HELP! Avoid Debt or Build True Expenses

We've just been trying to put out fires in our budget.

I restarted with YNAB last month after an awful August and September. We drained our savings and true expense categories to pay for $2,000 in vet bills and $1,000 in dental bills. 

Now we have a car repair that I have absolutely no idea how expensive it'll be, and we have exactly $450 to our name. 

So my question is, do I just put this on our credit card and start building up our true expenses/emergency fund again? Or do I just continue to put out the fires the best I can but have no savings/true expense money?

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  • Putting out fires sucks. I've been there, and for many years it felt like two steps forward and three steps back.

    This really is only something that you can answer because questions like this a very personal.

    But here's some things to think about:

    Between now and next pay day, what MUST be paid?

    Of those things what can go onto a credit card, and what must be paid out of the checking account?

    Is there enough in the checking account to cover those expenses (and could any of them be shifted to a CC instead?)

    Once you take a look at that, you can decide what needs to be prioritized to come out of the checking account vs what gets put on the CC. You'll probably slide backwards into debt. But guess what? THIS time, you'll do it knowing EXACTLY how much you are back sliding, and you'll know how to look forward and prioritize for the future.

    Being really aware of what is debt vs what you have the funds to cover is really important, and even though it SUCKS to go through it, going through it with eyes wide open is way better than wondering if something is going to bounce, which costs WAY more money in the long run anyway.


    I hope this helps a little bit, even if it doesn't directly answer your questions.

    Like 7
  • Thanks for your response!

    So we get paid on Wednesday. With that paycheck we can cover all our bills for the first half of the month and possibly put a little into the emergency fund.

    My main question was I have $430 (that's draining everything in our account,  plus @$20 in gas) in the auto maintenance category today. If it doesn't cover it all I'm considering just letting the remaining roll over into debt so I can build my other categories back up. The alternative would be to cover the overspending as much as I can with the paycheck on Wednesday and then have $0 in savings.

    However, I feel like if we don't get our savings back on track, we'll be stuck in this cycle forever. 

    I use to be a die hard Dave Ramsey follower, and I believe even he would agree to stop everything until you have your baby emergency fund back in place. Who knows, maybe this car repair won't be as bad as I'm imagining it to be and I can just cover it today and move on. 

    I also have a hard time when overspending occurs that I want to restart the entire budget instead of seeing that negative category stare at me. It's a very bad habit. 

    Like 1
  • lindsfin said:
    I also have a hard time when overspending occurs that I want to restart the entire budget instead of seeing that negative category stare at me.

     Oh man, I would have to restart my budget all the time if I did that!  Remind yourself, Rule 3 is part of the rules, moving money to cover overspending is not breaking the rules, it is following the rules.  Yes, when you're low on money and high on spending priorities budgeting is going to much harder than when it's vice versa, but as mentioned by someone else above, at least you're paying attention and not letting it happen without being mindful of it.

    I think you should wait till you know how much the car repair will cost, then decide what to do about it.  If it were me, if I couldn't cover it now I would probably put it on a credit card and then try to pay it off next month before the due date, if that was my only balance on the card, to avoid paying interest.  But yeah, you're in a bind right now with cash flow and it would be nice if Murphy would leave you alone for a little while so you can get things back in shape.  If there's one thing you've learned it the value of having funded your true expenses. 

    Good luck!  I hope your car repair is much less than you imagine it will be.

    Like 5
  • lindsfin said:
    I want to restart the entire budget instead of seeing that negative category stare at me

    If it was a conscious choice to finance something, then so be it. Cover the negative from the CC Payment category. (Make offsetting budget entries, negative on the Payment category.) This makes that a budgeted purchase, which flows the funds right back to the CC Payment... putting it right back where it started. The best part: no nagging for something you CHOSE to do.

    As with any reallocation, there's a consequence to that source category. When you reallocate from the CC Payment category, you're merely stating, "Maintaining my debt at present level is less important than <insert destination category here>." Your priorities shape the budget.

    Like 3
  • lindsfin said:
    do I just put this on our credit card

    This is easy... yes.

    Whether you pay it off or not is a different question, but by putting it on the card, you guarantee that you have that option.

    Like 2
  • lindsfin this is really hard but the good news is that you actually had some money saved and have choices. I’m also new to YNAB - five months in - and similar issues with heavy true expenses early on without time to save. If you read the forums it seems pretty common. Over time it will get better and you’ll be slowly get ahead. Hang in there. 

    Like 2
  • Oh, ugh! I hope the vet and dental expenses were for things that have improved, and that the car repair doesn't eat up your whole remaining savings.

    What I did in your situation was to put the repair on the credit card, and continue on with the plan that I had set for us. I was able to fund true expenses and build the emergency fund tiny bit by tiny bit, while throwing money at the credit card until it was done.

    The advice given to me when I was in your exact situation was that building up your true expenses will function much like a traditional emergency fund would, so building them both up simultaneously wasn't really necessary. I have found that to be entirely true, so I focused on fully funding True Expenses and Debt Reduction, and put a little ($50) aside each month toward the emergency fund.

    As the pandemic wore on, I focused on aging my money and slowed the debt payments down, but now that I've aged my money 90 days, I'm boosting up the debt payments again.

    Ultimately, I've decided that it's best to do what "feels" right to me. If having cash on hand "feels" better to you than paying down debt does, then build up that emergency fund. If staying debt free "feels" better, then focus on that. If you ignore your gut feelings on this, you'll "feel" like you're doing the wrong thing no matter who advised you to do it.

    Best of luck to you!

    Like 3
      • lindsfin
      • Navy_Blue_Python.14
      • 2 mths ago
      • 10
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      Krys  Oh interesting! I'm so ingrained in the Dave Ramsey method that I just want to make sure I understood what you were saying. You focused primarily on true expenses (so car maintenance, vet, home maintenance, medical etc) instead of focusing on an "emergency fund"?

      That would probably make a lot of sense in my situation because it seems my "emergencies" are actually categories I have in my true expenses anyways I just haven't had time to fund them. 

      UPDATE: The car maintenance was actually only $72.72. I blame a certain repair shop for making me anxious because they were telling me they were going to have to do "diagnostic testing" for a stupid lightbulb (the lightbulbs over the license plate). I took it to Meineke (HIGHLY RECOMMEND) and they were like, "Yeah, we can just change the lightbulbs." Which was $20, but the screws were stripped so they had to take the back bumper off to get them out, so $50 in labor, BUT I WILL TAKE IT. 

      I was able to pay for the repair in full because it wasn't hundreds of dollars like I imagined. 

      Like 10
      • Yes I can
      • yesican2020
      • 2 mths ago
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      lindsfin that's great news re: the cost of the repairs.  And as for emergencies actually just being true expenses - this is an idea that the YNAB people actually talk about a bit.   There are still real emergencies, but most could sort have been predicted.   You might also want to think about income replacement as another fund to save towards ie. the emergency of losing your job. 

      Like 5
      • Krys
      • I like bacon and sarcasm
      • Krys
      • 2 mths ago
      • 1
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      lindsfin Yes, that's exactly what I did. I put money into categories that have traditionally been problem areas for me and my family, after researching what we typically pay in those areas in a year (that usually feel like emergencies, but when you look at your history, can be predicted with some accuracy).

      I have also worked on building up to a $1,000 emergency fund, basically because I agree with Yes I can that having even a small income replacement fund feels more secure during the pandemic.

      But as a first step, I focused on fully funding my True Expenses each month, and added categories as I went along. I have categories for home, car, medical, annual fees, gifts/holidays, and travel, among others. I know how much we generally spend each year on all of those, and I fund them accordingly each month.

      So glad the car repair was minor and you're still in good shape there! 

      Like 1
    • lindsfin WAHOO!!!!
      This is another great lesson in exploring ALL the options before making a decision, and not rushing into something in a panic. SO glad it worked out!!

      Like 1
    • I agree with Krys  here - funding true expenses greatly eliminates the "emergency" situations.

      Since you are really new to this it takes time to work through to see what your patterns are. After you've been using it for about 3 months you can start to see trends, 6 months let's you get a bigger picture, and at a year point you will have one full cycle of seasons to review and you can make even better decisions based on that. I am able to fund my power bill based on our average and don't have to stress about it when it's the middle of winter and it's really high. That makes life SO much easier to manage!

      Like 2
      • PhysicsGal
      • Nerdy female homo sapien
      • physicsgal
      • 2 mths ago
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      lindsfin Yay, such good news!  Now hopefully you can get a break to start filling in those True Expenses.

      I was doing DR's baby steps for 2019 and I was pretty skimpy on my True expenses back then, only really had one for car maintenance since my car is a '99.  It was stressful and took up most of my attention and energy outside of work.  In 2020 I started doing MY plan and started saving up an Emergency fund, finished paying off my last non-mortgage debt (cheated by paying off my HEL with a Refi, but hey, lowered my interest rate to 3% and let me move on), and started saving more in my true expenses.  I know Dave makes you a stress case so you'll go gazelle intense and pay off your debts sooner on purpose, but personally, I have enough stress in my life and I know I'm going to stick with budgeting from now on no matter what, so I really don't want my personal finance plan to add stress to my life anymore.  I'm glad I did his plan for a little while and paid off most of the debt, but it's great to not be going gazelle intense anymore.

      I'm so much less stressed about money now and I think with a few months of saving up some true expenses, hopefully a break from Murphy you too can feel secure instead of feeling like you're on the edge.  And don't feel like Dave Ramsey is your only option.  I love Dave and for certain folks he really is the best option (if you have a history of overspending and not being able to control yourself with credit cards or other debt), but I have found that using my credit cards the YNAB way allows me to reap the cash rewards without the risk of debt or overspending.  I also think for some people it's better to save an emergency fund before paying off debt, or during, just depends on your life situation.  And giving up a 401k match is just insane, IMO.  Dave is pretty dogmatic about following his plan exactly, but personal finance really should be personal and depend on you, your life, your preferences, your priorities, etc.  That's what's beautiful about YNAB.  But some people really do better when they are told exactly what to do in exactly what order, so Dave's is the perfect plan for them.

      PS. I call my emergency fund category "Murphy Repellant", so far it seems to work pretty well ;)

      Good luck!  Happy budgeting.  Consider starting a Journal on here if you want to get more feedback as you go along in your budgeting journey.  This community is great and very helpful.

      Like 3
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