Sometime last year Ernie from Purple Sweatpants commented that he thought I might like YNAB. Always on the lookout for ways to improve my saving plan I looked into it. I didn’t use the product as the set up I had created was very similar to theirs and I was finding my groove.
The great thing about YNAB was that it reinforced my own beliefs regarding budgeting and let me see that I was on the right track. They’ve since changed their website so I can’t link you to the bit that had really stood out for me but it was something like this:
- Give every dollar a job
- While I sort of did this, I would often have $20 or $30 just loafing about. So this one I struggled with a bit as I didn’t like the feeling that all the money was ‘used’. That’s when I learnt the beauty of my misc. line! Suddenly instead of magically being $40 over budget, because I wasn’t tracking those loafers I was now aware when I was going over.
- Recognize all your expenses – including those pop up (maintenance) or annual ones (insurance)
- I was already doing this as my savings accounts are for all the things I want and need e.g. medical line, vacation, life happens, home insurance and then the general sky is falling line
- Roll with the punches
- This part made me giddy as it was the ultimate pat on the back that I was on the right track! I’ve always budgeted monthly but I try to check in weekly so if I overspent in one category I can jiggle things so that I still attempt to breakeven at the end.
- Build a buffer
- The promise was that if you were doing steps one through three you’ll slowly be able to break the paycheque to paycheque cycle.
I was following along well enough and then Step 4 was there and I thought, “Really Ernie! I don’t see how this buffer is going to magically appear.”
Well this is my thank you and apology to Ernie. He was right.
In May I kicked my debt, in June I overspent but July was my even keel. Even with my overspending in June I noticed something happening: I was using my last June paycheque to fund the start of July. My second paycheque in July isn’t being touched until July 30th. July 30th being my designated start of August.
My plan for July worked well. Having the money I planned to use sit in the line of credit really did make me very conscious of what I was ‘allowed’ to use. On July 30th, I transferred the mid-July paycheque back into my LOC. The plan is to use it all up before transferring the August 4 paycheque into the LOC. The earliest I’m allowed to transfer the money is August 18th.
YNAB considers having a 1 month buffer to be the end of the paycheque to paycheque cycle. To be honest, right now having a one month buffer seems like a pipe dream but then again back in November I thought the same thing about this.
I wish I had some tip to share, a how to guide that immediately sheds light on how this happened but all I did was manage to follow the first three principles that YNAB and I shared.
As I mentioned I don’t use the platform so this isn’t a recommendation; it is a shout out to Ernie as I would not have gone exploring for it on my own and I’m so thankful that he shared his knowledge both on my blog and on his own.