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Posts tagged with: YNAB

The Downside of Living on Last Month’s Income

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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?


Ashley’s June Budget

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Hi all! Happy Independence Day to the U.S. readers! I hope you all have a safe, happy, and healthy long holiday weekend! I’ve scheduled this post ahead of time because I’ll be spending time with family all day today. For those of you who would like an update on our Utah trip, we decided to split the drive into 2 days on the way there and drive straight through in 1 day on the way back. We’re coming back Sunday (meaning, we won’t be home until late Sunday night). I’ll try to write a post with this trip’s expenses as soon as we return.

I promised an update on our budget for the month of June. This was my second (and last) month of trying to do the envelope system. This month I’ll be using the YNAB free 30 day trial (and it sounds like some readers will be doing it with me!). I’ll certainly update about my experiences with that along the way, but for now let’s cut to the chase of how I did with our June spending.

Overall, we didn’t do terrible. I feel like I’ve given you a ton of budgets lately (“old” and “updated” – see this post), so instead of boring you with yet another budget, let me just give you the bottom line.

Here are our budgeting “fails” for the month:

  • First: We went way over with groceries. I had budgeted $380, and spent $453. Some of this was due to expenses from hosting the toddlers’ second birthday party. But some of it was just due to unnecessary spending on ‘gourmet’ grocery expenses (like cheeeeeese), and a big Costco trip. I have raised my grocery budget back up to $400 (where it was set prior to starting blogging), and I am excited to stick to the $400-limit. I will NOT go over this month. I will NOT go over this month. I will NOT go over this month. If I say it, it must be true. Yes? (psssst: but using the YNAB system, its okay if I go over a little because I can take that money from another category).
  • Second: We failed on our “eating out” budget. I had budgeted $75 and spent $149 (nearly double!!!) The funny thing is that I really don’t even remember eating out much this month. Then I look at my spreadsheet and see a string of drink stops (Starbucks, Sonic, Wendys – who has the best strawberry lemonade in the world!) All of these stops, individually, is only in about the $4 range. But they sure did add up! There are only 2 actual dinners out….ALL the rest of the expenses are little trips here and there that added up. This was total lack of constraint on my part. I WILL do better this month!

And here are our budget “successes” for the month:

  • First: Our childcare expenses were much lower than normal this month, so we saved a couple hundred dollars there.
  • Second: I was proud of myself in that I was “under” budget in all of my “miscellaneous” categories besides eating out (to jog your memory, the other categories include:  entertainment, personal maintenance, and “other”). I’m thinking I might be able to lower the “other” budget a little but I want to wait a month and see how things go. I was barely below budget this month ($120 out of $125 budgeted), but since I’m saving for so many different things now, I’m hoping I can reduce this category of spending.

All of my other expenses were pretty much in-line with what they should be (either at- or under-budget). The only other categories with higher spending were in debt payments (where we paid nearly $2000), and my gym membership (since the first month I had to pay $240 – to account for first and last month’s payments + an initiation fee). This should decrease back down to $70. (Side note = I realized in my updated budget I had my gym line-item as $50, but that’s the base fee…I’m paying an extra $10/child for gym childcare, so the monthly cost should be $70).

Whew! Lots of words! Now onto some numbers:

June Income: $9406

June Expenses: $5706

Income – Expenses = $3700 surplus (woohoo!!!)

 

How will we spend the surplus?

$500 = snowflake payment toward Chris’ license fees

$3200 = put money in savings (to build up one month’s living expenses)

I made our license payment earlier this week and it amounted to $1569 ($1055 regular snowball payment + $500 June snowflake payment + 14 extra for the processing fee). This brought the total amount due to just under the $2500 mark (at one point this was over $10,000….though when I started blogging here in March it was just under $6,000). I’m excited to think/hope that the license will be paid in full by August AND that we will hopefully have enough set aside to start living off of last month’s income in the month of September! Fingers crossed!!!

How have you done on your budget lately? Left with “more month than money”? (< a Dave Ramsey saying) What are you doing to try to cut expenses and/or make more money?