YNAB (You Need A Budget)

[Superbone]

The first thing anybody needs to do to get on top of their finances is to get their spending under control. You have to spend less than you make each month. To do that you have use the dreaded 'B' word, a budget. But it's really not so scary. I prefer to call it a spending plan. Back when I was in debt, I discovered a software program called YNAB which is an acronym for You Need A Budget. This software has literally saved my financial life. It is the best budgeting software money can buy in my opinion. Quicken lets you look at your spending after the fact while YNAB plans how you want to spend your money as soon as you receive it and before you spend any of it.

Before YNAB, I was always living on the edge of my bank account and often dipping into overdraft. Now, I always have thousands of dollars in my checking account with no worries about bills as everything is accounted for.

The YNAB philosophy and software is governed by four rules:

1. Give every dollar a job
2. Save for a rainy day
3. Roll with the punches
4. Live on last month's income

The method is outlined here:
http://www.youneedabudget.com/method

The main web page is here:
http://www.youneedabudget.com

There's also a free companion app for smart phones that allows you to enter purchases at the point of sale and it syncs automatically with the software on your PC or Mac. You can also import transactions from your online bank or credit cards.

They also offer free online classes, great online support and videos, a there is a great forum community. As you can tell, I'm an evangelist for this software at it has given me control of my financial situation. If you're serious about getting out of debt or you just want control over your money, YNAB will not steer you wrong.

 

[Gaddabout]

There are lots of these apps out there. Glad this one's working for you. Seems simple enough.

 

[Superbone]

There are lots of these apps out there. Glad this one's working for you. Seems simple enough.

Like what? The only ones I'm aware of are Moneywell and Mint. I don't have experience with either but I've read about users complaining about them on the YNAB forums. It's not just about software, it's about the philosophy behind the software. But yes, YNAB has been extremely successful for me.

If anybody has been struggling with getting their finances under control, I'd encourage them to check it out. It's also highly compatible with Dave Ramsey's system. At its heart, it's an envelope budgeting system.

 

[Linderbee]

I'm glad this sort of tool is out there. I make a budget for us, every month, in Google Docs. dcr & I can both check it from anywhere. For me, the number one rule is "Pay your bills before you pay yourself". Meaning, you don't get to spend any money until you've paid whatever bills are scheduled to come out of that check.

We do need to improve our saving habits...it's hard with 5 kids, lol. We have very little debt and we just refinanced our house to a 15-year loan for the same payment we had on our 30 year (reduced interest rate and we eliminated our PMI).

My parents have extremely good credit and have always been good with money, but they never taught us how to be good with money; it's weird. I just sort of had to eventually come into it on my own. I'm trying to do better with my kids, but my older two (20's) are already bad with cash. It's a hard lesson to learn/teach.

 

[Superbone]

We have very little debt and we just refinanced our house to a 15-year loan for the same payment we had on our 30 year (reduced interest rate and we eliminated our PMI).

That's awesome. My next mortgage is definitely going to be a 15-year one.

My parents have extremely good credit and have always been good with money, but they never taught us how to be good with money; it's weird. I just sort of had to eventually come into it on my own. I'm trying to do better with my kids, but my older two (20's) are already bad with cash. It's a hard lesson to learn/teach.

This is so true! To be honest, I have no idea how good my parents were with money. The subject really never came up. Money management is such an important part of life. Spending less than you make, saving, staying out of debt as much as possible are all things everybody should learn to do but nobody is taught. It really should be a part of school curriculum at least in high school.

Credit cards are such a part of life now that everybody thinks it's normal to carry a balance. Everybody thinks it's normal to have an auto loan. People are throwing away thousands upon thousands of dollars over their lifetimes. It didn't used to be that way.

I'm making it a point to teach my kids how to handle their money.

 

[Linderbee]

That's awesome. My next mortgage is definitely going to be a 15-year one.



This is so true! To be honest, I have no idea how good my parents were with money. The subject really never came up. Money management is such an important part of life. Spending less than you make, saving, staying out of debt as much as possible are all things everybody should learn to do but nobody is taught. It really should be a part of school curriculum at least in high school.

Credit cards are such a part of life now that everybody thinks it's normal to carry a balance. Everybody thinks it's normal to have an auto loan. People are throwing away thousands upon thousands of dollars over their lifetimes. It didn't used to be that way.

I'm making it a point to teach my kids how to handle their money.

When dcr & I got married, we knew we needed to get another vehicle that we could fit all 7 of us in, so we bought a used Expedition...and then we decided that we'd rather pay the interest on the loan to ourselves instead of the bank....so we took a loan out of his 401k (at the time it was losing money) and paid off both cars with it. We just got finished paying that money off (3 years) but the interest we were charged (3-4%) went right back into his 401k. I think it's one of the smarter moves we've made.

 

[Gaddabout]

Like what? The only ones I'm aware of are Moneywell and Mint. I don't have experience with either but I've read about users complaining about them on the YNAB forums. It's not just about software, it's about the philosophy behind the software. But yes, YNAB has been extremely successful for me.

If anybody has been struggling with getting their finances under control, I'd encourage them to check it out. It's also highly compatible with Dave Ramsey's system. At its heart, it's an envelope budgeting system.

I use Gazelle, but I don't think it's special. It just works.

 

[Gaddabout]

When dcr & I got married, we knew we needed to get another vehicle that we could fit all 7 of us in, so we bought a used Expedition...and then we decided that we'd rather pay the interest on the loan to ourselves instead of the bank....so we took a loan out of his 401k (at the time it was losing money) and paid off both cars with it. We just got finished paying that money off (3 years) but the interest we were charged (3-4%) went right back into his 401k. I think it's one of the smarter moves we've made.

The tax hit on that scares the dickens out of me. Did that once before. Took me 3 years to pay the IRS.

 

[Gaddabout]

II'm trying to do better with my kids, but my older two (20's) are already bad with cash. It's a hard lesson to learn/teach.

Monthly budget meeting. Make your teens participate, but with a non-voting participation. Seeing how the numbers fall each month will be an eye opener for them.

I remember as a teenager being amazed that anyone who made $2,000 a month couldn't have money left over each month. That seemed like a million dollars to me. It also never dawned on me how much I made a month or how much I spent. At one point I was making about $1,200 as a musician, spending about $1,600 a month, with about $12,000 in car and credit card debt (I bought about $6,000 in drum gear right out of high school). I was like, "I know I can't do this forever, but I'll just start making more money." And that never happened. I thought I was making more like $1,600 a month, spending $1,650, with about $5,000 in debt. I just never sat down to look at the numbers until it was too late.

I had no clue about car insurance, grocery bills, health insurance, etc. The idea that I couldn't eat Taco Bell for ever meal never dawned on me -- and that I thought that was cheap dining. The idea of cooking for myself and eating on < $5 a meal sounded comical and not reasonable. I just saw people on TV shopping at their NY grocer and having a bottle of wine with their $20 steak.

I think the hardest concept to get around is living below your means, even if you don't make a lot of money. I think we send kids into adulthood thinking they have a quality of life to maintain, and they just have to figure out how to make more money right away to maintain it. That's why so many people go into debt. They jump right into car loans -- in a car in which they can't even afford the insurance or tags -- and credit card debt to pay for things that should be cash transactions, like food and clothing.

UGH. I'm with you. It's scary to have a teen.

 

[Superbone]

I use Gazelle, but I don't think it's special. It just works.

Is that Ramsey's proprietary software? I'll be honest I don't know anything about it other than how Ramsey describes budgeting on his radio show and in his books. It get the impression that his system isn't as flexible. For me, YNAB IS special and I get that impression from many other users on their forums. It was a life changer for me.

 

[Superbone]

I like your idea of including teens in a monthly budgeting meeting, Gaddabout. You're right in that they have no idea how much everything costs and it would be good for them to start to have an understanding about everything that is involved in the budget and why there isn't always money available to do whatever they want, whenever they want. Maybe they'd have a better appreciation for what they do have.

Gadd as in Steve Gadd. Ha! Just got it when you mentioned you were a musician. The avatar alone should have been enough to tip me off. I've read your posts forever (mostly on the Suns side) and it never dawned on me. You'd never guess what I play.

 

[Linderbee]

The tax hit on that scares the dickens out of me. Did that once before. Took me 3 years to pay the IRS.

Interesting. We didn't have any real hit to speak of; probably because Nick still filed as Single that year, and with his kids as deductions/dependents, etc., he was fine.

 

[BillsCarnage]

you don't need any fancy software to create a budget. A budget is one of the easiest things one can create with Excel, Google docs, or any other spreadsheet type app/prog.

Common sense and simple math can make you a budget.

Sticking to the budget and prioritizing expenses is where people dig their hole.

 

[Superbone]

you don't need any fancy software to create a budget. A budget is one of the easiest things one can create with Excel, Google docs, or any other spreadsheet type app/prog.

Common sense and simple math can make you a budget.

Sticking to the budget and prioritizing expenses is where people dig their hole.

No, just like anything else you don't NEED fancy software but fancy software can make your budget a whole lot easier to manage and control. It's not just software either. It's a budgeting method that the software is built around. You could do the same method with a spreadsheet but it'd be a lot tougher to manage.

Plus, before making a purchase, you should know how much money you have available in that category. YNAB makes that easy with it's free companion app for your iPhone or Android device. You can also make entries on the fly and it all syncs up automatically with your computer. A spreadsheet can't do that.

You can play Dungeons and Dragons without fancy software too but a large population enjoys the video game form.

 

[jw7]

Click this link to get $6 off:
http://ynab.refr.cc/H2RDSFS

Are you getting compensated for referrals? Spamming is not allowed.

 

[dreamcastrocks]

The tax hit on that scares the dickens out of me. Did that once before. Took me 3 years to pay the IRS.

There is no tax hit if you pay off your loan on time and/or keep your job. If I would have lost my job I would have pay back the loan in full within 60 days or pay taxes using my current tax bracket plus a 10% penalty for early distribution of retirement savings.

It was easily worth it given the 7.5 and 11% interest I had on my car notes vs the 4% interest I was paying myself back. Not to mention I had lost 15% of my 401k balance in the year that I took out the loan; it was a way to curb my losses.

 

[Superbone]

Are you getting compensated for referrals? Spamming is not allowed.

Yeah, I think I get $6 and the person gets $6 off. Not the reason I started the thread. I really believe in the software and it made a huge difference in my life. Link removed.

 

[Superbone]

There is no tax hit if you pay off your loan on time and/or keep your job. If I would have lost my job I would have pay back the loan in full within 60 days or pay taxes using my current tax bracket plus a 10% penalty for early distribution of retirement savings.

It was easily worth it given the 7.5 and 11% interest I had on my car notes vs the 4% interest I was paying myself back. Not to mention I had lost 15% of my 401k balance in the year that I took out the loan; it was a way to curb my losses.

I didn't think there was a tax hit. It's your money and you're paying yourself interest inside of your retirement account that doesn't get hit with taxes in a traditional 401K anyway, until you withdraw money at the end. I've thought about doing it to pay down my 7.5% second mortgage but I'm planning on moving in less than two years and selling the house.

 

[Linderbee]

There is no tax hit if you pay off your loan on time and/or keep your job. If I would have lost my job I would have pay back the loan in full within 60 days or pay taxes using my current tax bracket plus a 10% penalty for early distribution of retirement savings.

It was easily worth it given the 7.5 and 11% interest I had on my car notes vs the 4% interest I was paying myself back. Not to mention I had lost 15% of my 401k balance in the year that I took out the loan; it was a way to curb my losses.

I knew it had to be something. My memory just sucks, lol.

 

[Gaddabout]

You'd never guess what I play.

You must be registered for see images attach

 

[Gaddabout]

There is no tax hit if you pay off your loan on time and/or keep your job. If I would have lost my job I would have pay back the loan in full within 60 days or pay taxes using my current tax bracket plus a 10% penalty for early distribution of retirement savings.

It was easily worth it given the 7.5 and 11% interest I had on my car notes vs the 4% interest I was paying myself back. Not to mention I had lost 15% of my 401k balance in the year that I took out the loan; it was a way to curb my losses.

Good info. Yeah, I was forced to do something with my 401K when I left my job. I had forgotten I had it (!!!) and we were desperate for cash as we transitioned to new jobs. I cashed it out and paid the penalty. I didn't have a job in which I could roll it over.

 

[Superbone]

That trombone has some HISTORY!

 

[RugbyMuffin]

The point of the thread is excellent.

#1. The minute you make a budget, you instantly have more money.

#2. There are a bunch of budget software programs out there to help, but excel can do the job as well.

Both are big points that I would recommend to anyone, especially if you are living pay check to pay check. IMO. the less extra money you have then more the reason to budget your finances.

Finally, it only works if you make a fearless, truthful assessment of your finances and your spending.

 

[Superbone]

Yep, rather than thinking of it as a budget, which sounds restrictive, think of it as a spending plan. You plan how you're going to spend and save your money within the confines of your income. It's a way to get control over your money rather than letting your money control you.

 

[Superbone]

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. And I did try and fail previously. It's not just about doing it but knowing how to do it successfully. The YNAB software has a method that drives the software and that is what makes it so successful for people.

Here's an example of a person who failed with previous budgeting attempts before trying YNAB:

http://forum.youneedabudget.com/discussion/24792/automatic-bill-pay

I'm a mess with money. I always have been and just assumed I always would be. I've tried every "budgeting" thing there was out there - all while on a budget, which is easier said than done. I stumbled across YNAB after finding Jesse's podcasts on iTunes. I figured that anybody who could talk to me like I was human had to have a decent idea of how to help me. I threw down the money for YNAB - like I had with every other software - and hoped for the best. I'm about 5 months in and it's completely changed my life. For the first time in my life, I am able to comfortably pay bills when the come in. I don't spend hours calculating and scheduling payments. And I've consistently had over $1000 in my bank account for at least two months now. I'VE NEVER HAD $1000 (AT ONE TIME) IN MY LIFE! When my roommate forgot to pay rent before he left for a weekend trip, I simply covered his portion for a few days. I couldn't believe how easy it was.

It's funny trying to talk to people about budgeting though. They don't want to hear it or talk about it. Heck, I can't even get my brother to try the software and he really needs it!