I started my YNAB (You Need a Budget < not an affiliate link) trial and have viewed the “getting started” video (several people said these classes really helped).
So far, I’m not sure this is for me. But there is one aspect of YNAB that I am getting really excited over: living on last month’s income.
Now, this isn’t rocket science or anything. I don’t know why the thought hadn’t occurred to me before being introduced to YNAB. I’ve even had people mention it in the comments before when I’ve talked about our variable income (the main problem with doing a zero-based budget at Dave Ramsey suggests). But it always just seemed so daunting and scary to try to save up enough money to live off of last month’s income.
But now I see the light.
Doing this will solve so many of my budgeting “issues.”
First and foremost, it resolves the issue of not knowing exactly how much we will be making during the month. Also, I’ve mentioned how I’ve had a hard time waiting until the end of the month in order to make our snowflake payments out of any surplus funds we have from the month. Now I’ll have all the funds up-front so I can make these payments immediately at the beginning of the month. And it is my hope that it will make sticking to my budgeted categories easier because there is ONLY “x” amount of money, and that is it (currently, I’ve tried to do that with the money envelopes, but it hasn’t stopped me from swiping my debit card when needed for the girls’ birthday even though I was out of money).
By living on last month’s income I’ll know, from the beginning of the month, exactly how much can be paid toward each variable expense. That money will get budgeted and/or spent and then I will literally be left with only “x” amount for groceries or spending money, so going over budget is not an option. If I really need more money in a category (like gasoline), then I’ll have to take the money from another category where I’ll have to get by with less (like personal maintenance). I like this flexibility, and yet the rigidity of the structure, too.
What I’m not “sold” on yet is the actual software, itself. I can’t even explain why, but I don’t like the way the system is all set up. I much prefer my usual Excel file spreadsheet. But that could just be a “comfort” thing. I will, indeed, use the YNAB software for a month to give it an honest chance.
Honestly, though, I’m excited about the whole “living on last month’s income” thing. I think it will be a positive change for me, and the saver in me likes that it essentially provides one additional month as a “buffer” should worst-case-scenario happen that disrupts work.
But, from a debt perspective, what does this mean?
I’m still crunching the numbers (hope to get a budget update up later today, Friday at latest), but I’m thinking this will probably mean no (or very small) snowflake payments this month. Instead, I’d be setting that extra money aside until I can build up enough to live on for a full month. The YNAB class said it takes most people 4-6 months, but with all our extra income lately, I think we can do it in 2 months. We shall see.
In the meantime, I’m going to create a new subaccount of my Capital One 360 savings called “one month’s income.” I’ll use it as the place where I stash the extra money until we get to one full month’s income (and, thereafter, it will be used for storing our income until the start of the following month). Make sense?
Have you ever lived on last month’s income? How long did it take you to build up a full month’s income? What were positive experiences? Negative experiences? What do you think of YNAB?