by Ashley
I’ve run into a problem with living on last month’s income. In general, I think its an awesome thing and has been really valuable for us. But maybe you YNAB-ers can fill me in on how to handle this situation….
You’ve got a budget all planned for the month and things are going well. Mid-way through the month (and everything is on track), something costly comes up. It cannot be put off until the following month and it is 100% for sure going to blow your budget.
If you are living on your current month’s income then maybe you can try to sell some things, work extra hours, or do whatever it takes to boost your income. But if you’re living on last month’s income then your income is already set and there’s really not much you can do about it (aside from “cheating” and using money from the current month’s income and/or dipping into savings). How is this issue best handled???
Let me tell you what’s happened/happening…
Remember my friend whose getting married? Her wedding is at the end of this month. Remember how I talked about giving her a decent-sized check because I’d initially thought I might be a bridesmaid, but since I’m not incurring any of those expenses I’d like to put (some of) the money I would have spent toward giving her a nice gift? Wellllllll, apparently things have changed.
What is it about the wedding industry that sucks people in and forces them to get all hyped up on the hoopla even when they’re trying to avoid it? I swear, its like they tell you that if you don’t get the monogramed napkins and matching monogrammed floor sticker that your marriage is doomed to divorce. I don’t want this to come off as talking badly about my friend but….she got sucked into the trap. And now, all of these things that didn’t exist before (bachelorette party, bridal shower, etc.) suddenly exist.
I had already budgeted to give her and her husband-to-be some money. Initially I’d thought $100-$150, and I ended up budgeting for $100. But that is it. There is no more wiggle room in our budget. Now, with two weeks notice, I have been invited (and would love to attend) a mini bachelorette the week of the wedding. Nothing crazy or over the top, but it’s a night out that will NOT fit in my eating out and/or entertainment budgets. And although she said no gifts, I feel like there’s an inherent expectation of maybe picking up a round of drinks or showing up to the party with some of those fun penis-shaped straws and whatever bachelorette parties entail. This all, of course, costs money. Maybe not a lot of money (certainly nowhere near as much as being a “real” bridesmaid would have cost), but money nonetheless and money I don’t have in our budget.
I know many will say simply not to go. But even though we may not be life-long friends (we met 4.5 years ago), she is one of my best friends in the state. We moved here at the same time (for school) when we didn’t know anyone else and have been through some serious life transitions together (weddings, babies, graduation, employment/lack thereof). I want to support her. I want to be there. So then do I just go and not really participate? Don’t buy her a drink, don’t buy myself a drink, don’t partake in the festivities? Do I give her less for her wedding and put some of that money toward these expenses? What would you do?
And, back to the down side of living on last month’s income, what do you do if you simply have an expense that exceeds your monthly budget/allotted income? Where does the extra money come from? I know a wedding/party is a whole different situation than a real necessary expense (like, a car tire blows out and HAS to be replaced immediately), but either way, how does this work with the YNAB living on last month’s income system?
Suggestions? Advice? What would you do?
Hi, I’m Ashley! Arizonan on paper, Texan at heart. Lover of running, blogging, and all things cheeeeese. Freshly 40, married mother of two, working in academia. Trying to finally (finally!) pay off that ridiculous 6-digit student loan debt!
One day I took a long hard look back through our Quicken transactions and realized that we were having these unexpected but not 100% necessary expenses almost monthly. So, we have a small budget category just for that type of thing. Any not used is carried over to the next month. Once it’s spent, then no more for the month unless there’s leftover from another category. Fortunately, my friends and family are all pretty frugal, too, so it’s fine in our circle to back out of things due to more month than money. Yes, we’ve missed a few things, but not very many. I also over budget the variable categories, such as groceries and utilities. Many months there’s a few hundred left over there that we can tap into. Finally, I have a part time job where I can usually pick up extra hours to make last minute money. That’s what we did last month with an out of the blue LARGE car repair bill. We were able to pay it off without tapping into our emergency funds.
That’s a really good idea. I feel like I have a similar-ish category (i’ve called “other”), but it generally gets eaten up every month so there hasn’t been an opportunity to carry any money over. I like this idea though.
Honestly, we rarely have any left in that budget to carry over. But in theory…
That is a good point. I am also trying to live on last month’s income, and these little unexpected things pop up!
Unexpected expenses are the reason I don’t do a zero based budget. Life happens and you can’t always plan for it 4 weeks in advance. I budget all our expenses and savings and make sure I have a cushion left over.
Some may disagree, but when things come up sometimes you will have to reduce your debt snowball. It is great to be so focused on debt, but I would not take money out of savings to cover a non-emergency. I would reduce the snowball by $100 or so in this case.
I have a category specifically for birthdays (we send out cards to everyone, cards a some money to all the kids), holiday gift exchanges and unforseen events like weddings, graduations, etc. We usually have about $350 – $500 in this account.
We also have a second category for irregular and/or upcoming bills like car insurance, renter’s insurance, car maintenance. That fund also has about $500 in it – sometimes a little less.
We average the monthly cost of these irregular expenses and we put aside that amount every month – so it may take a few months to build up the savings.
That’s a good idea. After the girls’ birthday party I started a small birthday fund for them ($10/month), but maybe I could expand this idea to be birthday/gift giving in general and increase the amount slightly (maybe $25/month??) This could help leave a buffer for when stuff like this comes up.
If you read in the YNAB forums, you’ll see lots of talk about “whacking moles” and rolling with the punches. Things change, life happens, and this is where the personal in personal finance comes into play. No going is an option, so is raiding other funds you have set aside for future expenses, or dipping into savings. We do zero-based budgeting and have for many years, and through that experience I have a couple of levels of savings. There’s the “OMG I forgot!” fund, which would cover things like this, but that fund did not exist until I had a few occasions of unbudgeted items that were lack of planning on my part rather than genuine emergencies.
Perhaps you could go light on participation – bring a small gift, have one drink, leave early – and use some of the wedding gift budget?
I definitely agree with the savings. I have multiple savings and I would never dip into my emergency savings, but I could maybe dip into my “christmas” savings, you know? Its a psychological thing but one savings feels totally off-limit while the other could maybe be used. I’ve also thought about going light on participation. I don’t really know entirely what to expect (she’s basically said she wants a girls’ night, but that can mean just going to a bar, or it could mean dinner + downtown/bars, etc.), but I’m thinking I’ll need to go light on the drinking (I’m not a big drinker anyway), light on food (try to avoid if possible) and possibly end up giving her a little bit smaller wedding gift. Still not sure.
Thinking about this specific out of budget situation – although you have made great progress, it seems you are still trying to live the lifestyle you want not what you can afford. The bachelorette party is optional. How large a gift you give is optional. How much you spend does not equate to how much you care for her. Think through why you feel compelled to spend more than you can afford on this situation and then be happy with whatever decision you make.
You’re definitely right that how much I spend does not equate to how much I care. But I don’t know whether I agree about the lifestyle thing. This would be my first time going out with friends in over a year. I don’t think that’s unreasonable. On the other hand, I’ve been thinking a lot about sense of entitlement lately. None of us think we have this entitlement attitude that the coming generation reeks of, but some of this may fall into that category. I am not entitled to go to this event simply because I want to (though that’s almost how I feel…I haven’t gone out forever, so I deserve this). That’s one part of the equation, and something to ponder further. But then there’s also the personal aspect. This is a good friend. She’s been there for me when I’ve needed her. I want to be there for her during this important event in her life. It’s a reciprocation thing. It’s a hard decision.
As long as it is a conscious decision then relax and enjoy whatever you decide! I was trying to point out how we “expect” or acquiesce to spending situations rather than making clear decisions about the use of our hard earned money. I never gave up travel to visit family even when I was broke because it was too important. The value you place on this friendship is important to you so thinking about the best way to show her how much you care for her will probably make you happier than the paths of least resistance.
I’d start with your 100 gift and work from it. Pick up something funny at the dollar store as your gag gift. $5 max. Go to the party and talk the table into splitting the cheapest bottle or two of wine. Your share should run no more than $10. Eat off the the appetizer menu. Another $10 plus tax and tip. Be vocal at the start about suggesting the wine and the direction. You don’t have to be cheap, but folks are inclined to agree with what is suggested. Between your budgeted gift and a little from your existing eating out budget, you should still end up being able to gift $75, which is plenty generous. People who are real friends aren’t going to open your gift and complain that you only gifted $75.
I love these ideas!
My bachelorette was a group of girlfriends splitting a pitcher of margaritas at my favorite dive restaurant. It was low key, I couldn’t tell you what we ate, but I remember spending a few hours just laughing with close friends. I’m willing to bet your friend would be okay with something similar considering she wasn’t initially planning anything at all.
This sounds like THE MOST FUN!!! I wish I would have done something like this! As it was, I didn’t do anything too extreme (read: Vegas), but I had a couple girls go with me for the weekend to a nearby old-timey city and do some sight-seeing/hanging out. I felt guilty about costs so I picked up the tab for everything (hotel, gas, food) but, even so, only a couple people were able to attend. If I’d just done a simple night out in our own town I bet a lot more of my friends would have been able to make it and it would have been much more enjoyable (not to mention cheaper!)
I would take $40-50 out of my savings for this occasion, enjoy and celebrate with your good friend and then learn from it and develop a plan for future surprises. Start a surprise fund and contribute a little bit each month….budgets should be living/breathing documents that can flex with your life.
Definitely go and have fun though!
Can you take some money from your expected expenses fund?
I don’t have a category called that; I think you might mean my semi-annual bills account. I actually had to wipe it out when I paid for my annual life insurance premium. Right now it has $100 (only because I’ve already made my deposit from this month) and I’d be reluctant to use this money. My other savings categories include: car maintenance (has $300, but we’re expecting to have to buy tires in a couple months so want to leave it alone), dental/vision (has $185, but might have to dip into it if I get a health bill from my blood work that was just run), travel/christmas (has $150, could dip into it but Christmas is right around the corner!), 3-6 month expenses (will not touch this fund), dog/vet care (only has $40 in it) girls’ birthday fund (only has $40 in it), and my 2014 Roth IRA savings (also won’t touch this). Soooo, yeah. Doesn’t seem like a lot of good options. If you had to dip into one, which would you pick and how much?
Definitely not, Ashley , sheesh you are old enough to make decisions but as you decide to bare your financial matters you know deep down you can’t afford any of this money to be gifted due to the situation your dh is in work wise, if is a good friend she will understand that your friendship I’d more valuable than the emotional part of her wants.. Bottom line you know you can’t afford it so don’t . And quit asking advise sheesh you know what’s right and you font well then there’s a problem. Harsh yes but your an adult mother
Ashley, I love reading your debt journey, but frankly, all these categories are exhausting!! What if instead of living on last month’s income, you tried each month to spend as little as possible? (Which, hopefully, will be less than or near a low-end monthly income.) The rest, you save and pay toward debt. Sure sometimes you’d need a splurge and sometimes you’d go over, but most months you’d have savings and debt payoffs. If you ask a millionaire (or a chronic saver) if they have an ’emergency fund’, they’ll get confused and say they don’t. But they certainly have money in liquid accounts available for emergencies.
I say, go over a little this month and know it’s ok because you did so well the last several (or more!) months! Nickel and dime so that you don’t always have to nickel and dime.
Of course, this is what works for me. If the categories and subcategories help you, the proceed on! Thanks for sharing your journey!
I definitely understand! I’ve had a couple of comments across the course of my blogging history that have suggested simplifying into one general savings fund. I’ve always been a natural “splitter” (as opposed to a “grouper”), not just with savings but with EVERYTHING. Another example: I might have a work project that I split into 15 different components and tackle each one individually. Or if you look at my desk I have different stacks all over the place – a separate stack for each thing I’m currently working on. It may look like a mess (or seem exhausting), but it works for me. I like having things compartmentalized. : )
Fair enough 🙂 It’s tough to put it all out there for everybody to judge, but I really do enjoy reading!
I think you should go and enjoy yourself. I’d also give her $150 for the wedding. I realize you are on a debt journey however she’s a great friend and that’s the difference. You’ve been through some stuff together. She’s supported you and you’ve supported her. You don’t have to be cheap and you don’t have to go overboard. Instead, enjoy yourself but be respectful of your money and spend wisely. I’d spend less on the debt repayment this month if I had too. I should also say that if this wasn’t such a good friend, my response would be different. It’s her day and an exciting time in her life. What makes these times even more special is when your good friends are there and that means you. You are still coming out ahead by not having to do the whole bridesmaid thing. Go ahead and go. I hope you have a great time:)
I would say find a way to go and enjoy yourself. I’ve skipped events due to lack of wanting to spend money allotted for other items. Truth is I regret and miss not going to those events. Don’t blow hundreds of dollars, but go and celebrate your friend.
i think i’d definitly stick with the “living on last month’s income” because it makes everything so much more predictable.
I guess like Den suggested, I would allocate (more) money to an “unexpected” or “surprise” category to help you stay on top of things… then if those $50 / $70 /$100 or however much you decide to contribute toward that category aren’t needed this month, they can go straight to debt.
tons of suggestions.
personally, I have a savings account that’s for stuff like this. WHat’s in it determines what I can afford to spend. it covers, wedding/birthday etc gifts and dinners. Pocket money if I travel and random nice to do things but not necessary. I think you can simplify or merge some of your savings.
in this particular instance, I would just take it from another category. Like my mother always says, money is fungible. yes you have all these categories, but they exist in your head. I try to stick to my categories but my overall goal is not to spend more than planned for the month – IN TOTAL. so if eating out was $80 over but then I spent $80 less on groceries and gas combined…then I don’t mind. only caveat, I try not to reduce the money that goes to debt or savings – but then even then, that’s what happens on occasion.
It’s hard to stick with a budget. You have $100 that is towards the “gift,” you should put part of it towards the bachelorette party. When you need to buy a round of drinks, you should remember that you only need to buy the bride and yourself drinks. Regarding the gift, if your friend did an invitation, you can have it framed, perhaps by using a groupon to save part of the amount. If you don’t like the framed invitation idea, you can contact her photographer after the wedding, buy 1 print, and get it framed. I have received both of these gifts and they are the ones I recall the most.
Tough decision…. However, as you think about how much the bachelorette will cost you, keep in mind that if you go the group may decide to split the bill evenly without accounting for how much each person consumes. So, even though you get one drink and an appetizer, you may still end up subsidizing another bridesmaid’s steak in addition to whatever the bride has.
One option I just thought of, and I don’t know if you have time for it, but you could talk to your friend, explain the money situation, and then offer to help with wedding errands in lieu of a gift and/or attending the bachelorette party. I’m sure there’s a bazillion things that she needs to get done and if you can take some of the load off she’d appreciate it!