Fresh start now I am out of la la land?

Hi I've been using YNAB for a year and a half, while off work with mental health issues.  For background, I resisted applying for welfare benefits and lived off savings all that time (very stupid I know). YNAB has really helped me to overcome my fear of looking at my bank account, I input daily, and balance weekly.  I do budget monthly, in that I set a spend in each category and monitor against it. The credit card figure baffles me TBH but I always know what the card balance is and make the minimum payment. I do plan for recurring and upcoming expenses. So far so good.

However due to Coronavirus I've been facing up to the fact that I can't live off savings forever and finally applied for welfare.  My claim has been approved and I know what my monthly check will now be, and I really want to try to live within that or as near as I possibly can.  So problem is, I am used to just moving money around different bank accounts on YNAB at random times, I am not used to having one piece of monthly income and then allocating it. I've always used To Be Budgeted as a kind of slush fund, in that I put anything left over at the end of the month back in there, and never carry money forward month to month in individual categories.  This is because the To Be Budgeted was always a kind of lump sum of money I'd pillaged from my savings :(

I feel like I'm only part way to solving my battle with money.  Actually the pandemic has helped me face up to the fact I was putting my head in the sand for so long, which is good. 

Question: what do I do now? Do I Start Afresh?  My welfare benefits started on 5 April, so not a neat month end.  If I Start Afresh, is all the info I have gathered on my past spending patterns deleted? Can I keep my categories?  I assume it keeps my bank balances, but how do I separate the savings I now do not want to spend?  I've previously used categories with a minus budget amount in them for any bits of income I had eg selling things on ebay. Is that the right way?

I want to do better I really do, please help.  Thanks for reading.

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  • A fresh start will keep your account and category structure. The current budget and all your information will also be saved so that history is available for you to look  back.  If you do the fresh start and don't like what you see, you can go back to your current budget and pick up where you left off.

    Like 1
    • Herman That's reassuring to read.  If I did start afresh, should I somehow portion my monthly check so that part of it went for April? Or just treat it like you would a payment in a business, ie that it counts on the month it is paid, period?

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      • Herman
      • herman
      • 1 yr ago
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      Good Intentions  When you fresh start, you'll have to take all the money you have on hand and assign it jobs.  You  can carry what you had before in places it make sense but you'll get the most benefit by really reviewing your priorities now and deciding.  

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  • Good Intentions said:
    how do I separate the savings I do not want to spend?

    Those go into categories and don't touch it. You should have an idea of what you're saving for, which should be very clear from the category name. That will make it easier to leave it alone, if you know what you'd be giving up. It will also help know if you SHOULD take from it, if there's something else more important that need those funds.

    Realistically, I think you would benefit from going over the Getting Started materials. It doesn't sound like you're using YNAB in the most efficient and effective manner. Rules 1-3. Start doing that. Whether you do that in a Fresh-Started budget or your existing budget doesn't really matter. It might make you more motivated to have the "clean slate" of a Fresh Start, though.

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    • dakinemaui Thank you.  Previously I used the categories for savings Savings Accounts in YNAB, and Savings Accounts Other (ie two of my accounts were in YNAB as they were the ones most easy to make online transfers into my current accounts).  However some of the savings are now in a second current account which I also have on YNAB.  I get the feeling from what you said that this is all wrong. Ie that I am mixing up accounts with purposes.  This was because my savings had no purpose other than to meet my monthly expenses 😢

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    • Good Intentions Your intuition serves you well. That is not the most effective way to use YNAB. First realize that EVERY category represents is savings. "Savings", in fact, is simply "delayed spending". You might save your Mortgage payment for 2 weeks, but your annual Auto Insurance payment would ideally accumulate over the course of a year.

      Categories represent purpose and accounts represent location. You can change either without impacting the other. Realistically, the primary reason to have a savings account at all is for additional interest. Read this several times, as it usually takes a bit to sink in:

      The Relationship Between Your Budget & Your Accounts

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    • I forgot to mention that having all savings accounts on-budget is recommended so you can define purposes for all that money.  If you're looking for simplicity, you can consolidate all your money into a single checking account. (You obviously give up interest, but if that's not an appreciable amount, I don't see the need to make things more difficult than necessary.)

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    • dakinemaui Given that interest is low beyond belief at the moment, my main purpose of what little savings I have left is as an emergency fund and maybe to put to a house deposit one day.  Putting stuff in checking accounts is super dangerous for me. I already have some savings I withdrew from an investment in my second checking account which is deadly.  I'm not looking for simplicity, so much as stopping the self delusion and trying to live within my income.

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    • Good Intentions It's an illusion that money is safe in a separate account. Assume you do that and that you have a plan for all the money in your checking. (That's what the budget is.) Now say you overspend something in the budget. There are only 2 options:

      • Now say that everything else in the budget needs the money it's been assigned, but some of it's missing (i.e., the overspending). Guess where the money comes from? Your off-budget account. So much for being "safe".
      • OR, say that there is something less important in the budget from which you can cover the overspending. (You would do with less of that something or perhaps wait longer to do that something.) Great, your emergency fund isn't needed.

      You'll note, it's not the fact that EF is in a separate account that makes it safe. It's the fact there's something less important in the budget. A separate EF is no different than a separate Christmas account, etc. It's a great idea if you don't have YNAB; otherwise, it's a needless complication. It makes it harder to use (when necessary) and harder to grow (when you can).

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  • Good Intentions said:
    Putting stuff in checking accounts is super dangerous for me

    It's dangerous for a lot of people, which is why YNAB exists. You need to move to making spending decisions based on CATEGORY balances (Available column) rather than your checking account balance.

    At the end of April, I couldn't tell you how much was in my checking account to the nearest thousand dollars, but I knew I had to pull frozen leftovers out of the freezer because I had already spent everything allotted to Groceries. Going to the grocery store would have mandated something else take a hit, which I was unwilling to do -- given I could raid the freezer.

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    • dakinemaui But it does really matter if I go overdrawn on my checking account because of the charges. I can't afford to just ignore the account balances.

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    • Good Intentions That's absolutely correct, and it's a consideration for anyone with multiple cash-based accounts. (In fact, you're already in that situation because you have savings and checking accounts.) In such cases, spending becomes a TWO step process:

      1. Can I afford this? Check category Available. If insufficient, but important, move funds from a lower priority category (Rule 3).
      2. Can I pay from this account? Check account balance. If insufficient, transfer from any other on-budget account.

      Many people use a paid-in-full CC to reduce complexity, as the answer to #2 is usually "Yes". This means the two-step process is only applied to spending that cannot be put onto the CC (e.g., Rent/Mortgage or the CC payment itself).

      The other option is to just keep all your money in checking, and Step #2 goes away. Again, you should be using CATEGORY balances for spending decisions.

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  • Thanks for the responses so far Herman and dakinemaui   I'd be interested in your comments on what changes I have made:

    On reflection, I didn't do a fresh start.  I tried it and saw how much info I would have to hand input, and decided to do backdated changes to correct my existing budget instead.

    I've made a new savings category called Save for Next Month.  This is so I can try to budget within my means while acknowledging that I still need to dip into my savings a little bit each month while trying to live off my welfare.

    dakinemaui i am in the UK and we have a cultural bias not to spend most things on our credit cards, even to make things simpler. We have debit cards on our current accounts.  Credit cards are often used to separate out work expenses, buy big purchases to take advantage of the payment protection, or just because we haven't got enough money to get by (which is dangerous of course).  Also I am not closing my second checking account because it has a couple of specific purposes to me, and is with the same bank as my credit card.

    I have changed all withdrawals from my savings accounts from negative transactions on those budgets, to InputsTBB. I am only going to use those savings categories if I am ever able to actually save into those accounts in the future.

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    • Good Intentions I strongly urge you to structure your budget so that you can budget all income (even transfers from off-budget accounts) in next month's area. Things will be much clearer when you can work with an entire month at once.

      To switch to that, you need your categories that incur outflows after your welfare check to already be filled. (Again, all income will be pushed into the following month's area.) One approach is to reallocate from other categories to make that happen. Another is to add funds to the budget from one of the off-budget accounts. It doesn't have to be in checking, but it does need to be on-budget. Or perhaps a mix of both approaches.

      Once things are all laid out within the same month, you can work on reducing budget amounts (perhaps over time) until the fit within your welfare check. You can't keep drawing from off-budget forever.

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  • Thank you Herman and dakinemaui

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  • Ok I am checking back in as the month end approaches.  I did what was suggested.

    I put a portion of my welfare check in a new budget called Welfare Held Over For Next Month, which was portioned based on how many days of each month the check is supposed to cover (it comes on 11th).  I budgeted frugally for May and then put the remaining money in a new budget called Savings Held Over to try to separate it from the welfare held over.

    I have only a couple of small fixed transactions left for May and I am now budgeting for June.  I can meet my regular payments for the beginning of June, which was the purpose of holding over the welfare.  However the cheque only just about meets the fixed payments, and I need to eat til the check arrives on the 11th, so I have put an aspirationally frugal figure in for food.  So I am now left with a red negative figure in the To Be Budgeted, which is a bit less than the welfare held over from May to June.  I think that's a good thing, right?

    My question is this: do I leave that red figure there to remind me that I haven't really got enough to live on and that I am waiting for the cheque on 11th and may need to use savings? Or do I move some of the Savings Held Over into there, to make the balance green, in the hope I can move it back when the cheque arrives? Or at least most of it.  What's the best way to keep track of all this without deluding myself?

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    • Good Intentions That red figure is how much additional money you need to make your plan feasible. Move enough from your savings hold over category to fix that.

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