For some reason, credit card debt is on my mind this week. At the moment I have no balances, I’m living on (and loving) my budget, and the only card I use automatically pays itself off every month – things are good.
But I’m not getting cocky. The debtors anonymous survey tells me I should be very careful with any kind of credit instrument. Heaven knows I’ve spent the last 10 years on and off the credit card roller coaster:
- In college, I ran up a balance of about $1,500 on my first credit card. I’m sure the money was spent on normal college kid stuff: fast food and rent.
- When I started my business in 2008, my income dropped but my spending didn’t. I ended up with around $15,000 on the credit cards before my income caught back up to my spending habits.
- When my daughter was born, her hospital expenses totaled around $9,000 – all funded by Visa.
- While building one of the businesses I sold in 2012, I carried roughly $7,500 in balances until the proceeds of the sale zeroed the debt.
Nickels and Dimes, or Big Chunks?
I see three ways we bury ourselves in credit card debt:
- Daily living beyond our means. We use the cards to buy groceries, gas, clothes, meals out, utilities and the like. Balances creep up slowly, but steadily.
- Conspicuous consumption. Furniture, vacations, private school tuition, home improvement. That sort of thing.
- Emergencies and “emergencies.” Car breaks down, taxes are due, kid breaks his arm and you have to cover your insurance deductible, water heater breaks. You get the idea.
So How Did You End Up in Credit Card Hell?
You can see I’ve walked through doors 1, 2, and 3 on the credit card gameshow. I’m wondering about your story? How’d you end up with big balances? Have you cleared them now? Are you snowballing? Or still mired down, wondering how you’ll pay it all off?
(I’d love to hear your story. If you’d like to comment anonymously, just make up a name and email address for the comment form.)
Why would I do such a thing?
Because Jesse basically dared me to. We were talking about putting a couple pieces of exercise equipment in the office (I take a few minutes every hour to move around and shake off the desk stiffness), and I said I was going to drive one of my sandbags over Monday night.
“Oh, I thought you liked to walk,” Jesse said (with a bit of a tone).
Well, that settled that.
Tuesday morning I arrived at the office pretty beat. But I’d done it.
See, you’ll always do more with someone in your ear than if left to yourself.
Lugging my sandbag to work had crossed my mind before, you know, just to see.
But had Jesse not given me the (half-joking) challenge, I probably would have driven the thing to work and missed out on the experience.
And it was a great experience – I got some prolonged double-takes from a few mini-van moms. If only it were for my good looks and ripped physique instead of the large duct tape pillow draped over my shoulder. Ah, well.
So what could this possibly have to do with budgeting?
We budgeters can be pretty smug in the presence of non-budgeters, with our 4 Rules and our peace of mind.
But are we in budgeting cruise control?
Where’s the 40 lb sandbag in our budget we can throw over our shoulder just to see what it feels like?
In a recent podcast (Episode 078: The Black Box of Spending), Jesse described how you can really move the needle in your budget by digging into your “Miscellaneous” category, pulling a recurring expense out of it, and making that expense its own category.
By setting it apart, you’re already triggering the power of awareness, which will automatically reduce your spending in that category.
Now take it a step further. Just for kicks and giggles, cut the number in half.
Then sit back and be wildly entertained by the frantic yelling in your head:
“You couldn’t feed a dog on that, let alone a family of four!”
“I didn’t start budgeting so I could live like a homeless person!”
Give it a shot. You’ll learn great lessons about yourself and the category.
The Unexpected Benefits of Challenging a Budget Category
A couple of months ago Kate and I canceled DirecTV, saving us $100 per month. We’d hemmed at hawed about it for a couple months; after all – satellite TV was a big part of our post-work, post-kids-going-to-bed routine. In hindsight it seems strange to have anxiety about dropping a TV service, but it was an uncomfortable couple of days.
Fast forward two months, and I’ve never missed DirecTV. Kate and I find we’re spending the time in ways that make us happier:
- We talk more.
- We read more.
- I’m teaching myself to code – building software that will help me improve my writing output.
- Kate updates the family blog more often.
- Our kids are watching much less TV (we still have Netflix).
The experiment has been a big win.
Listen, I get it. You can’t cut your grocery budget in half (unless, of course, you can). Could you do a 30% experiment? 20%? 10%?
Giving yourself this kind of challenge is all upside. You’re either going to come out of it:
a) Enjoying the same level of happiness while spending less, or…
b) Fully confident that spending more is making you happier.
So, what’s it going to be? Which category are you going to wrestle for the next few weeks?
Listen, I realize it’s not the most scintillating headline. I’d love to be able to use something along the lines of “Pics of Britney Spears’ Chihuahua Entering Rehab – Again!” But sometimes we just need to slow down and make sure you’re clear on some of the nitty gritty points of your favorite budgeting software. So stick with me.
Yesterday Jesse and I were discussing different aspects of the YNAB interface, and I mentioned how useful I found the “Monthly Header” – which is what we call the area above each month’s budget. The main feature of the header is ‘Available to Budget’ – the number of dollars in your budget that haven’t yet been assigned to a specific category.
Jesse’s reply was “I’m afraid the header confuses the heck out of most people – they don’t know how we come up with ‘Available to Budget,’ and they don’t know which of their actions affect it.”
Jesse’s comment reminded me that I’d quit YNAB a couple of times due to confusion about ‘Available to Budget.’
If that’s you – if you find ‘Available to Budget’ confusing – I have two pieces of advice:
Dollars Enter the Budget
$1,000 enters my budget through my checking account.
‘Available to Budget’ Reflects the Inflow
The $1,000 inflow takes my checking account balance to $1,000. In the ‘Available to Budget’ area above May’s budget, you’ll see the $1,000 reflected as ‘Income for May’ – which takes my ‘Available to Budget’ to $1,000.
Dollars Are Assigned to Categories
I assign $900 of the $1,000 to various categories in my budget, leaving me with an ‘Available to Budget’ of $100. Normally, I’d assign every available dollar to one of my categories; I’m only leaving $100 available to budget for the purposes of the tutorial.
See how my checking account balance didn’t change? That’s because account balances only change when money enters or leaves the budget (usually in the form of income or expenses).
Assigning ‘Available to Budget’ dollars simply moves them around within the budget – which is why account balances are unaffected.
You’ll notice I’ve updated some of my category names to show the typical amount for that category as well as the day of the month they bill is due.
Spent Dollars Leave the Budget
$50 leaves my budget as I pay my home internet bill. I record the transaction on my checking account register.
Current Month’s ‘Available to Budget’ Unaffected By Normal Spending
The $50 outflow reduces my ‘Internet $50 (21st)’ category balance to $0 and lowers my checking account balance to $950, but does NOT impact my ‘Available to Budget.’
Two Options for Dealing with Overspending
Another $72 leaves my budget when I pay my electric bill. My checking account balance reflects the outflow, and the ‘Electricity $50 (17th)’ category shows a negative balance of -$22.00 because I’ve overspent in that category.
Here’s the important part: May’s ‘Available to Budget’ number still hasn’t changed. If you click on a negative category balance, YNAB gives you two options for handling overspent money:
- I can subtract it from next month’s ‘Available to Budget’, or…
- I can subtract it from next month’s category balance.
To keep things as simple as possible, I’d recommend choosing the default – subtract the money from next month’s Available to Budget.
This Month’s Decisions Affect Next Month’s ‘Available to Budget’
Clicking over to my June budget, I can see how June’s ‘Available to Budget’ is impacted by May’s decisions:
I have $100 ‘Not Budgeted in May’ and $22 ‘Overspent in May,’ leaving me with $78 ‘Available to Budget’ in June.
Ideally, I’d like to get June’s ‘Available to Budget’ to $0 – reducing the opportunity for confusion later on.
Cover Overspending with Available Dollars
My first step is to go back to May’s budget and budget an extra $22 in the category called ‘Electricity $50 (17th).’ This takes my budgeted amount to $72 – which matches my $72 outflow.
Up in the ‘Available to Budget’ area, ‘Budgeted in May’ jumps by $22, which reduces May’s ‘Available to Budget’ to $78 – because I’ve assigned those $22 to cover the overspend in my Electricity category.
If I didn’t have any dollars ‘Available to Budget,’ I’d have either allowed the overspend to roll into June (which is part of a realistic budgeting method), or I’d have taken available dollars from another category to cover the overspend in my Electricity category.
(Again, notice how these moving money within the budget doesn’t affect my checking account balance.)
Going back to June’s ‘Available to Budget’, the ‘Overspent in May’ has gone to zero, and the ‘Not Budgeted in May’ has dropped to $78, leaving June’s ‘Available to Budget’ at $78.
Getting ‘Available to Budget’ to $0
Because I want to give every dollar in my budget a job, I (arbitrarily) allocate the remaining $78 to my ‘Phone’ category, increasing my ‘Budgeted in May’ to $1,000 and taking May’s ‘Available to Budget’ to $0.
With no unassigned dollars and no overspending in May (and no income yet for June) my June ‘Available to Budget’ also sits at $0.
You’ll also notice how I have positive balances in several categories of June’s budget, but those positive balances don’t affect June’s ‘Available to Budget.’ Why? Because those dollars already received their jobs, and now they’re sitting in their respective categories waiting to be spent.
Hopefully this tutorial gives you some insight into how YNAB determines your ‘Available to Budget’ number.
Hey all, for those of you interested in the support rep position, just a quick status update.
We received just shy of 200 applications, so we’re still working through the first phase. We’ll be finished with the first phase by the end of the day on Tuesday. On Wednesday, if you hear from us, that means you’ll move on to Phase Two :)
If you don’t hear from us, it means you didn’t make the cut :(
Our plan is to have about 20% of the candidate pool move to Phase Two.
The applications have been great, and it’s been fun getting to know some of you YNABers a bit better. You’re voracious readers, and have added a lot of books to my “To Read” list!
One of the last comments on my post about keeping Monopoly money out of your budget was from Harriet, whom I’d classify as a borderline financial rock star. Read on to get a sense of her situation, then help me help Harriet decide whether she needs YNAB.
I am trying to decide if I should buy this software, and am having trouble understanding how it works. I took the intro class, and I’m still confused.
The deal with us is that we have a year’s living expenses either in the bank or fairly easily accessible.
I have set up all of our regular bills to be paid automatically.
I keep track of all of this in my checkbook, generally recording payments way ahead of the time they are due.
On the rare occasions when the balance runs a little too low in the checking account, I move money from savings to make sure there’s enough there. When I get an unexpected bill (e.g., medical co-pay), I pay it right away. If we want or need to buy something outside of regular expenses, we usually put it on a credit card for convenience (in fact, we use cards for almost everything), but I know the money is there to pay for it, and those CC bills are paid in full each month. I have operated this way for years, well before I got married.
In essence, we ARE paying bills on previous income. We don’t have any debts other than mortgage. Included in the regular expenses are transfers into a savings account, with some of that earmarked for larger expenses later on (contributions to IRAs, home improvements).
My interest in trying YNAB out was to get a better handle on where smaller amounts were going — for eating out and things like that. It’s not that we can’t pay for those things, but I have been feeling like we may be frittering money away without thinking about it.
So is there anything YNAB can do for us that we’re not already doing? Thanks — Harriet
Harriet, your main goal in trying out YNAB was to manage your discretionary spending more effectively, wanting to avoid “frittering away” (great phrase) your hard-earned and hard-saved cash.
Here are three big benefits you’ll enjoy by adding YNAB to your life:
1. The Observer Effect Will Automagically Reduce Your Spending
Have you heard of the observer-expectancy effect? Here’s the gist: people perform better when they’re being watched. In the case of YNAB, we’re using our budget to watch ourselves.
When you establish a spending ceiling for a given category (eating out, for example), your spending in that category will naturally decline simply because you’re watching it. I recently confessed to eating out like a Wild-eyed Burger Demon in 2012, spending over $300 per month at restaurants – often on food I didn’t even like.
Last month (April, 2013), my wife and I spent a total of $70.96 at restaurants. I’m sure our “steady state” spending on restaurants will be as much as double our April amount – but that’s half our historical average. YNAB gets the credit for helping us spend more consciously.
2. Clean Categories Create Consumption with Clear Conscience
My mom (whose transition to YNAB we’ve recently discussed) is loving the program. She (like you, Harriet) has always been financially mindful, but at times she goes to the extreme of feeling like she can’t (or shouldn’t) spend any money – especially on herself.
Thursday night we were chatting about YNAB, and she said “I have $300 in my clothing category, and I can see that everything else is handled, so now I get to go shopping guilt free.”
Right on, mom.
3. Budgeting Your Discretionary Funds Frees Your Mind
Your system works, but I’d wager it requries too much thinking and pen-and-paper reconciliation. Based on your description of pen, paper, and checkbook, you’d find YNAB a breath of fresh air.
Here’s how I use it:
1. Money comes into my life (usually in the form of a paycheck).
2. I assign dollars to jobs (categories) until there all new money is spoken for.
3. I spend money, logging transactions on my phone.
4. I take three to five minutes every couple of days to reconcile my checking and credit card accounts against YNAB, ensuring all is square.
With this workflow in place, I’m shocked at how little time I spend thinking about my expenses, bills, due dates and the like. YNAB lets me think about other things; it’s a major stress reducer.
Overall, Harriet, I’d say you’re doing great. Add YNAB to your workflow and you’ll find yourself spending more consciously and with less anxiety, while reducing mental overhead.
It seemed like a good idea at the time.
My wife is no big spender, but during her regular visits to Costco she’s been known to throw this and that into the cart along with items from her list. Problem is, “this and that” at Costco can easily add $50 to your bill.
So when she told me she needed a few things from our favorite bulk food outlet, I offered to go instead. “Just text me your list,” I innocently said.
Driving to work that day left me missing my morning walk to the office. To ensure I hit my mileage for the day, I decided to walk to Costco, pick up the food, walk back to the office, and then drive home.
You Decided to Walk to Costco?
You’re probably asking:
- How far from your office is Costco?
- How did you plan to get the groceries back to your office?
- But, seriously, how were you going to get the groceries back to the office?
- Google Maps (which is a lying liar) pegged the distance at 1.4 miles (for a 2.8 mile round trip). As I flashed my membership card to the nice lady at the Costo entrance, my iPhone gps app registered 1.9 miles. Uh oh.
- I had no plan for transporting the groceries back to the office. Actually that’s not true. My brilliant plan was: carry them.
As I headed out of the office, Chance (YNAB COO), said (with some confusion in his voice) “Do you think you maybe want to take your backpack?”
My backpack! No wonder Chance gets the fancy title.
After grabbing my backpack, I confidently strolled out of the office and marched myself to Costco.
I quickly made my rounds through the store, picking up the items on Kate’s list:
- Four loaves of bread.
- A six-pack of Orange juice concentrate.
- A large bag of spinach.
- A big plastic container of grapes.
- A block of Tillamook sharp cheddar.
- And…four dozen eggs.
As I headed to the checkout, my confidence in the mission wavered. The pile of food in my cart seemed like a bad combination of big and heavy.
I checked out, loaded everything into a pretty good-sized fruit box (you know how they do it at Costco) and headed for the door.
Once I cleared the door, I ditched my cart, loaded the spinach and the cheese into the backpack (thanks Chance), which left the juice concentrate, grapes, and the eggs in the box.
Welp, I thought to myself, we’ll see how this goes.
You’ll be shocked to hear the box made for an awkward carry.
I hefted it onto my shoulder, busboy style, and walked about 10 steps. My shoulder tired quickly, and I switched to a more traditional forklift approach.
Ten or twenty more steps, and I was ready to set the box down on the nearest mini-van and call my wife to bail me out.
No! That’s the coward’s way out. Finish the mission.
I made it to a stoplight and rested my load on the crosswalk button. One of my neighbors happened to drive by, giving me a confused look and a wave.
Only then did I realize how ridiculous I must look. Grown man, walking out of the Costco parking lot wearing a stuffed backpack and carrying a large box of groceries on his shoulder.
The light changed; I marched on. After a couple hundred yards I realized the box just wasn’t going to work out – it was too blasted awkward.
Luckily, I was right next to one of the two grocery stores I’d passed on my way to Costco. Did I forget to mention those?
I walked up to the store, set my box down on the ground in front of the big sliding doors, went in and grabbed five or six grocery bags.
Am I shoplifting? I remember wondering.
Back outside, I transferred the eggs, orange juice, and grapes into the bags, and took off, hoping there wasn’t a teen-aged grocery bagger behind me dialing up the cops.
Ahh, yes. The bags made for easier carrying.
Although I do have to hold them out from my sides to keep from banging them into my legs…
And, man, these bags are heavier than I thought. My arms are going numb…
And, hm, I don’t think I got the weight distributed quite evenly between the two bags, and the fingers on my left hand are dangerously close to giving out.
With dead arms and purple fingers, I picked up the pace. Fast enough to cut my time down, but not fast enough to risk blowing out the bottoms of the bags. So, instead of Strange Guy with Backpack and Big Box of Food, I’m now Weirdo Gently Speed-walking with Two Grocery Bags in Each Hand.
Finally I turned a corner and my office came into view.
I shouldered the door open, plodded up the stairs, and unloaded the food in the office’s kitchen area, cursing my own stupidity.
Chance walked by just then, and cheerfully asked “How’d it go?”
Panting and sweating, all I could think to say was,
“I hope the eggs survived.”
He gets paid twice monthly, on the 1st and 15th, and he’s not fully buffered yet (meaning he isn’t able to live on last month’s income).
Rather than budgeting twice per month (one budgeting session for each paycheck), he estimates his expenses for the entire month when he gets his paycheck on the 1st.
By the way, Jesse tells me that 80% of YNAB users get paid other than monthly, so my friend’s situation – and the way he handles it – are normal. Less than ideal, but normal.
Another way of saying “he estimates his expenses for the entire month” is “he budgets money he doesn’t have.”
Which turns his whole budget into Monopoly money. If any of your budget is fake, all of it is fake.
Things Fall Apart When You Break Rule 1
When you break Rule 1, the other three rules break down, and YNAB becomes a simple expense tracker instead of a finely-tuned money happiness machine.
How so? Because Rules 2, 3, and 4 are extensions of Rule 1:
- Rule 2 assigns dollars to known future expenses.
- Rule 3 acknowledges that dollars sometimes do jobs other than the one they were originally assigned.
- Rule 4 lets you assign old dollars to today’s jobs, creating true financial bliss.
“Estimating” detaches your budget (and spending) from your real account balances (in checking, savings, etc), creating undesirable outcomes:
- You always have to check your bank account balance before making a purchase.
- You’re missing out on the magic expense reducing-power of a real budget (because your brain knows those category balances are made up, and don’t have to be honored).
- As your budget becomes less and less meaningful, you have less reason to use it, and you run the real risk of quitting.
Make a Fresh Start
First of all, don’t feel bad. Feeling guilty about your money is a waste of energy (No shame, no blame – right?).
Second, consider a fresh start with your budget. I don’t know how many times I’ve fresh-started YNAB – could be a dozen or more.
After fresh-starting (which, you might not realize, is an actual feature in the software under the “File” menu), resolve never to budget money you don’t have.
When money enters your life, assign it to those jobs that need to be done before you get paid again. In the unfortunate event you have to use a credit card to get by (we’ve all been there), you’ll be doing so with full awareness.
For those of you paid weekly or twice monthly, use your category names (or the notes feature in YNAB) to estimate your bills and remind yourself of their due dates. (I just made this change myself.)
Bottom line: “Available to Budget” is a sacred number. As long as you treat it accordingly, you’ll be using YNAB to its full potential.
My Mom, the budgeting rock star (no joke), is currently experimenting with a transition from Quicken to YNAB. She’s already signed up for an intro class, but last night we spent a few minutes sharing screens and talking about her first pass with YNAB and the 4 Rules.
Five questions came out of the conversation:
1. How do I manage my car loan on the budget?
You don’t. Make the loan an off-budget account and budget the payent as a normal category and outflow.
(Yes, you technically can manage loans on budget, but it’s messy – with no benefit to your budgeting success.)
2. Is there a difference between a known, infrequent expense and a Rainy Day fund?
Nope. YNAB vernacular throws new folks a little. Traditionally you’d think of saving for a rainy day as something that only refers to unexpected expenses. For YNAB’s purposes, Rainy Day funds refer to any expense that gets paid less frequently than every month.
Your choice of jargon doesn’t help or hurt your ability to live the 4 Rules. Mom has a master category called “Known Infrequent Expenses” (or something to that effect), and another called “Rainy Day Funds.” That’s fine. She’s giving her dollars the right jobs; naming conventions don’t matter much.
3. Do I have too many on-budget accounts?
Okay, Mom didn’t actually ask me this question. Looking at her budget, I said: “Ma, you have too many on-budget accounts.”
Now, I realize having multiple on-budget accounts doesn’t break YNAB or any of the 4 Rules in particular. But it breaks simplicity.
I told her I’d only put accounts on budget if they were directly involved in my monthly outflows and inflows. Turns out she does have money flowing into and out of several accounts at any given time – but out of habit, not necessity.
In my opinion, working with lots of on-budget accounts creates unnecessary mental overhead, and creates opportunities for mistakes.
I’m a fan of “as few accounts as possible,” so for me it’s:
- Credit Card (zeroed monthly)
- Emergency Fund
- Student Loan
4. Is it okay to budget a month in advance?
YNAB isn’t going to boot you off the software if you’re budgeting ahead of the current month.
But you are breaking Rule 1, and as a beginner, the practice of allocating money you don’t have (“forecasting”) is a threat to a successful budgeting habit.
The True YNABer keeps “Available to Budget” at a radiantly green $0.
Okay, but here’s the deal. I use next month as a placeholder for my typical category allocations. Am I breaking Rule 1? The shame of it.
5. Should I create a second budget for the rental properties or manage them in my main “Household” budget?
As far as I’m concerned, this could go either way. The key factor in Mom’s situation is that rental income and expenses flow into her personal bank accounts.
The mix of personal inflow and and outflows with property incomes and outflows told me she should manage the properties on her main budget, and use YNAB’s Payee field and slick reporting features (where you can filter by Payee and export to a spreadsheet) to pull relevant data out of the budget at tax time.
I’d be curious to hear how other YNABers deal with property management.
The beauty of YNAB is its flexibility. Could my mom go completely against my advice? Sure (it’s typically the safe move). What matters is finding a work flow that helps you make better, more thoughtful decisions about your money.
How would you have answered my mom’s YNAB questions?
Why on earth don’t budgeters talk more about income? It’s your biggest budget category – bigger than all others combined (hopefully).
As YNABers we spend time each day, week, and/or month reviewing our spending: How are we on groceries, what’s left in the misc category, how soon until we can buy the thing we’ve been saving for?
Why wouldn’t we also spend a few minutes during that same meeting thinking about income?
Wasteful non-budgeters don’t benefit from pay increases the way budgeters do – our expenses are so dialed in that any bump to our pay makes a big difference to the bottom line.
In my case:
- A 15% increase in income would cover all my Rainy Day categories (and that’s allowing for taxes and charitable contributions coming off the top).
- Or…a 25% jump in income would cover my mortgage.
- Or…a 35% pay increase would cover everything in my “Monthly Bills” master category (everything but debt service, savings, rainy day funds and charitable contributions).
Is it easy to bump your income 15% to 35%? Probably not – that’s a topic for another day. Salaried people tell me increasing their income involves performance and patience – but also politics and positioning. In other words, they have some influence over their income, but not a lot.
So what? Exert whatever influence you can. The return on effort toward increasing your income is much bigger than the return on figuring out how to cut your grocery budget by $50 per month.
Budgets are Bones; Earning Power is Muscle
Without your financial skeleton (budget), your muscles (income) are a worthless pile of mush. But if your money bones are strong, building your earning muscles lets you do more work (saving, paying off debt, and even spending) in less time.
Which is why that rare person who is both a dynamic earner and disciplined budgeter is so easily identified by his/her enormous smile and overflowing bank and investment accounts.
From taxes to IRAs, and patience to happiness, we talked a lot about retirement this month. We hope you enjoyed April’s podcasts!
076 – Taxes and Timing – Having the choice to create a taxable event (or avoid one) is extremely powerful when it comes to minimizing your life’s single biggest expense.
077 – Why Roths are Better than Regular IRAs – This is the end of that debate.
078 – The Black Box of Spending – Your “Miscellaneous” category is a black box of spending. Is that spending a reflection of your values? Or are you being lazy? And should you care anyway? We discuss :)
079 – Patience – The pathway to wealth is paved with patience.
080 – The Idea of Retirement is Really Starting to Bug Me – This should probably just be a replay of my interview with Leo from ZenHabits.net. The key to money (and probably everything else in life) is to be happy in the moment.
I wonder if many people “succeed” with budgeting on their first attempt. It must have been at least four years ago that Jesse first gave me YNAB, and yet I’m just now closing in on two months as a “real budgeter.” Actually, “real budgeter” is too strong a title. How about Budgeting Intern?
My attempts at budgeting are similar to my (and many others’) attempts at sustained scripture study.
“How many times have you read the Bible cover to cover?” someone might ask me.
“Uh, well, none.”
“How many times have you read the first few chapters of Genesis?”
So why do we all fall off the wagon so often?
We’re sold on the 4 Rules. We see the benefits of budgeting, but for some reason, we just stop. One day we’re budgeting; the next day we’re not.
Here’s my take on why I kept flaking:
I Kept Breaking Rule 1
I didn’t even know I was breaking it (because I didn’t attend one of the excellent YNAB live classes – which would have sorted me out in no time) – but I sure was. I kept trying to budget for an entire month before I had an entire month of money available to budget.
So I’d make these estimates across all these categories, and the total budgeted amount would look ridiculous (because it was), and I’d throw up my hands. “I guess budgeting works for some people, but not for me. The numbers just don’t work.”
The numbers didn’t work because I was treating categories as guesses, rather than treating them as official jobs for each dollar. My budget wasn’t reality. It was what might happen, sort of.
As a budgeting intern, I now understand that you always budget to $0, and you never budget money you don’t have.
I Over-Estimated the Hassle of Entering Transactions
…and underestimated the benefit. These days, YNAB’s free mobile apps allow Kate and me to enter 90% of our transactions at the point of sale.
Before cloud sync and the mobile apps, it would only have taken two or three minutes per day to open my online checking and credit card accounts, look for any new transactions, and square things up. Why was I so convinced the only “efficient” way to deal with YNAB was a weekly or monthly import from my accounts?
I’d fall behind on my transactions, then mess up the import process, so my numbers were always wrong, and I’d quit (again).
My budgeting internship has taught me nothing raises awareness like entering transactions at the point of sale and reviewing the budget daily.
I Handled Credit Card Balances Incorrectly
I’m grateful to say I no longer carry any credit card balances.
When I did have balances (on cards I was still using), they constantly made a mess of my budget. One of two choices would have solved this problem, but I was too lazy to carry out either:
- I could have stopped using the card until it was paid off, making it just like any other debt I pay monthly and manage off-budget (like my mortgage).
- I could have watched the education team’s excellent video on credit card management in YNAB (or attended the live credit card class), and followed through on their instructions.
All said and done, I can’t blame any of these circumstances for my budgeting setbacks. The reality is I hadn’t fully converted myself to the joys and disciplines of budgeting. Once the pain of not budgeting exceeded the temporary discomfort of creating the habit, YNABing became a breeze.
Have you ever fallen off the budgeting wagon? Why? And how did you get yourself back in the groove?
I genuinely love your budgeting system, but generally disagree with you on what seems like a focus on frugality over convenience / indulgence. Not that either of us is wrong, I’m just no good at going without!
That’s a comment from Jason on my post about deciding whether to sell my car. If any of my family or close friends were to hear a person accuse me of extreme frugality, they’d laugh until they passed out. I’ve never been what you’d call the most conscientious money manager.
What Jason is seeing in my recent posts is an exploration of a new mindset – the idea that money should slow down a little as it passes through my hands.
I’m NOT trying to be dogmatic – avoiding consumption for its own sake. I still plan (and look forward to) $150 meals out with my wife. I’m keeping my unnecessary house, and I’m up in the air about getting rid of my car. But at least I’ve thoroughly hashed out the costs and benefits of those decisions, so they’re no longer causing me stress.
For me, that’s the rub:
If a habit or a mindset is causing you stress, take a long hard look at it.
This applies just as well to extreme frugality as it does to loose spending.
At the end of they day, if you’re:
- Giving jobs to all your dollars.
- Saving for infrequent and unexpected expenses.
- Rolling with the punches.
…and working toward living on last month’s income – you’re winning.
I’ll continue to beat up on my big expenses, questioning their value in my life. Hopefully you’ll do the same, but you should never feel stressed, judged, or wrong just because other people consume differently than you do.
Find your sweet spot, and enjoy it!
Spoiler alert for a future post:
I’ve been walking to work since the day after I wrote about robbing the emergency fund to buy a bike. Walking to work is one of the greatest decisions I’ve ever made. Details to come.
I don’t drive much – in the last five years I’ve put 10,000 or 11,000 miles on my car. Since I’ve been walking to work (three weeks now), it has left the garage once.
In the spirit of putting all major expenses on the table, my wife and I are talking seriously about getting rid of it and becoming a one car family.
Monthly Payment: $0
Insurance: $24/month (liability only)
Annual Safety and Emissions Test: $4/month
Maintenance Cost: ?*
Estimated Resale Value: $2,000 to $2,500
*In 2004 the car required new brakes – the only time it’s been to a mechanic in the nine years I’ve owned it. Of course it will eventually need repairs, but I have no idea when that will be, or how much they’ll cost.
Maybe you YNABers can help me out by sharing a) what you budget monthly for car maintenance and repairs (according to Rule 2), and/or b) any big car repair expenses you’ve incurred recently.
If a safe estimate of repair costs is $50 per month, the car is costing me around $90 per month to sit in the garage. If the real cost of repairs is $150 per month, I’m closer to $200 per month for a car we hardly use.
Even if the fixed cost of the car is only $100 per month, it seems like a no-brainer to get rid of it.
But what about the what ifs?
- What if I want to have lunch with a friend in Salt Lake or Provo?
- What if I want to drive up to American Fork Canyon for a hike by myself?
- What if my mom comes to town and wants to borrow the car again (as happened last week)?
- What if I want to take a solo road trip?
The Bottom Line
Cost: some loss of freedom and flexibility that comes with having an extra car on hand.
Benefits: $2,000 to $2,500 now, $100 to $150 per month in the budget and the freed-up garage space. Also, a simplified life thanks to one less large possession.
I’m torn about this decision – as is my wife (unlike in the case of getting rid of the house for an apartment, which was over before it started).
We’re considering a couple of options:
1. Put the Car Out to Pasture
Near our subdivision there are plenty of people with large unused plots of land. Some of them use their extra space for RV and boat storage. We could approach one of them (we know most of them through church), and see if we could park my car on their property for a small fee.
That will give us the full experience of having the car out of sight and mind. If we don’t miss it, we sell it. If we find ourselves missing the car (and frequently walking over to get it from Farmer John), we’ll keep it. We might even keep it at Farmer John’s place, which would give us the garage space without giving up the extra car convenience.
2. Four Wheels Move the Body, Two Wheels Move the Soul
Stole that line from a scooter forum user’s signature. Laughed right out loud when I read it.
When Kate and I were newlyweds I had a scooter and commuted on it for over a year – half an hour each way. I enjoyed it, even in the winter.
I’m sure I could get a 150cc or 250cc scooter with the proceeds from selling the car. I don’t know if the fixed costs of scooter ownership are much lower, so it could be a wash financially. But we’d get the fun of a scooter and the convenience of speedy transportation on demand.
Whichever path we choose, I’ve decided not to drive the car at all in the month of May. If we find ourselves NOT missing the car after the month is up, the right decision becomes much clearer.
What would you do?
and you’ll find you’ve collected
a lot of empty yesterdays.”
- Professor Harold Hill, The Music Man
The following is a transcription of YNAB podcast episode 80 (with some small edits for flow). Make sure you subscribe to the podcast to get Jesse’s weekly take on budgeting and personal finance.
We’ve been talking a lot – especially since I launched that investment course – about saving for retirement (or other things). And in that course I talked about how the purpose of investing is to grow your wealth. Period.
And…to become, oh, what’s the word, like a fat-cat type person. People are sometimes bothered by the idea of wealth because sometimes they see wealth being wasted, or being used flamboyantly (if that’s the right word) – for show, for selfish reasons.
But wealth does an awful lot of good – especially on a micro level: wealth for your kids – to provide them a great education, or to provide the necessities of life to people, or just to give to worthy causes, or to pay for your daughter’s (modest) wedding.
Wealth isn’t bad it all. The investment side of things focuses a ton on retirement and it’s starting to kind of bug me. Mark’s been writing on the blog about how he wants to move – well not wants to move – but running the numbers on moving to a 2-bedroom apartment instead of having his house, and it would mean $200,000 in ten years, and that could go toward retirement.
And then people came back with all sorts of insightful commments about how there are all sorts of other factors besides just the savings and investing for retirement.
In the investing course I really push people hard toward starting, and I’m not backing down from that at all. The average 50-year-old has about $1,000 to their name for each year they are old (or young, depending on how you look at it)!
But the idea of saving and investing toward retirement has tons written about it – you see book after book after book talking about howy you can retire – you can stop working. And I just want to say that I think you should take a hard look at being content now.
It would be really, really said if you had these great kids (as I do – five kids, ages eight and under – basically piled in like a stack of pancakes). And we’re busy with them – it’s crazy at the house, truly crazy – absolute chaos. And sometimes I’m guilty of thinking “When it’s just Rose…” (She’s the youngest – not saying she’s my favorite, but she sure is cute) …”how simple will that be?” All the other kids will have moved on, and I just think about how simple that will be.
And then at the gym the other day someone told me “Oh, man – when they’re teenagers, everything changes. It’s crazy.”
So here I am, looking ahead the future, always thinking, “Man, tomorrow. That will be something.” Instead of enjoying right now. Enjoying the chaos for what it is, and just finding the joy in the moment.
I was reading a sermon by a church leader who says (paraphrasing): “If you’re always focused on tomorrow, you have a lot of empty yesterdays.”
I feel like the retirement siren song is causing us – or could cause us to be looking to that day off in the future where we get to retire and stop working. Where we get to travel more, or do more woodworking, or gardening, or whatever it is you’re excited about doing when you have more spare time. Always looking forward and saying “Oh, that’s going to be great. I’ll just survive for today.” Instead of just enjoying the moment, enjoying today for what it is.
Whether you’re sitting in a cubicle, crunching numbers (which is what I was doing back in the day), or whether you’re making a podcast (which is what I’m doing now) – just enjoy the moment.
Everyone should go back to the podcast where I interviewed Leo (from ZenHabits.net) and listen to that again, because it’s a good exercise in being content. And when you’re content, maybe that’s the key to retirement: You may not ever really care about retiring because you’re just living in the moment and enjoying where you are.
Whether you’re in debt and slowly getting out, or you’re out of debt and looking to invest more – whatever you’re finances are at the moment. You can just be content with where you are and happy with the direction you’re facing – but you’re not looking off to some distant day and not ignoring – missing- what’s going on all around you.
Some food for thought.
Wednesday’s retirement post alarmed people (me included). It’s not comfortable to realize you’re in no way, shape or form prepared to retire in the traditional sense.
In the comments on the post, saveourskills offered an alternate view:
“The idea of retirement is that you do something terrible now and when it is over you can finally enjoy life. To me retirement is a lie. Retirement is a mindset – not a goal.”
Jesse made a related comment after I published the post:
“I think this idea of ‘retirement’ started with the invention of Social Security – before that I’m pretty sure the idea was that you’d just keep working until you died.”
If you hate the idea of working until you die, your problem isn’t your savings rate. It’s your profession.
What if your income-generating hours made you happy? Challenged you? Taught you new things? Created and improved relationships?
If those were the conditions, would you ever want to stop?
“Sure,” you’ll say, “I’d love to enjoy my job, but I’m too entrenched. I have too much experience/too many bills/too much debt/can’t take the risk…”
Yes, you do. I’m not trying to diminish the reality of your responsibilities.
Can you transition to a new job (or completely new profession) tomorrow? No. Next week? Month? Year? I don’t know – maybe not.
But what if you set a goal of truly enjoying your work within two years? Or five? Still unrealistic? I doubt it.
I love this quote from Peter Drucker:
“We greatly overestimate what we can do in one year. But we greatly underestimate what is possible for us in five years.”
As budgeters, we’re uniquely capable of making this transition (however long it takes). We understand (or are discovering) our real expenses. We don’t overestimate the financial obstacles in our path (nor do we underestimate them).
We can say, with great clarity, what we’d need to earn from our new happy profession. We’d have far fewer stresses as we made the transition, because we wouldn’t be piling financial unknowns on top of the questions about changing the way we make our living. We can even start to use the 4 Rules to whittle away at our expenses in preparation for earning less money.
*But who’s to say we’d earn less money in the new profession? Why wouldn’t our happiness and enthusiasm for the job lead to more money? Not a guarantee, but not an impossibility.
A recipe for financial contentment:
2. Save aggressively as insurance against permanent loss of income. Planning to work happily forever isn’t an excuse not to prepare for the ultimate rainy day.
3. Pursue enjoyable work to avoid feeling the need to stop earning money. Believe it’s possible; set a goal to love Monday within 2 to 5 years.
Can it be done?
Opportunity Cost: The loss of potential gain from other alternatives when one alternative is chosen.
Confession: When I said I would seriously consider downsizing our home, I was only sort of telling the truth (so much for defeating denial). Yes, I’d evaluate the costs and benefits of downsizing, but there’s no way I’d really get rid of our house, I said to myself.
Maybe that’s still true – maybe there’s no way my wife and I would leave a home and neighborhood we love for the sake of accelerating our savings. But after a couple of hours with Excel, I can now say that staying in our home is purely emotional, because financially it makes no sense at all.
Check out this table:
|Housing Alternative||Savings||3 Yr Value||5 Yr Value||7 Yr Value||10 Yr Value|
|Rent Similar Home||$310||$12,450.54||$22,323.26||$33,674.98||$53,969.29|
|Rent 2-bedroom Apartment||$1,135||$45,585.03||$81,731.95||$123,293.89||$197,597.22|
- ‘Savings’ estimates the difference in cost between our current home and the alternative, and includes estimates of the value of the mortgage tax credit, maintenance on the home, utilities, and HOA fees.
- This table assumes a meager 7% return on the saved amount. If the money earned 10% per year, the 2-bedroom apartment would pay out nearly $235,000 in ten years. Yikes.
- My wife may threaten divorce if I use this table to try to get her to move.
When I showed Jesse this table, he took it to another level: after ten years of renting, we could go right back to our current cost of living, let the $200k sit in the market for another ten years (when I’d be reaching my goal retirement age of 54), and have around $400,000 extra in savings. Four hundred grand (or $470,000 with a 10% interest rate on the savings).
Summing up: If I lived the next 10 years in a 2-bedroom apartment – investing the savings along the way, the end result could be an additional $16,000+ per year in retirement.
I don’t know what else to say about it. We love our home and our neighbors. We’ve planned to be where we are for a long time – maybe forever.
But these numbers aren’t unreasonable. It’s one thing to grasp the total cost of home ownership in the traditional sense (principal plus interest), but adding in the cost of lost savings is making the house feel really, really expensive.
If you’re just arriving on the post, make sure you read the comments, where some of my assumptions are generously corrected.
On Friday I said I’d be evaluating all my major expenses, and decide whether to:
- Downsize my house
- Have no more children
- Take my kids out of private school
- Become a one-car family
- Drop or reduce my health insurance
- Drastically reduce grocery spending
As I started to research whether downsizing the house is a good idea, it occurred to me I’ve never established a long term financial goal, like, you know, retirement. Deciding whether to make major changes to my big expenses is only meaningful in terms of the impact on my long term goal – so that’s where I need to start.
Shocker: I Want to Be Debt Free with a Nice Nest Egg
My major goals are similar to yours:
1. Eliminate all debt (including home mortgage) by the time I’m 50 (16 years from now).
2. Draw $40,000 per year from my investments starting at age 54 (20 years from now).
Barring catastrophe, the debt elimination goal is on track. I’m already rolling a pretty good debt snowball, and as long as I don’t interrupt it, my home loan will be zero right around my 50th birthday.
By the way, if you have debt, and you’re not snowballing it, you need to start. The day you start snowballing – however modestly – your feelings about your debt will change. You’ll still feel annoyed and stressed by the balances, but you’ll shift immediately toward a sense of control and power. And…
Debt snowballing is addictive.
My current plan zeroes all debt in 16 years, but the momentum of a good snowball could easily knock that down by 3 to 5. Why? Because the more the snowball grows, the more excited you get about eliminating balances. The excitement drives more dollars toward the snowball, accelerating it.
If you’re YNABing, it’s all the more fun because every time you have extra money in a category, you can slide it right into your debt repayment. Double the emotional payoff and patting of self on the back.
So, that’s the debt freedom goal. I’m sure there will be ups and downs along the way, but as long as I’m living on a budget and working to improve my earning power, I’m confident the debts will go away on schedule.
I Have to Save How Much if I Want to Retire in 20 Years??
The retirement income, on the other hand, is a can of worms. This is my first real foray into the messy world of investing, inflation, and withdrawl rate in retirement.
Here are the assumptions I’m working with; feel free to jump in and correct any you consider way off base:
“Retirement” Date: 2033 (age 54)
By age 54 I’ll have no debt and no kids at home (right, parents over 55? Please don’t burst my bubble). My son will be 26, daughter 24, and if there are any more Butler kids on the way, he/she/they will be 18 (or close to it).
*I’ll put all their belongings in suitcases and on the front porch, then kick them out at 4am on their 18th birthday. In my head this is a scene played out between Cliff, Theo, and Vanessa Huxtable. I don’t know why.
Retirement Income Goal: $40,000 per year (in 2013 dollars)
Based on our current budget – with no kids and no debt – Kate and I would live fine on $40,000 per year (again, in today’s dollars). Not lavishly, but comfortably.
We may not even need the $40,000 when I’m 54 – I should be in my peak earning years. But assuming I’m completely fed up with all income-generating activities, $40,000 per year would do the job.
Trying to Predict the Stuff You Can’t Really Predict
- Inflation: 3.25% per year (the historical average).
- Number of years in retirement: 40 (assuming I make it to age 94. If I die earlier, the remainder can go to charity – or to build a shrine honoring John Elway’s Super Bowl wins).
- Interest rate earned on investments during retirement: 4.25% (I really had no idea what to use here, and went with the default number on the calculator shown below).
So how big does my nest egg need to be, and how much do I need to be saving to get there?
Plugging my numbers into this calculator, it appears I need to have $2,500,000 earning 4.25% per year, with an average inflation rate of 3.25% per year – and all of that would allow me to start drawing $40,000 in 2013 dollars from age 54 on.
This is Where Things Get a Little Nuts
According to Betterment, if I want to have a (roughly) 75% chance of having $2,500,000 at age 54, I need to be saving around $5,000 per month.
If I were making $250,000 per year, $5,000 per month would be reasonable. Unfortunately, I’m not. (It is worth mentioning that improving your earning power – once you’re solidly living on a budget – changes your retirement prospects in a major way.)
That’s One Heck of a Reality Check
So, why did I take you through all those goal calculations, when I’d obviously already found out they were unrealistic?
Because maybe you’re like me. Maybe you think $40,000 is a piddly retirement income – one that I could achieve by beginning to invest when I’m 45 or so. If you do think like me – oh how wrong we both are.
For example, dropping my annual income goal to $25,000 (2013 dollars), and extending my retirement age to 65 (giving me 31 years instead of 20 to prepare), changes my monthly savings requirement to $1,475 – a savings rate I could achieve within the next year or so.
Don’t Forget About the $729,000 Bonus I’ll Get at Age 65
Remember how all my debt will be gone when I’m 50? Taking the whole snowball and putting it into my investments for the fifteen years between age 50 and 65 will pad my nest egg with a tidy $729,000, bumping my retirement income from $25,000 to $34,000 per year. It pays to be debt free.
Sheesh – 1,000 words (and one John Elway reference) later, that’s my best guess at a retirement plan.
How’d I do?
Yesterday I spent a hew hours reading through different YNAB users’ journals in the forum (worth the time, by the way). The journals are a mixed bag:
- Lots of quick starts and equally quick burnouts (with journals AND budgeting).
- Lots of people who are fighting the good fight, for years in some cases.
- Just a few cases of rank denial, entitlement, and wussiness.
journaler journalist person made me want to kick my chair over in disgust (and righteous indignation):
“Boohoo, I can’t cut my grocery bill at all. I’m not going to eat beans and rice for the next five years just to avoid a little debt.”
“Waaa, how could I possibly deprive my son of his private french tutor?”
*Examples made up because I’m really not trying to out the cry-baby here.
After reading this journal, I typed out a harsh comment, and then – thank the heavens above – deleted it.
See, I’ve been told by those closest to me that, on the rarest occasion, I get a little preachy.
*Actually, my younger brother once observed me to have only three settings: preachy, scheming, and asleep.
After backing away from my righteous rant, I had a thought:
“He and I, we’re the same.”
We claim to “deserve” different luxuries, but entitlement is entitlement.
Hut-Dwellers Define “Necessary”
If hut-dwelling natives can enjoy quality relationships and some measure of health, why not establish their standard of living as the real baseline for “necessary?”
No, I have no intention of moving my family to a hut. The point is third-world folks provide a very useful definition of what a human needs to get by – which is to say, not much.
With that in mind, I’ve decided to climb down off my high horse (however temporarily) and go through the exercise I was going to impose on the cry-baby journal writer:
Put it all on the table.
All Major Expenses Are Up for Discussion and Debate
An economics professor of mine taught that every study needs bias to be meaningful. You don’t ask “is this true, or is that true?” You start with “This is absolutely true”, then set about trying to prove or disprove.
Up for debate are my six biggest expenses:
- children’s education
I’ll bias the discussion against my life of luxury, and you’ll stand by, laughing as I wriggle and squirm under the weight of my wasteful self-justification.
Great times will be had by all.
My six hypotheses are:
1. I should sell (or otherwise be rid of) my enormous home, moving into something much smaller and less expensive.
2. I should absolutely not have any more children.
3. I should not continue to send my children to private school.
4. I should cut my grocery budget to $100 per person, per month, and I should never eat out.
5. I should sell both my cars, use the proceeds of the sales to buy one less expensive van, and become a one-car family.
6. I should drop, or drastically reduce my family’s health insurance coverage.
*I’m constantly using I as though I were going to make these decisions alone. Of course I won’t, but always writing as we (we being my wife and me) would sound weird.
I’ll spend quality time reasoning through each decision, so the posts (on this particular subject) will probably come once each week. I may not take them on in the order listed here.
Let’s see where this takes us. At the very least, it will spark some interesting discussion in the comments, and in my marriage. This post alone will cause me to have some ‘splaining to do when I get home from the office today.
Most compulsive debtors will answer “yes” to at least eight of the following 15 questions. Your answers might surprise you.
By the way, this survey comes from Debtors Anonymous, a 12-step organization that helps people with compulsive borrowing and spending problems. Jesse featured DA in podcast episode 057 – “When debt is an addiction.”
1. Are your debts making your home life unhappy?
Yes. Kate and I have had our share of arguments over debt. One fight that stands out in my memory was when I was taking out another round of student loans near the end of school – loans I would definitely not need. Kate finished her degree with no debt, and could not understand why I would be borrowing money for no other reason than to borrow it. Smart woman, that wife of mine.
2. Does the pressure of your debts distract you from your daily work?
Absolutely. As a small business owner, I found myself constantly weighing business decisions in terms of how much and how fast they’d increase my income, which would allow me to accelerate the paydown of my debt.
That’s the point of owning a business, right? Right, but the smart business owner takes the long view and says “How do we make this thing work forever?” not, “How can I pay myself an extra $5,000 next month to hurry up and zero a credit card balance?”
3. Are your debts affecting your reputation?
I never had friends and family tell me directly that my borrowing (and generally terrible financial management) damaged their view of me, but how could it not? Who do you trust and admire – the high-earning big spender/borrower, or the thoughtful, patient budgeter?
4. Do your debts cause you to think less of yourself?
Yes. The longer I borrowed, and the bigger my outstanding balances, the less I respected myself. At its worst, I considered myself an outright loser for having accrued massive debt in spite of earning an income far above the average.
5. Have you ever given false information in order to obtain credit?
No, thank goodness.
6. Have you ever made unrealistic promises to your creditors?
7. Does the pressure of your debts make you careless of the welfare of your family?
Careless? I don’t believe so. But the pressure of my debts absolutely affected the quality of my peformance as a husband, father, and friend. I don’t think my debts made me careless, but they certainly made me care less (as in, give less attention to) everything in my life that actually matters.
8. Do you ever fear that your employer, family or friends will learn the extent of your total indebtedness?
Yes. There were times during my peak borrowing years that I’d meet someone new, and literally as I’d shake their hand in introduction, or as we’d discuss our professions, I’d find myself thinking about my debts and hoping they’d never know what a financial mess I was.
Now that I live on a budget, and the worst of my debts are paid, I find myself more confident in my interactions with people, more at ease. I actually find myself wondering if they have a budget, and how much happier and less stressed they’d be if they thoughtfully managed their money.
9. When faced with a difficult financial situation, does the prospect of borrowing give you an inordinate feeling of relief?
There was a time I’d have answered yes. During times of financial turmoil – like while starting a business and paying for two adoptions – the idea of being able to borrow the money actually eliminated my stress (very temporarily). Boy, was I confused.
These days, the thought of borrowing one red cent makes me physically ill (thank goodness).
10. Does the pressure of your debts cause you to have difficulty sleeping?
My debt would be the last thing I thought about as I fell asleep, and the first thing I thought about as I woke up. It consumed me.
11. Has the pressure of your debts ever caused you to consider getting drunk?
No, but yes.
I’ve never had a drink, but alcohol isn’t the only thing we humans use to medicate ourselves, is it? I escaped my stress with bad food – in the form of eating out way too often and snacking on gas station junk food (how embarrassing is that?).
Whenever I see an overweight person, I automatically assume they’re seriously in debt. Probably just a case of projection – but probably not far from true.
12. Have you ever borrowed money without giving adequate consideration to the rate of interest you are required to pay?
Let’s see, that would be just about every time I’ve ever borrowed money. So – yes.
13. Do you usually expect a negative response when you are subject to a credit investigation?
Until three months ago – no. My credit was basically flawless. Today – yes. My credit is trashed. Ironically I find my newly-terrible credit rating a huge relief. Although I live on – and love – a budget, I’m pretty happy to know I couldn’t borrow money today if I tried.
14. Have you ever developed a strict regimen for paying off your debts, only to break it under pressure?
It definitely sounds like something I would do, being a lover of grand schemes who often doesn’t follow through.
When I finally became truly disgusted with my debt (and myself), I created a ridiculously aggressive debt repayment plan and did follow through on it. It is the greatest financial accomplishment of my life (which is a sad commentary, but hopefully the foundation for better things to come).
15. Do you justify your debts by telling yourself that you are superior to the “other” people, and when you get your “break” you’ll be out of debt overnight?
This hits disturbingly close to home. While borrowing all this money, I did consider myself superior to others. I saw myself as a savvy borrower who was simply funding my ability to grow a large income. Total crap, obviously.
I’m just grateful I eventually had my debt-hating epiphany, and that it came at a time when my income let me pay off around $75,000 in debt in 18 months.
Wow – I answer a definitive yes on 11 of the 15 questions. It would appear that I do have some level of addiction to borrowing. Makes me all the more enthusiastic about my new life as a budgeter.
How many “yeses” do you come up with taking the debtors’ survey? Which questions elicit a stressed or emotional response?
I keep thinking our hiring will slow down, and then find myself writing another job posting. This one is for a front line Defender of the YNAB Brand—a support rep.
What this job would look like:
- You would set your own schedule, but you’d need to stick to something fairly regular. So if you told us you planned on knocking out some cases for a few hours on a Saturday morning, we’d plan on you doing just that.
- You care about the single customer.
- You know that speed of response is the number one driver of customer satisfaction and that,
- Accuracy of response is a close second.
- You’d track your time and email me your hours on a monthly basis. I’d cut you a check each month.
- You’d be a 1099 contractor, responsible for your own internet, working space (probably at home, but you could do the work wherever you preferred), computer, etc.
- The pay would be $10-$15 per hour, depending on your experience.
- We’re looking at about 20 hours per week, with a bias toward weekend hours.
- The hours would perhaps ebb and flow, where some weeks were very busy (new years is always busy, where December is not).
- Your technical skills would definitely need to be up to snuff. You know your way around computers, basically forward and backward, can troubleshoot stuff with some Google searches, and can explain things for people that aren’t as skilled as you, so they can feel victorious :)
- Your location, country-wise can be totally flexible. Your English needs to be superb, but accents are totally fine!
How YNAB works
- We collaborate using email, Basecamp, Google Hangouts, Skype, and HipChat. Even a real phone on occasion.
- We do meetups in person every 18 months or so. The next one is in a few weeks, where we’ll be doing some survival training out in the California desert, and then staying in a hotel at night. Yes, those two can coexist. We may take surfing lessons while we’re there.
- We’re profitable, and in this for the long haul, boostrapped initially from $63 of AdWords spending back in 2004.
- We don’t track vacation or sick days. We hire people that would never abuse that situation.
- Our number one growth driver is word of mouth.
- We don’t work during the week surrounding Christmas.
- We give our team members birthday presents :)
How to Apply (Application DEADLINE is April 30)
- Everything should go to: YNAB+YNAB0518@applications.recruiterbox.com
- Send us your resume as a PDF.
- Send us a really interesting/compelling cover letter that answers, at a minimum:
- Why you would make a great YNAB Support rep.
- What prior tech support experience you’ve had.
- The book you’re currently reading, why you’re reading that book, and what you’ve learned so far from it.
- Share a positive customer service experience where you were the customer. What made the experience positive?
- Respond to the following support case: ”Hey, I bought YNAB about two weeks ago, and it’s just not working out. Could I please have a refund?” (Bear in mind that since we offer a 34-day free trial, our stated policy on refunds is that we don’t provide them.)
- Respond to the following support case: “We are trying to install YNAB on a 2nd computer in our home and I can’t find the right activation key for it. The one I’m using isn’t working. Are we not allowed to install YNAB on another computer? And if we are, how can I get the key to activate it?”
- Respond to the following support case: “I must say that I’m pretty frustrated at this point. I just purchased YNAB and spent several hours trying to import transactions from the last 6 years into YNAB. And now the program that I just paid $60 for is running super slow. To top it all off, I just found out that YNAB doesn’t automatically connect to my banks and download transactions for me going forward! Why would a financial program like yours NOT do this automatically?? I’m not sure I can spend the time manually entering transactions every day and would like to ask for a refund.”
- Respond to the following support case: “I can’t get Cloud Sync to work for the life of me. I have YNAB installed on two computers and I have an Android phone with the YNAB app. On my mobile app it just says “Woops! we couldn’t find any budget set up for Cloud Sync…” And the YNAB app on my computers are definitely NOT showing the same budget files. Please help!”