Sunday, May 27, 2018

How to Get Started with YNAB


Last week marked a special anniversary in our household - we celebrated two years of budgeting bliss with YNAB. This is worth bragging about, because You Need a Budget is more than a app. It's a lifestyle and a way of thinking that completely transformed our finances.

Like a lot of people, I didn't have great mentors when it came to money or any kind of financial education. I still have a lot to learn (like investing, and mortgages, and how to retire before I'm 80) but these days, I can confidently say the day-to-day stuff is under control. We know exactly where every penny of our money is going, we plan ahead for upcoming expenses, we have zero credit card debt, and we live well below our means. These are all hard won victories, and YNAB was our not-so-secret weapon. 

I've sung YNAB's praises so often and to so many people that I have a ready-to-go introductory email I send to folks who are interested in learning more. Because I love spreading the budgeting love, I decided to publish that email as a blog post. Think of it as a love letter from me to your bank account, and may it lead to budgeting bliss for you, too. 

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First things first: here's my referral link. We'll both get a free month if you use it to sign up, which is an excellent way to start your new financially-savvy life! 

Second things second: this app has a learning curve and some quirks. I've been using it since May 2016 and it took me a few weeks to really get the hang of it, but it's absolutely worth the initial effort. So don't give up, even if it frustrates the heck out of you! Pain is temporary, but debt is forever - unless you stick with YNAB. 

Finally, I'll be up front with you: this software is not free. After the 34-day trial, it costs $84 per year, which works out to less than $6.99 a month. I got two weeks into the trial, realized it would change my life, and immediately started a paid subscription. Worth every penny. (If you need more convincing, check out this guest post I wrote for the YNAB blog because I'm a huge dork.)

If you're brand new to YNAB, the two things that you need to know to get started are the power of embracing the YNAB mindset, and the magic of setting up your categories.

The YNAB Mindset


Why, yes. This is a custom illustration of me, made by YNAB, to accompany my guest post on their blog.

The basic idea behind YNAB (that's pronounced "why-nab" if you're cool, which you are) is that you decide what to do with your money BEFORE you spend it. This is key. YNAB's language is to "give every dollar a job," which is really just a glorified way of being intentional with your funds. How does this look in real life? Well, the second I deposit any money (IE, pay day, freelance checks, birthday cash) I figure out what those dollars need to do before I get paid again, which means assigning a category to every single cent. Rent, groceries, dog food, wine - it's all there, and it all gets a piece of the pie. 

Later, when I spend money, I log it and categorize it (for example, a trip to my beloved Trader Joe's counts toward "Groceries") and it automatically deducts that expense from both my overall balance and that category. You can do this using the smartphone app or on your desktop. Personally, I do most of my budgeting on my laptop and log transactions as I go on my phone. You can also import transactions directly from your bank account, like in Mint, but I prefer to do it manually. It makes me more aware of my cash flow and really just takes a few minutes a day to make sure my YNAB balance matches what's in the bank. 

Now, here's the part that everyone has trouble understanding: you only budget the money you currently have, not money you expect to get later. So even though I am salaried and could feasibly budget a whole year at once, I only budget my money as it hits my bank account, and not a moment sooner. Let's face it - life is wild, and anything can happen. When it comes to your finances, don't assume anything and work with what you have, when you have it.

How this mindset has changed my finances: In the past, I'd feel the desire to go out to dinner and would dutifully check my bank account balance because I was "responsible." I'd see some money there and think, great! Cash to burn! Then, a few days later, I'd realize that our annual car registration was due, or the dog had to go to the vet, or I needed to buy someone a wedding gift, and curse past-Chrissy, who had frittered away all her funds on tacos and beer.

Now, I almost never look at the balance in my checking account. Instead, I look at individual categories. I feel the desire to go out to dinner? Then I pull up my budget, glance at the "Dining Out" category, and see what I'm working with. If the car registration is due, no problem - I've been setting aside a few dollars every month, so the money is just sitting there, waiting to do its job. Life still throws us surprises, but they're no longer a daily occurrence. My balance has achieved balance.

Setting Up Your Categories


A screenshot of June's budget-to-be, with dollar amounts whited out because privacy.

So now you're thinking, "Categories, eh? How do those work, and why are they so magical?" Friend, I will tell you.

YNAB comes with pre-set categories for common expenses, like rent, utilities, Netflix, etc. Because we are each special and unique beings, you can and should customize these categories to suit your lifestyle and needs. I added ones for alcohol, Calvin, and donations, for example. You can also move money from one category to another as you go, which is why I joke that every now and then I have to borrow money from my dog.

This system works best if you keep your most important and inflexible categories, which YNAB call "Immediate Obligations" (like rent, electric, water) at the top, followed by "True Expenses" (groceries, gas, clothing), followed by "Just for Fun" (dining out, fun money, booze) at the bottom. This helps you prioritize, because you just kind of work your way down the list until you have no more money left to budget. (As you can see from the screenshot above, I renamed these "Monthly Bills," "Everyday Essentials," "Treat Yourself," "Future Funds," "Annual Expenses," and "Long Term Savings," because I love a good theme.) 

Also, if you need to adjust your budget, you know that you can transfer money from the "Just for Fun" categories pretty easily, but should probably stay away from the "Immediate Obligations." 

One of the best parts for me has been a category I created called "Future Funds." This is stuff I want to save for in the long term, like plane tickets, birthday gifts, or other big-ticket item. YNAB also encourages you to add your savings account (I have one, thanks to YNAB) and assign those dollars jobs, too. 

So, instead of having a $2,000 in savings just sitting there, you have $2,000 sitting there, but you have it assigned to categories, like $1000 to emergency fund, $500 to new car, $500 to collapse of society. Same account, just a different way of looking at it. Plus, when you tie a reason to pile of cash, you're less likely to spend it on something else.

How creating categories has changed my finances: Like everything else YNAB-related, setting up your categories is an exercise in intentionality. It forces you to examine what you spend money on, and decide whether it's worth creating a space for it in your budget. (Do my chickens have their own category? Yes, they do.) Categories are also a great way to make your goals seem real and possible. For example, I have a category in my Long Term Savings group called "Dream  Home," which I would like buy someday. I also have one called "40th Birthday Trip." It's empty right now, but every time I open my budget, I see it. I'm reminded of that goal. And soon I'll start funding it. One step at a time.

Budgeting vs. Spending


YNAB also has cool charts and graphs. That big spike is when I bought a car, mostly in cash. 

A quick note: it's important to remember that budgeting is not the same as spending. While you budget every dollar, you shouldn't spend every dollar. Ideally, anyway. Sometimes a dollar's job is to sit there for a very long time, in service of a long-term goal (like "Dream House") or for peace of mind ("Emergency Savings," anyone?).

YNAB is like learning a language - the best way to become fluent is to immerse yourself in it. So start your free trial, set up your categories, and start thinking about you want out of life and how your budget can help you achieve those goals.

I've really just scratched the surface of YNAB, so here are two more resources to help you out as you begin your journey. These videos are great - I watched both of them (they're about 30 minutes each) while drinking a glass of wine, and that's when things really started to click (and why I now have a "Wine" category): 





Try it out and let me know what you think! Drink a glass of wine while you watch the videos! Become a financial rock star! I'm still working on that last step myself, but thanks to YNAB I feel like I'm on my way.

Thursday, May 17, 2018

Right Here, Right Now: Spring 2018


I have a lot of half-finished budget-friendly blog posts in my drafts folder - an intro to YNAB, a review of Republic Wireless, a chicken update, a mediation on the power of plans - but I don't feel like working on any of those today. I have 30 minutes before I need to get ready for work, it's a dark, wet day, and there's a full cup of coffee on my desk. In other words, the perfect morning for a little life update. So, in that spirit, here's what I'm currently up to. 

Watching 


A lot of Jeopardy!, mostly. We've been watching consistently for about two years, and I'm getting better and better at the game. It's not so much about what you know, but more about what you know about Jeopardy!. Plus it feels better than "regular" TV, since it forces us to think a little bit. We don't always get a chance to watch it at 7:30 pm, but here's a hot tip - the Jeopardy! subreddit has a thread for each night's game, and in that thread a very kind soul posts a link to the episode, which he uploads to Google Drive, every single day. I'm not a religious person, but I'm pretty sure he's an angel. 

Eating 


Protein, baby! I hopped on the macro train and spent a few days analyzing the balance of my diet, and guess what? It was about 90% carbs. After some trial and error and a few new habits, I was able to get that balance to a better place, and maybe it's psychosomatic, but I feel leaner, stronger, and more energetic, especially in the afternoons. I'm also spending a bit more on food, because as it turns out simple carbs are really cheap, but hey. Health comes first. 

Reading 


Somehow, this has been the slowest year for reading yet. I've only finished eight books so far! To be fair, I started and abandoned multiple books, but still. Right now, I'm reading You Think It, I'll Say It by Curtis Sittenfeld, and I'm about to start What We Lose by Zinzi Clemmons, which is May's book club pick. My to-read list grows every longer, so hopefully these long and light summer days will offer more time for books! 

Writing 


As always, I am working on my novel. As always, it's a slow, plodding affair, filled with starts and stops. Every time I have a breakthrough, it requires more work than I anticipated, but things are moving forward. In the meantime, I've cheated on the book a few times with shorter pieces, and one was published yesterday in Flyway Journal! It's called "Material Remains," and it's about two sisters, a family tragedy, and a very deep hole filled with strange and sinister things. I'd be honored if you checked it out. Also, if you like my writing and want more, I have a website with links to almost everything I've published. 

Spending 


Too much! We still have a budget, of course - in fact, I celebrated my two-year YNABiversary over the weekend via a shopping spree at Costco (oops). Still, I've gotten in a bad habit of spending most of our money in the first half of the month - probably because we both get paid on the last day of the month. Once it's gone, however, it's gone. We don't pull from savings or move too much money around. We just suffer. So if you see me eating beans and riding my bike more during the last few days of May, that's why. 

Planning


Speaking of spending, we have a few trips coming up over the next few weeks, and I am very excited for them. One is a weekend on Long Island for my sister's baby shower (I'M GOING TO BE AN AUNT!!!) and the other is a trip to a mysterious location for my Texas BFF's 40th birthday. I say mysterious because we're still deciding where to go - stay tuned! I know I will. 

How About You? 


Tell me what you're watching, eating, reading, writing, spending, or planning right now. I'm super nosey and I'd love to add some new things to my list! 

* Amazon links are affiliate and I may earn a teeny tiny commission if you click them. Thanks! 

Sunday, April 29, 2018

5 Frugal Things: Spring is Here!

Two Sundays, two blog posts. Maybe this one-new-post-a-week routine will finally stick! In this week's update, we return to an old favorite: five frugal things. Big or small, every choice that keeps a little more cash in my bank account is a win. Here are a few ways we're staying on budget, despite the siren call of spring. 


1. I bought a last minute plane ticket to New York.


A few weeks ago my mom fell at work and broke her hip. After surgery and some new screws, she is healing well and should be back to normal in a few months. In the meantime, she can't put weight on her leg and has been stuck at home. Thanks to my budgeting powers, I was able to buy a plane ticket for relatively cheap and spend a few days entertaining her. And, because my job is awesome, I worked remotely from my parents' kitchen table, which means I didn't have to use PTO. While the trip wasn't the most exciting (we watched A LOT of HGTV and MANY Lifetime movies) I was grateful for the ability to show up for my family without putting anything on my credit card. 

2. We paid off our truck.


Two summers ago we bought a truck from Nathan's parents. We made a down payment and have been paying off the rest in very small monthly installments ever since. This debt wasn't high on my list of things-to-pay-off, since it was essentially an interest-free loan, but as we got closer to $0, I became more eager to see it gone. Last month I moved some things around, cut a few extra corners, and came up with the last $500 a whole three months early. I sent it off and was very pleased with myself, only to discover that, according to my father-in-law's calculations, I had actually overpaid them by $125. "Are you sure?" I asked. "Yes," he said, and who am I to argue? So they gave us a refund and I put it straight into our vacation fund. (We have a lot of travel coming up this summer and fall.) Next up: paying off my car by the end of the year. 

3. I attended a meeting about my new retirement benefits. 


My company recently switched 401K plans. Last week, we had an introductory meeting  with our new financial advisors during which they walked us through all the nuts and bolts. Next week, everyone in the company can sign up for individual meetings with the advisors for more specific guidance, and you better believe I grabbed a slot! Now that I'm an expert at budgeting and successfully living well within my means, the next step in my financial journey is figuring out how to retire before I'm 80. I'm really excited about all these new perks and also the chance to talk to a professional about the best path forward. I'll keep y'all updated! 

4. We started selling eggs again. 


It's spring, which means my chickens are laying eggs again! A chicken's cycle is tied to the length of the days, so during the dark winter, they slow down production significantly. Some people keep a light on them to trick their bodies into laying year round, but I feel like the ladies deserve a break, as inconvenient as it may be. In the spring and summer, though, I remember why I love keeping chickens. I've already sold two dozen to my neighbors, and I have another 12-pack ready to go. While the extra cash the ladies bring in is nice, I really love knowing that my friends and neighbors are enjoying more eggs from happy, healthy, free-range hens. 

5. Our windows are wide open. 


North Carolina is a land of extreme weather. We had perhaps the coldest winter in recent memory, and our summers are hot and incredibly humid. Spring, while brief, is a gift - it's warm but the mosquitos have not yet arrived. The mornings are cool enough to run without drowning in your own sweat, and the afternoons are the perfect temperature for drinking a beer in the sunshine. And, most importantly, we can open our windows. This means that we're not running the heat OR the air conditioner. I try to stretch this season out as long as I can - one year, we almost made it to July before we broke down and turned on the AC - not just because it's a literally a breath of fresh air, but because I also love the lower electric bill. 

Have you had any frugal wins lately? Share them here, on Twitter, or tag me on Instagram, which is where I've been spending the bulk of my online time these days. More soon! 

Sunday, April 22, 2018

The Next Big Thing


Most of us are constantly looking ahead, instead of paying attention to what's right in front of us. How many times have you scheduled a trip or an event because you "need something to look forward to?" How often do you count down the minutes until 5pm? How often do you skim past most posts on social media, only pausing to comment or like on big announcements - the wedding, the baby, the new job?

In fact, you may have seen the title of this post paired with the image above, and felt a small thrill of anticipation. Is this post an announcement? A reveal? Am I about to embark on a new adventure and turn my world upside down?

Sorry to burst your bubble, but the answer is: none of the above. There are no big changes on the horizon. I am not on the cusp of a cosmic shift. Everything is fine; I'm just chugging along. And even though things are mostly good, steady and fulfilling, I still feel a twinge of wistfulness, a tiny voice whispering "But what's next?" in my ear.  

I started thinking about this phenomenon when I followed the Boston Marathon earlier this week. Watching Desi Linden cross the finish line to win first place, 11 years after she first ran the race, made me cry at my desk. (To be fair, I cry easy.) The cold, the pouring rain, the fact that her winning time was not even her fastest, the way she hung back for a teammate and still finished first. What a race! What an accomplishment! What a Big Thing!  

If my first response to the Boston Marathon was tears, the second was jealousy. I, too, wanted to do something big. Not run a marathon, exactly (though I am not opposed to taking on 26.2 again one day), but something exciting and impressive, that required hard work and sacrifice. It's been a while since I've set a big, scary goal and worked for it. (Not counting novel-writing, which is a goal so big and so time-consuming that it's just part of the fabric of my life, a fear I live with and write through nearly every day, and nothing, at this point, out of the ordinary, which I guess is a pretty Big Thing when you think about it, but I digress.)

I'm not sure what my next challenge will be. There are some things I've been meaning to try, some directions I'd like to push myself in. Lately I'm drawn to physical challenges. This past winter, I started focusing on speed during my runs, and set a new half-marathon PR. I've been lifting weights at the YMCA, watching tiny new muscles grow. I've been eating more protein. I'm not sure if these changes will lead to a new Big Thing, or if I'll simply enjoy feeling stronger in my body. I suspect not everything I do needs to be a Big Thing, that really I only need one thing at a time. All I have to do is figure out what it will be, and how big. 

Sunday, March 25, 2018

A Simple Trick For Building Better Habits

(I'm going to ignore the fact that I went two months without writing a blog post. I blame a combination of work, novel-writing, and the coldest Wilmington winter ever. In other words: life.) 


There's nothing I love more than a good habit. This proclivity isn't because I'm smack in the middle of my 30s, either. Even in my wild youth, I always made my bed first thing every the morning. Always buckled my seat belt as soon as I got in the car. Always washed my bowl when I was done eating.

Of course, I have bad habits, too; nobody is perfect. One habit that I've touched on a bit was drinking a glass of wine (or three...) at the end of the day. In my "Best Budget Wins of 2017" post, I mentioned that I'd cut down on my drinking, which was better for my wallet and my health. This habit was especially hard to break, because relaxing on the couch with a delicious beverage had become routine. Not only that, I enjoyed it! What I did not enjoy, however, were the slow mornings, the extra calories, and the fact that alcohol was such an integral part of my day. (Coffee, on the other hand, is a totally acceptable crutch.)

So, I decided to cut back and it was not nearly as hard as I feared! Here's how I did it, in three simple steps.

1. Set a measurable goal. 


"Drink less" is a great idea, but it's not specific enough to work as a goal. After all, less is relative. It would be easy to rationalize that two drinks on a Tuesday night is less than three, or one bottle of wine on a Saturday is less than two. Yes, I'd be drinking less, but the benefits at that point are negligible. Plus, I know myself. I am very disciplined - until I start drinking. One sip and all bets are off. So for me, the best route was to skip drinking entirely. I started with two evenings a week, and I could choose any evenings I wanted. At the beginning of the week, I'd look at my calendar, see what was going on, and identify ahead of time which days were best for not drinking. Book club was out, obviously. But a night when I had a run scheduled after work was perfect.


2. Find a healthier replacement. 


One thing I discovered was that it wasn't so much the glass of wine I loved, but the ritual of a special drink at the end of the day. Settling onto my couch between my dog and my husband, especially during the cold winter months, while sipping something delicious and shouting out the answers to Jeopardy! is, for me, the height of relaxation. So I knew it was important to find a replacement beverage that would scratch that same itch. I'm not a fan of La Croix or seltzer, so I asked for an electric kettle for Christmas and bought myself a bunch of herbal teas. And wouldn't you know it - holding a hot cup of tea is way cozier than a bottle of cold beer.

3. Keep track of your progress. 


This is my favorite part. I love tracking things - I have more spreadsheets than I care to admit, tracking all sorts of mundane-to-anyone-but-me facts and figures. After trying out a few different apps, I downloaded HabitShare (available via Google Play and iTunes) and it's awesome. You create a habit, set a goal for how often you want to accomplish said habit, and then start tracking. Keeping track is simple - a green dot means you did it, red means you missed, and gray is a skip. Here are two screenshots of my booze-free progress for February and March:


My twice-a-week goal ended up feeling so good that I upped it to three times a week at the beginning of 2018. Most weeks, however, I actually hit four. As a bonus, I've also found that when I do drink, I imbibe less overall. For example, I drank four days in a row this past week, but I only had one beverage each time. So a total of four drinks for a whole week - not bad, especially compared to what I was mindlessly drinking out of habit just a few months ago.

I like HabitShare so much that I now have a bunch of things I'm tracking - a daily writing goal, a goal for workouts, a reading goal, etc. When I lie in bed at the end of the day, it feels great to go through my habits and check off the ones I accomplished. Some days are better than others, which is why I like looking at the month as a whole - it keeps things in perspective and helps me see how my habits are building over time and affecting one another. The less I drink, for example, the more I run and write and read. A fair trade, I'd say.

Do you have any tricks for tracking habits or creating good routines? I'd love to hear them!