YNAB (You Need A Budget)

[RugbyMuffin]

As far as doing it on paper, using spreadsheets, or other software, sure you can do it but I'm just telling everyone what a fantastic tool YNAB has been in my life and I don't know if I would have been as successful using other methods.

Good stuff.

Whatever it takes.

 

[Superbone]

Yep, budgeting is the foundation of one's financial well being. Once you have that under control, you can get out of debt, pay off your house, invest or whatever is most important to you. I will never have a car loan again.

 

[Gaddabout]

I will never have a car loan again.

My fiancee' kept her car from college and paid herself a car payment each month from her first job. Paid cash for her next car, kept it for 9 years. Stayed with the formula. The car finally caught on fire (!!!) on Sunday, so we're going through the process again. She could conceivably buy a very, very nice car again, but she decided to earmark that money for actual investment, so she's being extremely frugal. LOL Still paying cash.

Once you save up that money, it's so much harder to spend it than when you're shopping with borrowed money. But the point remains: Car payments = poverty.

 

[Superbone]

My fiancee' kept her car from college and paid herself a car payment each month from her first job. Paid cash for her next car, kept it for 9 years. Stayed with the formula. The car finally caught on fire (!!!) on Sunday, so we're going through the process again. She could conceivably buy a very, very nice car again, but she decided to earmark that money for actual investment, so she's being extremely frugal. LOL Still paying cash.

Once you save up that money, it's so much harder to spend it than when you're shopping with borrowed money. But the point remains: Car payments = poverty.

That is excellent! Marry that girl posthaste!

 

[RugbyMuffin]

I will never have a car loan again.

Bold statement.

 

[Superbone]

Bold statement.

It's really not that hard. As Gaddabout outlined above, you just make car payments to yourself and when the time comes, you don't have to buy a brand new car that loses 20% of its value the minute you drive it off the lot. Buy something a couple years old that somebody else took the depreciation for.

You can start small if you need to and trade up as you continue to make payments to yourself. Ramsey outlines the process here although I wouldn't trust his maths:

http://www.youtube.com/watch?v=BKyV8CTHeJ0

 

[Gaddabout]

Bold statement.

You know what, it is bold, but that is how you build wealth. Dave Ramsey calls it "living weird," because people earning $100K are driving in $2,500 vehicles while they get out of debt and build savings.

You can't build wealth borrowing money for an asset that ultimately has a value of zero. And building wealth isn't about becoming rich so you can blow it like oil barons. It's about security, peace of mind, and knowing you will be able to maintain your current quality of life after you stop earning an income.

So, yes, it's a bold statement because it means not driving even a nice car for most people. It means not eating out when your friends call. It means not having instant access to every entertainment option or, worse, simply having your local library as your primary source of entertainment.

These are the sacrifices you make now, while you are still in control of your financial future, so you don't end up at the end with a life full of regrets.

I haven't used a credit card or borrowed money in seven years. It's been the seven most rewarding years of my life, because I'm a slave to no one, and I can actually look at my short-term and long-term future and see it getting better.

 

[Kel Varnsen]

Thought I'd bump this to recommend Personal Capital to track your accounts.

I created a Mint account years ago and recently started using it again, but, man, it's really bad. It doesn't update correctly, the app shows different accounts than when you use the web, customer service doesn't know what's going on, etc.

Personal Capital is the same concept, but is very smooth and easy to use.

I'll note that when you sign up, they automatically set up a call with an advisor (which is how they make their money, I think - the tracking tool is free, though). But right after you set up an account, there is an actual button to cancel the appointment, so don't let that stop you.

 

[Russ Smith]

Thought I'd bump this to recommend Personal Capital to track your accounts.

I created a Mint account years ago and recently started using it again, but, man, it's really bad. It doesn't update correctly, the app shows different accounts than when you use the web, customer service doesn't know what's going on, etc.

Personal Capital is the same concept, but is very smooth and easy to use.

I'll note that when you sign up, they automatically set up a call with an advisor (which is how they make their money, I think - the tracking tool is free, though). But right after you set up an account, there is an actual button to cancel the appointment, so don't let that stop you.

FWIW i signed up with them a few years ago when Yahoo Finance changed their format and I wanted another way to track my stocks. It has to be 4 years now and PC is still calling me every so often, and emailing me, asking me to sign up with an adviser. i've told them repeatedly I'm not interested and I don't use their app and haven't for a couple of years now.

I did like the app but at a certain point I felt guilty using it when they kept calling.

I have heard good things about them but if you don't want to use the adviser part be aware they will probably call you multiple times to try and get you signed up.

 

[iLLmatiC]

Yep, budgeting is the foundation of one's financial well being. Once you have that under control, you can get out of debt, pay off your house, invest or whatever is most important to you. I will never have a car loan again.

Did you get rid of the Camaro?

 

[iLLmatiC]

You know what, it is bold, but that is how you build wealth. Dave Ramsey calls it "living weird," because people earning $100K are driving in $2,500 vehicles while they get out of debt and build savings.

You can't build wealth borrowing money for an asset that ultimately has a value of zero. And building wealth isn't about becoming rich so you can blow it like oil barons. It's about security, peace of mind, and knowing you will be able to maintain your current quality of life after you stop earning an income.

So, yes, it's a bold statement because it means not driving even a nice car for most people. It means not eating out when your friends call. It means not having instant access to every entertainment option or, worse, simply having your local library as your primary source of entertainment.

These are the sacrifices you make now, while you are still in control of your financial future, so you don't end up at the end with a life full of regrets.

I haven't used a credit card or borrowed money in seven years. It's been the seven most rewarding years of my life, because I'm a slave to no one, and I can actually look at my short-term and long-term future and see it getting better.

Not a huge fan of Dave Ramsey but I can pick things that I like about him and leave the rest. I like that he wants you to build an emergency fund, I dislike that he'd rather you completely pay off your debt before investing. Time in market is crucial, having compound interest work for you and not against you is vital.

 

[Ouchie-Z-Clown]

Not a huge fan of Dave Ramsey but I can pick things that I like about him and leave the rest. I like that he wants you to build an emergency fund, I dislike that he'd rather you completely pay off your debt before investing. Time in market is crucial, having compound interest work for you and not against you is vital.

But that only works if the interest you’re earning is greater than the interest you’re accruing with debt.

 

[Ouchie-Z-Clown]

Not a huge fan of Dave Ramsey but I can pick things that I like about him and leave the rest. I like that he wants you to build an emergency fund, I dislike that he'd rather you completely pay off your debt before investing. Time in market is crucial, having compound interest work for you and not against you is vital.

But that only works if the interest you’re earning is greater than the interest you’re accruing with debt.

 

[iLLmatiC]

But that only works if the interest you’re earning is greater than the interest you’re accruing with debt.

I'm not saying stop paying down your debt, I believe that you should be doing both.

 

[Superbone]

Did you get rid of the Camaro?

No, it’s my favorite car ever. I paid cash for it.

 

[iLLmatiC]

No, it’s my favorite car ever. I paid cash for it.

I realized that after I read the date of the posting, my apologies.

 

[Superbone]

FWIW i signed up with them a few years ago when Yahoo Finance changed their format and I wanted another way to track my stocks. It has to be 4 years now and PC is still calling me every so often, and emailing me, asking me to sign up with an adviser. i've told them repeatedly I'm not interested and I don't use their app and haven't for a couple of years now.

I did like the app but at a certain point I felt guilty using it when they kept calling.

I have heard good things about them but if you don't want to use the adviser part be aware they will probably call you multiple times to try and get you signed up.

I’ve used them off and on the last 5 years just as a secondary place to track my net worth. My first experience with them, I talked to one of their advisors on a Saturday. But I told them I’m a do-it-yourselfer and they didn’t bother me again. I deleted my account at one point because they could never get my work 401k values correct. After my plan changed companies, I signed up again. I got multiple calls but I never answered them. They eventually stopped trying. It’s a pretty good free tool once you get past the phone calls.

 

[Superbone]

Not a huge fan of Dave Ramsey but I can pick things that I like about him and leave the rest. I like that he wants you to build an emergency fund, I dislike that he'd rather you completely pay off your debt before investing. Time in market is crucial, having compound interest work for you and not against you is vital.

I totally agree. The craziest thing is not taking advantage of free matching employer funds if your 401k plan has them. Ramsey is even against that if I recall correctly while getting out of debt! Back when I was working on getting out of debt, I used to listen to him but I agree that you need to pick and choose what advice of his you use. He’s good for getting out of debt but investing, not so much.

I also use credit cards but I use them smartly and same as cash while always paying the statement balance fully.

 

[Superbone]

By the way, I still use YNAB budgeting software but I can’t recommend it as whole-heartedly as before. They’ve gone to a “software as a service” model that’s pretty pricey. Luckily, I was grandfathered in at a lower price point. The software is also not as good as their last desktop version, YNAB 4. Still, their method is great and more flexible than most.

 

[Superbone]

My next mortgage is definitely going to be a 15-year one.

I’ve changed my tune on this since I wrote it back in 2013. I think Dave Ramsey must have brainwashed me back then. I’d rather have the flexibility of a 30 year mortgage and instead of putting extra into the house, invest in the stock market. This keeps your funds liquid and the math says you’ll get a better return than putting it into paying back the smallish mortgage rates of today.

 

[Ouchie-Z-Clown]

I'm not saying stop paying down your debt, I believe that you should be doing both.

Most people have to prioritize and can’t accomplish that. Paying down debt is a sure thing. Once it’s gone you don’t have the downside. Investing is not a sure thing. Market dips or poor investment selection/diversification and you’re behind the eight ball. If an individual is trying to get themselves right financially they should first do the sure thing and then move to the calculated gamble.

My just-out-of-law-school self is a great cautionary tale. I was earning more than expected and hadn’t really had experience with managing it or credit cards. I allowed credit cards to get up $45,000 (yup, young ouchie-z-clown was idiot-z-clown). But I had money in two investments that were going gangbusters. Both had earnings in excess of the interest rates on my credit cards. So on paper I was ahead. Until both investments cratered, almost overnight. Then all I was left with was the debt. Took me more than a few years to pay that down to zip. So not only did I lose the money I invested, I also lost all the interest that was accruing on my debt that wasn’t being paid down because in my head it was offset by my investments.

It was a valuable lesson learned. And glad it happened early in life to recover and reform my actions.

 

[Ouchie-Z-Clown]

I’ve changed my tune on this since I wrote it back in 2013. I think Dave Ramsey must have brainwashed me back then. I’d rather have the flexibility of a 30 year mortgage and instead of putting extra into the house, invest in the stock market. This keeps your funds liquid and the math says you’ll get a better return than putting it into paying back the smallish mortgage rates of today.

Now this I support fully.

 

[Superbone]

Most people have to prioritize and can’t accomplish that. Paying down debt is a sure thing. Once it’s gone you don’t have the downside. Investing is not a sure thing. Market dips or poor investment selection/diversification and you’re behind the eight ball. If an individual is trying to get themselves right financially they should first do the sure thing and then move to the calculated gamble.

My just-out-of-law-school self is a great cautionary tale. I was earning more than expected and hadn’t really had experience with managing it or credit cards. I allowed credit cards to get up $45,000 (yup, young ouchie-z-clown was idiot-z-clown). But I had money in two investments that were going gangbusters. Both had earnings in excess of the interest rates on my credit cards. So on paper I was ahead. Until both investments cratered, almost overnight. Then all I was left with was the debt. Took me more than a few years to pay that down to zip. So not only did I lose the money I invested, I also lost all the interest that was accruing on my debt that wasn’t being paid down because in my head it was offset by my investments.

It was a valuable lesson learned. And glad it happened early in life to recover and reform my actions.

I agree with this for a taxable account but I would still be contributing to a retirement account, at least a little, while getting out of debt. But like you said, I'd be putting every extra taxable dollar outside of that toward my high interest rate debt.

 

[Ouchie-Z-Clown]

I agree with this for a taxable account but I would still be contributing to a retirement account, at least a little, while getting out of debt. But like you said, I'd be putting every extra taxable dollar outside of that toward my high interest rate debt.

I’d do the retirement account to max out a company match (again, consistent with my concept of the “sure thing”). But once you’ve maxed the match, the rest should pay down debt. And I say that as the head of a national registered investment advisory firm that has $600 billion in retirement assets under influence (in other words, I want everyone to invest as much as possible in their retirement plan!).

 

[iLLmatiC]

Most people have to prioritize and can’t accomplish that. Paying down debt is a sure thing. Once it’s gone you don’t have the downside. Investing is not a sure thing. Market dips or poor investment selection/diversification and you’re behind the eight ball. If an individual is trying to get themselves right financially they should first do the sure thing and then move to the calculated gamble.

My just-out-of-law-school self is a great cautionary tale. I was earning more than expected and hadn’t really had experience with managing it or credit cards. I allowed credit cards to get up $45,000 (yup, young ouchie-z-clown was idiot-z-clown). But I had money in two investments that were going gangbusters. Both had earnings in excess of the interest rates on my credit cards. So on paper I was ahead. Until both investments cratered, almost overnight. Then all I was left with was the debt. Took me more than a few years to pay that down to zip. So not only did I lose the money I invested, I also lost all the interest that was accruing on my debt that wasn’t being paid down because in my head it was offset by my investments.

It was a valuable lesson learned. And glad it happened early in life to recover and reform my actions.

Agree to disagree. I still believe you should be paying yourself first. Also, you never lose the money you invested unless you sold the investment.