months, the upcoming vet bills for the dogs, the upcoming bills we expect with our next baby, etc. etc. 

It's been a year of using YNAB now and I haven't seen much benefit, mostly because we've been so broke and living paycheck to paycheck all year. HOWEVER, I feel like I have trust in the system. And really hope we can pay our taxes this year without the credit card. I would also love to save the cash to cover my paycheck on maternity leave and be able to pay the hospital bill as soon as it comes, again, without putting it on the credit card.

Does anyone else struggle with this principal?? Cash sitting around while debt is accruing interest?

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  • Congrats on making that first stepto changing your behavior! And now, kindly...get over it. 😀

    The foundation of all good money management is letting money sit, a point I first read powerfully articulated in the old YNAB forums by Patzer .  You have debts because money burns a hole in your pocket, and all your spending has likely been driven by whatever need or want is latest and loudest. This results in running out of money, which leads to consumer debt.  Fixing those debts also involves fixing the discomfort reaction to having money sitting around waiting for future needs. 

    When you live below your means, you will end up with lots of money sitting around not doing anything but waiting for its eventual use. You’ll have money sitting in rule 2 funds, money funding next month, and money you’ve sent out of the budget entirely. This will make your accounts fat. But because you’ll be using your categories to guide your spending, that money will stop seeming “available:” you gave it a higher priority than buying cheeseburgers so the fact that you have $1000 doesn’t mean cheeseburgers are a go. 

    So get used to the discomfort. Learn to see that high balance as a sign you are making good progress on the debt by not adding to it. 

    NB: $1000 is actually not the YNAB method;  that is baby step one from Dave Ramsey’s Total Money Makeover. YNAB  wants you to have your Rule 2 funds at a point that you are funding them each month, and us longtime users would say that  before chucking money at debts that are going to take you more than a year to pay off like those student loans, you really should be a month ahead on your budget.  Done right, for most people, that’s going to mean a lot more than $1000 sitting around. Even more reason to get comfortable with it. 

    Like 8
      • jenmas
      • jenmas
      • 3 yrs ago
      • 4
      • Reported - view

      WordTenor is exactly right! What's the point of putting $1000 towards your credit card debt now if you are just going to have to charge $200 when you go the vet next week and $500 plus the 2% processing fee when you pay the IRS in a few months?

      Like 4
      • ESLoans
      • Forest_Green_Horse
      • 3 yrs ago
      • Reported - view

      WordTenor thanks - I think I need to do a refresher of the basics and remind myself why I'm doing all this. Especially since I couldn't remember what Rule #2 was :) I think the hardest thing is accepting the fact that I do not necessarily have the funds to start "tackling" our family debt, but instead, we have just enough funds to make minimum payments on all debts, and manage our day-to-day finances. Which I should be grateful for, especially since we're starting with baby steps. And our baby goal #1 is to just quit accruing more debt. Once we manage that we'll see about getting the existing debt paid off quicker. Sigh. 

    • ESLoans I think the most important motto is “accrue no more debt”. Our budget has been tight for a couple of months now because it seems odd things (that I couldn’t foresee coming) have come up. We are doing the Dave Ramsey baby steps, so we have the $1,000 emergency fund on top of our True Expenses. 

      It can be disheartening to constantly feel like we are just replenishing the emergency fund or our true expenses all the time and making little progress on the debts. However, we aren’t going backwards. We have been able to cash flow things as they’ve come up.

      Dave says you can’t get out of hole while digging out the bottom. So we try to be grateful that while some months we can only pay minimums, a small step in the right direction is better than a huge step in the wrong direction. 

      Like 3
  • I refer to this new awareness as learning to [live, spend, save, invest, or pay off debt] at the speed of your income.  It does mean leaving funds needed for short-term expenses in your account. Spending to zero is no longer an option.

    Those of us who had consumer debt to deal with have to acknowledge that it was from spending faster than we earned. Stopping that process isn’t just an act of hiding the credit card; it’s learning how much is really extra every month. The extra is what you can use for debt, savings, and investing. The extra isn’t as much as we think it is when we subtract true expenses, and that is when we begin to learn about patience and consistency.

    I had to relearn the concept when it came to retirement investing too. I kept throwing every available dollar to investing, and that was causing me problems.

    Like 6
  • I can empathize - I could pay off the last of my debt with my savings right now, but then if something happened (and something always happens) I'd be completely up a creek. Being buffered one month, and having funds set aside for major expenses that might happen are negotiable for me. I just get too anxious, otherwise! The other way to look at it is to calculate how much in interest you actually save by putting that money towards your debt right now. The fact is it's probably not much - I'd save $114 by paying off all my debt now rather than waiting until the end of the year.

    Personally, I'm OK paying the bank $114 more of my hard earned money for the piece of mind of knowing I have a financial safety net.

    Like 2
      • Kombucha Kid
      • Slate_Gray_Router.1
      • 3 yrs ago
      • 1
      • Reported - view

      Kombucha Kid *non-negotiable! I will not give those things up! You can pry them from my cold, dead hands :D

      Like 1
  • This thread puts my goals into perspective. I’m glad I’m not the only person feeling this way, feeling off about bulking up on savings and not being aggressive with debt. But in the past, when I’ve been very aggressive with debt, I always pay something off just to incur a new debt because I don’t have the savings to pay for emergencies when they come along. I started using YNAB in Jan 2019 so still getting used to the change. I will also be going on maternity leave in April for 12 weeks so that was a huge incentive to change my financial life.

    Like 2
    • Khaki Storm
    • YNAB book topics online:
    • Khaki_Storm.1
    • 2 yrs ago
    • Reported - view

    i think its called taking the long view,  you're doing fine.  

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