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Money Envelope Update, Part 2

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Hi all! Who else was doing Money-Envelope June with me? I wanted to check in briefly and see how its going! After my mishap early in the month, I haven’t had any more issues (thank goodness!) But I still stand by my statement that the money envelope system may just not be for me. Even with all the benefits (which, I reported last month to outweigh the negatives), I just can’t get over the bulkiness, the inconvenience, and the simple fact that….I don’t like to use paper money! Commenter Mary did point out some valid reasons why dollar bills can be safer than credit/debt cards but, for me, I think I prefer the plastic. So many of you commented on trying You Need a Budget that I decided to check out the website and….I’m intrigued. I don’t really want to shell out the money for it, but I’ve also seen other blog writers (who are not endorsed by the YNAB) talk about how life-changing it was, how its worth every penny, and this means a lot given their frugal nature, etc. etc. etc. So I’m thinking that in July I may try the free 34 day trail that they have advertised on their website. It would give me a chance to use it for a full month and see what I think before committing. Users of YNAB – what do you think? I obviously haven’t downloaded the software yet – is it a huge time-investment up front to get everything synced with the software programs? This makes me a little nervous since we’ve decided to go visit my Dad out-of-town for 4th of July. Will I have time to set everything up before leaving town (we’re planning to go for a long weekend, from Thursday July 3rd through Sunday July 6th). How long did it take you to get everything organized when you started? The trial is for 34 days (as opposed to 30 or 31), so I could start it at the end of June and try to get it set up before July starts. Just trying to figure out the logistics of that. Would love some insight from those who use the program. Prior to the money envelope system I’ve just tracked all my expenses in an Excel file. We did mostly “okay,” but there was some overspending here and there, which is what the money envelope system has helped to curb (mostly…unless I forget the dang envelopes!) I do feel like using the envelopes has made me more cognizant of my spending so, in some regard, I think/hope I could return to the excel file and bypass the overspending since I am now more aware of my spending. But I’m not opposed to trying other systems and YNAB seems to have a lot of strong supporters. What other budgeting systems do you use? Would your recommend any (or recommend to avoid any)?

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24 Comments

  • Reply TPol |

    I am not familiar with YNAB. I have been using a simple spreadsheet to track all my money since 1998. My budget is on one sheet, my investments on another, budgets for vacations or home renovations mainly things with a number of components are worked out in separate sheets. This file has become a summary of my financial life. I work only with two banks. One is just for a credit card I have been extensively using since 1991 and paying in full each month. Except for my credit card, I do no business with them. I keep the rest of my money in another bank and do all my banking with them. So, it is easy to log in and check on a daily basis. My spreadsheets have evolved over time and I even have graphics for certain things.

    Since you are new at this and since you are paying debt, you may need an app like YNAB but, I do not know how much this will cost you in the long run. If it is gonna cost something, I’d think twice about it because free tools are available after all.

  • Reply Vanessa |

    I have been using YNAB for about two years now and I highly recommend it! It does take a little time to get it adjusted the way you want it, but I love that you can customize all the categories and master categories as the ones they had recommended in the way they had them set up just didn’t work for me. It took me a couple months to tweak those. I also didn’t sync any of my previous transactions with YNAB. I just took my bank balances and started with those and then began tracking from there. I still don’t sync with the bank now. We do it all manually. I have found it keeps us more accountable and then I just sit down once a week and reconcile our most used account in case I missed a recurring bill or a receipt somewhere. I love that I can save for things like Christmas every month and see how much we have available at any time. Our checking account never had as much money in it before we started using the program but thanks to them we know we can’t spend it! I also love having my budget right on my smart phone since I’m always out and about anymore :). I too tried the cash envelope system and I hated it! I have two young kids so getting gas cash wasn’t an option and we live rurally and with two kids I hate to shop so we do a lot of stuff online. When I actually get to Target I will often buy groceries, home decor and clothing so it’s three different categories and its much easier to just split it up in YNAB than trying to figure out the cash! I recommend starting to look at the forums and take their free classes to get an idea of how to best utilize it but once you figure it out to work for you it’s amazing! We will always have it 🙂

  • Reply the spunky banker. |

    I just started the money envelopes and why I agree with you about the bulkiness and stuff it has definitely helped me stay on track. I can totally see how it’s not for everyone though.
    I tried YNAB but it just wasn’t for me (but since we are opposites on the envelope thing YNAB might be totally what you want, lol.) I did the free trial and it didn’t take long to set up. I set it up while I was watching a movie one night. When you do the trial you can also download (if you don’t already have it) DropBox and get the YNAB app. I also signed up for the 9 day financial email “course” or whatever he calls it and the emails were pretty helpful.
    Can’t wait to hear what you decide to do!

  • Reply Scooze |

    How much does YNAB cost? I’m generally against spending money to save money unless you are pretty certain it will help. It feels a bit like throwing money at a problem and hoping that will solve it. What is the real problem you have? Is it that you can’t remember what you have in your budget when you go to the store? Is it that you have trouble tracking? Is it that you are overwhelmed and can’t think about it when you are out of the house? There are lots of ways to keep your latest budget numbers with you at all times.

    Do you have a smartphone? I put my budget file in Dropbox (it’s free for small files). That way I can access it anytime, anywhere from any device. I just need to sign in to Dropbox. I can even see it from my phone. Every week I enter everything I spent for the week into my spreadsheet and deduct it from the budget line items. Then I can see how much I have left. When you’re on the go, you could open the app and – boom – there are your numbers.

    • Reply Ashley |

      Sorry – I should’ve posted the cost! It’s normally $60…I just checked the site this morning and it looks like there’s a sale, making it $54. The license never expires and the price entitles you to free updates until the next version is released.
      I think my real problem is just kind of “winging” it. I always have an idea of how much I have spent and how much is left in my budget, but before the envelopes I guess I just wasn’t super strict about it. For example, I might know I have $80ish left in my grocery budget, but if I went to the grocery store and my items rang up to $100 I would just go with it (instead of sticking to the budget and putting items back).
      I do have a smartphone, so that’s a good idea – that’s also been part of the issue (not knowing the exact amount I have left in the grocery/eating out/etc. budget. I already use dropbox for work-related things but I could certainly throw my budget file in there!

  • Reply Mary from SC |

    I guess I am old school. The envelope system keeps me honest. If it’s empty, I can’t spend. I am afraid I would try to justify spending with my debit because the money would still be there. I will research YNAB out of curiosity. Debt reduction is truly about whatever works for you…just like dieting. Keep up the great work.

  • Reply Kayla @ Shoeaholicnomore |

    Maybe it’s because I’m single and so I have less $$ per budget category, but I’ve never found the “bulkiness” to be an issue… I’ve never heard of YNAB so let us know what you decide and more about it please 🙂

    • Reply Ashley |

      I’ll definitely do a review. I’m not sure if I’ll commit to the paid version yet, but I think its worth a try with the free trial to see if it will work for me. I don’t know much about it yet, but I know they utilize dropbox to keep the software at your fingertips. Then, Scooze (above) commented that I could use dropbox to keep my (FREE) excel file, so that might do the trick too. I’ll let you know what I think when I try it out.

  • Reply I |

    I love YNAB! It makes it easy for my husband and I to see exactly where we at any given time because we both of the app on our phones. As an advanced Excel user, I still use Excel to track investments and high level budget items (although with the updated reporting in YNAB this the budget tracking is more out of habit than anything else). The initial set-up took me less than a half an hour. Already having a budget and the amounts outside of YNAB will make the set-up easy. I helped my brother set his YNAB up and he did not have a budget already so it took a bit longer to go back through his accounts and review spending, etc. It is easy to reconcile your accounts when your statements arrive. Overall, I have been very happy with YNAB. Knowing I have to immediately log an expense makes me think twice about it if I don’t really need it. I can easily review on the fly at the store where we are at with a specific account. If you are searching for something that will work for you, then I say give it a try. For people that already have a system that works, then it probably isn’t necessary. Having the ability to access on my iPhone is the biggest pro for me personally.

  • Reply Angie |

    I use mint. Its free and I don’t think its all together too different from YNAB. It looks to be a much simpler interface also. Its a little finagling to get your categories set up from the beginning to something that makes sense for your spending. But once that’s done it pretty much takes care of itself.

    • Reply Angie |

      Also, it automatically adds transactions from your cards. The only ones you need to manually input are cash. No reconciling accounts at the end of the month. No forgotten transactions. Especially helpful to allow you to allocate extra money to specific categories such as interest earned in a savings account or credit card rewards

  • Reply Tania |

    I’m a fan of simple spreadsheets… I’ve been trying to make a post about it, but haven’t finished it. I tried envelopes and all cash a while back, but really, it’s no fun divvying up $100, which is the full extent of my spending… all else (bills, etc) are online. I’ve read about YNAB, but it sounds a lot like what I already do by tracking my bills and spendngs on my blue book, so I didn’t get to use it.

  • Reply April |

    I’m a total YNABer and absolutely love it! Still, I will tell you what I did prior to YNAB that might be a happy medium for you. Get a 3×5 notebook and make each sheet the title of your envelope (in YNAB-speak, a category) and keep track that way. I prefer YNAB because the reconciliation is much easier, but it still holds you accountable like the envelope system.

  • Reply Sara |

    Love YNAB as well. I find it very easy to use. Once you have a fully funded buffer it really takes the anxiety out of bill paying. It’s very easy to set up, and then you just enter each payment into the app on your phone. When I’m grocery shopping, for example, I always know how much I have to spend because I have the balance on my phone.

    I don’t have it synced to my bank, however. I find the whole bank syncing idea distracting and much more than I need. I just enter every transaction into the phone app/computer file, and that’s that.

  • Reply Sue |

    I LOVE, LOVE, LOVE YNAB!!! I am on the 34 day free trial right now but both my husband and I agree it is well worth the money. I’ve taken a couple of their webinar classes which are very helpful and it seems like there is always help available if you need it, which we haven’t yet. I love playing around with the different categories and love that the ultimate goal is to live off of LAST months paycheck!

  • Reply Amanda |

    I did the free trial of YNAB, and I really enjoyed it. My problem with YNAB (which isn’t a problem with them) was that it was a little TOO easy to move money from category to category. So if I went to the store with just $80 in my budget but spent $100, no problem with YNAB. For me personally, for certain categories, I need absolutes, like cash in an envelope. My compromise this month has been to take out cash for groceries, fun money, and our “together” budget, which are the ones to most likely go over. I still debit everything else, but those categories are set up in a spreadsheet, and there usually aren’t significant surprises at the end of the month.

    The only annoying thing about the money envelopes is that my husband and I both stop for groceries, and we didn’t split it up, so it has been a hassle to trade back and forth. But to me it is worth it to not overspend.

    Also, if you are looking for a comparison of YNAB vs. Mint, or how other people just LUUUURVE YNAB, check out sixfiguresunder.com.

    • Reply Ashley |

      I’ve been to sixfiguresunder but I must have missed this post (that’s one of my “occasional reading” blogs so I don’t always catch everything). I’ll have to check it out.

  • Reply Julene |

    We did the envelope thing for a while too – or rather “I” did. It was okay but frankly for me the cash in my hand got spent sooner. I know that’s backwards but it’s the way it worked for me. We use YNAB and love it. We both can enter our expenses when we spend them and they get tracked immediately. If one of us forgets to put it in, it is usually caught when reviewing the bank statement or online accounting and its a good reminder that we are in this together and both responsible. I have used Mint and what I found is that it doesn’t make me accountable – it simply tracks what I’ve spent without my interaction. By having to enter the amounts manually in YNAB I feel it more and am more conscious of where the money is going.

    As for setup, if you have a budget already setup that will help immensely. You will have categories already developed that you can enter into the system and amounts already figured. It shouldn’t take too long. The other thing is that YNAB has some great tutorials and get started videos that help you get going right away. Definitely give it a try – I say the money has been totally worth it for me.

  • Reply Shirley |

    I have been using YNAB for 3 years and really like the ability to properly plan my dollars. I always know my net worth and budget. It has helped me keep focus on my priorities. Previously I had tried envelopes, MONEY, Quicken, etc but non were a fit for my life style. When I was searching for a solution YNAB was highly recommended on Marriage / Relationship blogs as a tool for communication and transpariency. I’m single, but thought that was interesting.

  • Reply absentmindedmother |

    I have the earlier version of YNAB. I tried Mint and a Quicken trial version but it didn’t do all the items I missed when they retired Microsoft Money. I have received email where they will have YNAB v4 for $40. I like the spreadsheets but I don’t use the budget part too much. I like to project for 6month-1year in to the future and being able to make categories, and sorting by date or category. I have been using the cash envelope system Jan and hearing about Dave Ramsey. The zero based budget does work at paying off debt. In the past I tried the envelope system and it didn’t work because I wanted to spend more cash then I had, and I knew I had money in the bank. With the zero based budget I know this is all I can spend because I know where the rest of the money is going. I only keep my mad money and 1 week or grocery money with me most of the time unless I know I’m going to buy personal care or clothing. The rest of the money is in the safe at home.

  • Reply Katie |

    p.s. I’ve been using YNAB for years and really, really like it. Ashley, since you’re already tracking your expenses, I think you’d have an easier transition to YNAB than many people do. I don’t have a smartphone, but I think YNAB has a free iPhone app that lets you enter transactions on the fly and view your up-to-date balances – basically like having your envelopes with you virtually.

    The biggest mental hurdle to YNAB for most folks (other than tracking all your transactions) is the idea of getting a month’s worth of expenses saved for your buffer. BUT once you have that (and it seems like this would only take a few months for you since your income has been so much higher than your budgeted expenses lately), budgeting based on last month’s income is so great.

    I think the initial software setup is not bad at all, but it can take people a while to get their heads wrapped around the system / rules that YNAB uses and how that applies to your specific accounts. But if you put the initial effort in for a day or two at the end of June to get things set up right away when you start the trial, you should be good for going out of town for the 4th.. There’s lots of help on the YNAB website and forums on getting things set up, how to work with different kinds of accounts, etc.

So, what do you think ?