You need a budget (YNAB) advice thread

Mysteek

Hello YNAB'ers, well I tried the trial and decided to buy the full version (through Steam at £29.99) as I am a control freak and I like the fact it allows me to be in control:D

Now Rule 4, living on last months salary. Have I sussed this out correctly or not?

I get paid on the 24th of the month and that money is used for bills between the 24th of that month and 23rd of the month following. So I figured I was already part way to living on last month's salary..... right?

I then took the money from my savings (in ISA building up to pay off 0% credit card when it becomes due), to budget for the bills between 24th of this month and the end of this month. Then when I get paid on 24 May I will then mark that income for available next month (June), and so on.

Am I truly living on last months salary or have I got my knickers in a twist!!! :rotfl:

SeduLOUs

Mysteek wrote: »

Am I truly living on last months salary or have I got my knickers in a twist!!! :rotfl:

I get paid on or around 28th of month, and use that money for the following month (i.e. pay on 28th May funds all of June) so technically, this is living on last month's income and obeying the rule.

Realistically though it doesn't leave a lot of leeway, and the spirit of the guideline is to be a full month in advance. It's aimed at the people who anxiously await pay day in order to be able to pay bills due only a few days later, which is always risky if the pay doesn't appear on time for whatever reason.

For us I would take it to mean getting paid at the end of May and using that pay to pay all of the bills in July.

But it doesn't mean you need to fret about it either! Whatever works for you is the best method - some might only be budgeting for one month of bills in advance but be sitting on 3 months worth of income in savings, and would still be in quite a secure position.

You just need to find a position that allows you to budget your money as far in advance as you want to be able to, whilst having an appropriate safety net in case the pay packet doesn't arrive on time or at all - how you handle this in YNAB (either budgeting in advance or holding a large emergency fund that you can use if necessary) is entirely up to you!

Frogletina

Mysteek wrote: »

Am I truly living on last months salary or have I got my knickers in a twist!!! :rotfl:

Yes, you really are living on last month's salary.

When I was working on spreadsheets, I showed my income in the month that it was received - but it was actually monopoly money, as it didn't exist for most of the month. My income and expenditure spreadsheet only balanced with my bank accounts at the end of each month.

In January, I decided that was not the right way to do it and I transferred a month's income from my savings to show as income for January.

I started Ynab in February, and ever since then my income when received is shown as income for the following month.

frogletina

Mysteek

Thanks SeduLOUs and Frogletina for your replies, I think 'technically' works for me at present. Any achievements, however small, help to give me a psychological boost whilst I am debt busting. I don't have a 'buffer' or emergency fund at the moment, preferring to put any spare money to killing that debt. In future, though I would like to save a full month's salary to give me that extra protection should anything go wrong. So I am not 'obeying' YNAB rules in order, but I like to be different



Yoo hoo! I am living on last month's income yay!! :T

SeduLOUs

Mysteek wrote: »

Thanks SeduLOUs and Frogletina for your replies, I think 'technically' works for me at present. Any achievements, however small, help to give me a psychological boost whilst I am debt busting. I don't have a 'buffer' or emergency fund at the moment, preferring to put any spare money to killing that debt. In future, though I would like to save a full month's salary to give me that extra protection should anything go wrong. So I am not 'obeying' YNAB rules in order, but I like to be different



Yoo hoo! I am living on last month's income yay!! :T

Paying debt is by far the most sensible approach - it will cost you more in interest if you save money instead of paying down debt.

Assuming some of the debt is credit cards, you are creating an emergency fund by freeing up available credit on the cards - I know you don't want to use it, but as an absolute last resort it means that you do have access to some funds.

ShirePiskie

Hey YNABers (said in a Jesse Mecham voice). Does anyone else listen to the weekly podcast?

A few weeks ago there was something about accepting a reality. Which really resonated with me.

Each month I do a bit of jiggling and reduce what goes into my buffer to move in to, effectively topping up my grocery and spending money categories. Not loads, usually about £20 in each...

...yet each month I still budget the same amount in each category, repeat, repeat, repeat.

Anyway, for May, in setting my category allowances I decided to use the 'use the last three months' outgoing button... so upped my budget in each a little AND NOW, with a week of the month still to go I'm probably going not going to spend all of my money in each category.

It's weird. By allowing myself more money to spend, I'm spending less! I don't know if part of it is "well, I've run out of money on that category and stealing it out of the buffer will compensate so I might as well spend it" has been stopped. A bit like dieting? Well, I've had a doughnut I might as well have a cream cake and a sausage roll, the damage is done???

So hopefully there will be left overs in those categories on payday and these will be tidied up and moved to the buffer!

That all makes sense in my head!

headachesrus

I'm still in my first month but makes sense to me! Can't wait for the end of the month so I can budget June!

FireWyrm

I think you might be right. I used to suffer from the 'head in the sand' mentality. I budgeted money, I missed every month, I just topped it up from the buffer, rinse and repeat. By acknowledging reality (I'm spending more) you have the confidence to say, yes, I want to buy that thing and I have the money to do it, rather than, oh well, spent it so might as well be hung for a sheep as a lamb.

Just as a by the by, if you do have money left over in categories, I usually push that to an 'ad-hoc' buffer for the master category instead. That way, if you do have a bad month, you have a teeny weeny buffer you CAN pull from legitimately without hitting the main one.

For instance. Here is a screenshot of my Food master category. I have £250 to spend, but this month, I have spent far less. I sent that excess to the 'overflow' and it will just sit there for when I have a 'bad' month in the future and need a little extra top-up.



The main account buffers are completely intact and untouched. I dont need to worry about slight overspends because the food buffer is available to me.

ShirePiskie

Ooooh, am liking sub-buffers!

FireWyrm

ShirePiskie wrote: »

Ooooh, am liking sub-buffers!

I have sub-buffers for all the main categories and it seems to work out pretty well. The buffers are there if you need them and the main get ahead buffer is kept for the correct purpose. You end up with quite large balances in the accounts quite quickly this way. In the meantime, if there is a disaster, the sub-buffer naturally counts as part of the main buffer if you need it to since the priority would be to deal with the disaster rather than an accidental packet of doughnuts.