Spinoff-Those using YNAB

[FairestOfThemAll37]

So I've seen it mentioned recently on my own thread and a few others and countless times in the past.

For those who use or have used YNAB: what made you try it? What were your goals for using it? Pros/cons? Is it of any use if you have a decent handle on your budget (ie. Don't have CC debt or "overspend")

Give me the skinny. I'm very curious as online reviews make it seem like finding the gates to heaven.

 

[DisneyMandC]

Following along. I'd never heard of YNAB until coming to this forum. I've read good things, and now I see where one of my favorite bloggers wrote on it today as well and said she loved it. We aren't necessarily Dave Ramsey followers, but I've read one of his books and am interested in assigning a job to every dollar, which it sounds like YNAB is good for.

 

[disneymagicgirl]

I have used it for going on 3 years. It is great for tracking spending even if you don't have debt, which we don't.
I also like that I can keep my DH work expenses separate and when he gets reimbursed I put that income straight into those categories.
I also have a second budget set up in there with our rental properties so I know how much extra cash is in my account earmarked rentals for things that come up.

 

[RobbW]

I just started using it a couple months ago, and I love it! I've been using Quicken Premiere and its budget function for 15+ years, but it never really seemed to help me keep tabs on our family's spending vs. budget very well. Quicken kept the spending and budgeting functions too separated. Also, it is too automated; not that I would normally EVER complain about things being too automated. But Quicken automates the task of recording and categorizing your spending so much that you kind of become disassociated from your spending vs. your budget. Also, with Quicken and most other regular budgeting programs, you (or at least I do) try to schedule/budget your entire year's spending all at once.

YNAB is very, very different from what I've been used to with Quicken. Rather than try to budget all your spending up front (months in advance), you simply start fresh with a clean slate and just budget out each paycheck. When you get paid, you go into YNAB, enter that income, and then budget out every single dollar. That's one of the major tenets of YNAB. You need to give every single dollar a job; be it paying bills or building up a savings fund.

So, what you do is take your paycheck and budget out your necessary spending until your next paycheck. What needs to get paid between now and the next time you get paid? Start with your highest priority items, budgeting each of those, and then work your way down to your discretionary spending.

It sounds like a lot of work. And, sure, it takes a little extra effort at first, but once you get the hang of it, it actually works very smoothly and quickly. It's also very fluid and dynamic. You don't trap yourself with very stringent spending budgets in each category every month. If you're getting close to running out of funds in a particular budget category before your next paycheck, you can easily move some funds over from a different category in which you haven't spent as much as you thought. It takes a bit of a mind-shift to get used to this dynamic budgeting method. I was so used to setting rigid monthly budget amounts and trying not to go over them that the YNAB method seemed very foreign at first.

Probably the coolest thing I love about the YNAB method is that you never have to worry about making sure you have enough money on hand to pay all your bills. Since you are only budgeting out the income you have actually received, the money will be there to pay the bills when it's time. Well, as long as you stick with the YNAB method and don't completely overspend your budgeted categories. You see, all you've done is budgeted out only the money you actually have. So as long as that's all you spend, you don't have to worry about if there's enough money to pay the bills. Just go ahead and pay them!

YNAB also makes it VERY easy to set up separate savings buckets, fund those savings buckets, and keep track of them. Vacation savings, new car savings, household improvement savings, holiday shopping savings? Set up a different budget category for each and let YNAB keep track of them. Many people set up several physical savings accounts with their banks to keep all these different savings funds separate. With YNAB, that's not necessary. Use one single physical savings account and track separate funding categories within that savings account using YNAB.

YNAB has a very easy-to-use mobile app that makes it easy to keep tabs on your budget spending while you're out and about. It's easy to immediately record transactions and have your budget categories updated on the spot.

The only down side with YNAB is that it is all manual as far as entering your transactions. You cannot yet link up your different bank and credit cards with YNAB and have your transactions automatically downloaded and entered. While this sounds like a big PITA at first, it's actually a huge blessing in disguise. First, it keeps you INTIMATELY in tune with all your spending. Since you have to manually enter all your transactions, you know EXACTLY what is being spent, where it's being spent, and on what! With Quicken, all my transactions were being automatically downloaded, categorized, and entered into my register. I was lucky if I really paid attention to even half of the transactions that were going through. With YNAB, I know EVERYTHING that is going on.

Another benefit to all this manual entering is that it somehow has a magical way of causing you to spend less money, or at least have fewer transactions. Since you have to manually enter everything, you develop a subconscious urge to have fewer transactions that you need to record. This almost invariably results in less spending.

At the end of the day, I am VERY pleased with YNAB. I really wish I would have found it and started using it a long time ago. To my accountant brain, there is something deeply pleasing about watching my savings categories steadily grow and seeing my spending categories get depleted at a slower and slower pace!

 

[disneymagicgirl]

That was a good point the PP made that I forgot to say. You always know you have the money to pay the bills. So for me that means pay in full that huge credit card bill each month. We put everything on our SW Visas and pay it all monthly. Using YNAB, I know that as long as none of my budget categories are in the red that I can send the full payment to the credit cards. Prior to YNAB it was sort of a guessing game based on our checking account balance.

Also, as far as the tedious task of entering expenditures manually....When I first started the program we had some debts to pay off. I painstakingly entered each category expenses all month long. We have a ton of swipes of our cards monthly btwn our personal stuff and DH's work stuff, so it took me several hours a week to do this. I broke down each target trip, for example, into various categories....kid clothes, groceries, house stuff, etc...based on what i bought each trip. I had to calculate how much for each category based on my receipts. It was tedious but it really helped us stick to not overspending and thus getting rid of the debt quickly.
Now that we have no debts to work on and our income has grown, I stopped doing this...probably about 4 months ago when my terrible morning sickness kicked in and I couldn't keep up. Instead, I now break down the basics into their categories, such as electric, mortgage, water bill, etc, but all other spending...such as target, walmart, tj maxx, home depot, etc goes into one big category called "misc expenses." It has made entering my charges much quicker. I really don't care what we spend on each category anymore, as long as we can pay it at the end of the month and we can still put a chunk in our general savings per month. So that has made life way easier.

 

[FairestOfThemAll37]

Thanks for the detailed reviews! That's awesome.

So how I do things goes something like this:

Paycheck hits my account 1st&15th
Auto debits to vacation fund 3rd&18th
Auto debit to random savings 3rd
Manually pay rent on 30/31st
Cable/internet bill auto bills to CC
Power bill auto bills to CC
Pay non-monthly bills as they come in
Spend what's left in checking on whatever-food,gas, extras, etc.
Pay CC bills when the notice comes

So I feel like this has been working just fine. But often times reading on here I get caught up in the "shoulds" and feel like I "should" have a closer eye on specific spending.

I guess I've never been motivated because I don't see any great benefit to changing.

Thoughts? Yes I realize most here aren't any sort of financial advisor. I'm just looking for opinions of the very budget conscious on here.

 

[DisneyMandC]

Thanks for the detailed reviews! That's awesome.

So how I do things goes something like this:

Paycheck hits my account 1st&15th
Auto debits to vacation fund 3rd&18th
Auto debit to random savings 3rd
Manually pay rent on 30/31st
Cable/internet bill auto bills to CC
Power bill auto bills to CC
Pay non-monthly bills as they come in
Spend what's left in checking on whatever-food,gas, extras, etc.
Pay CC bills when the notice comes

So I feel like this has been working just fine. But often times reading on here I get caught up in the "shoulds" and feel like I "should" have a closer eye on specific spending.

I guess I've never been motivated because I don't see any great benefit to changing.

Thoughts? Yes I realize most here aren't any sort of financial advisor. I'm just looking for opinions of the very budget conscious on here.

I would think you'd only need a closer eye on the specific spending if you're concerned about paying your bills or want to contribute more to a specific bill or savings. As DH and I are getting ready to take on a mortgage, I want the closer eye on where exactly our money is going so that I can find places to scale back in order to contribute more towards our mortgage. If you're comfortable though, then I don't see why you should. Though I guess it never hurts to say "looks like I'm spending $20 a week on coffee, maybe I should rein that in."

 

[RobbW]

If your current system is working for you, and you never find yourself in tough financial situations, then don't worry about it. Budgeting is very useful for people who either a). Have very specific goals they are saving towards and want to track them, b). Have a very thin margin between income and expenses, c). Frequently find themselves spending more than they can afford or more than they intended to spend, d). Other, e). All of the above, or f). Are OCD anal about numbers. Personally, I fall under A, C, D and F!

If your current system works for you, has always worked for you, and you don't see things changing much in the near future, then great! Keep at it. However, if you come on the DIS Budget Boards and posting a question asking how to come up with an extra $2K so you can be nice and treat your mom with her cruise, that may be a signal that at least a casual investigation into a budgeting program may be in order. Even if this money you're trying to save up to pay for your mom's cruise is just a one-time, one-off coincidence, taking a look-see at a budget program never hurts. Even folks with gobs of money that technically never need to worry about budgets are often surprised at just how much money gets frivolously frittered away and how quickly they cold save up a ton more money by just keeping tabs on it. There are plenty of once-wealthy celebrities, athletes, rock stars, and rappers out there who went from riches to rags due to a total lack of financial management!

 

[FairestOfThemAll37]

If your current system is working for you, and you never find yourself in tough financial situations, then don't worry about it. Budgeting is very useful for people who either a). Have very specific goals they are saving towards and want to track them, b). Have a very thin margin between income and expenses, c). Frequently find themselves spending more than they can afford or more than they intended to spend, d). Other, e). All of the above, or f). Are OCD anal about numbers. Personally, I fall under A, C, D and F!

If your current system works for you, has always worked for you, and you don't see things changing much in the near future, then great! Keep at it. However, if you come on the DIS Budget Boards and posting a question asking how to come up with an extra $2K so you can be nice and treat your mom with her cruise, that may be a signal that at least a casual investigation into a budgeting program may be in order. Even if this money you're trying to save up to pay for your mom's cruise is just a one-time, one-off coincidence, taking a look-see at a budget program never hurts. Even folks with gobs of money that technically never need to worry about budgets are often surprised at just how much money gets frivolously frittered away and how quickly they cold save up a ton more money by just keeping tabs on it. There are plenty of once-wealthy celebrities, athletes, rock stars, and rappers out there who went from riches to rags due to a total lack of financial management!

Thanks for the insight. I may take a stab at a free trial and see if I can push past the tedium. There is zero question that I frivolously fritter (love the alliteration) money; usually argued away in my head by the convenience factor.

To clarify about the cruise. Yes, it started out as not paying for my mom. But, I've already PIF. It's not so much about coming up with $2k so I can treat my mom so much as spending that $2k dips my vacation fund below where I like it and I am really hoping to replace faster than my normal monthly contributions.

I guess I could have made that clearer in my OP in that thread. I don't know if it would have changed responses. I did find a few of the tips helpful.

I always try to go with the simplest explanation and should know by now that often backfires on the dis haha.

I figured the whole long story of planning a cruise to only pay my half then changing my mind and already having paid for it on and on and on would be TLDR. Of course I ended up repeating it more than once as "hey how do I find $2k" on the budget boards is a can of worms into "maybe you should focus on not taking a cruise"

Final question for anybody budget folks reading? Do you ever stop funneling money into an emergency fund? It's something I don't "pay into" anymore as I figure it's for all intents and purposes "fully funded." But if you run the gamut of how much various "emergencies" could cost you could easily argue that you need $200+k in emergency cash.

 

[RobbW]

I imagine most people will probably have some savings level in mind for their emergency funds, e.g. enough to replace their HVAC system in a "home repairs/improvements" fund or enough to buy a new car in their "car repairs" fund. At that point, they'd probably feel comfortable enough to stop contributing to those funds (until they deplete them somewhat) and divert those dollars to another savings goal.

 

[lovemygoofy]

Thanks for the insight. I may take a stab at a free trial and see if I can push past the tedium. There is zero question that I frivolously fritter (love the alliteration) money; usually argued away in my head by the convenience factor.

To clarify about the cruise. Yes, it started out as not paying for my mom. But, I've already PIF. It's not so much about coming up with $2k so I can treat my mom so much as spending that $2k dips my vacation fund below where I like it and I am really hoping to replace faster than my normal monthly contributions.

I guess I could have made that clearer in my OP in that thread. I don't know if it would have changed responses. I did find a few of the tips helpful.

I always try to go with the simplest explanation and should know by now that often backfires on the dis haha.

I figured the whole long story of planning a cruise to only pay my half then changing my mind and already having paid for it on and on and on would be TLDR. Of course I ended up repeating it more than once as "hey how do I find $2k" on the budget boards is a can of worms into "maybe you should focus on not taking a cruise"

Final question for anybody budget folks reading? Do you ever stop funneling money into an emergency fund? It's something I don't "pay into" anymore as I figure it's for all intents and purposes "fully funded." But if you run the gamut of how much various "emergencies" could cost you could easily argue that you need $200+k in emergency cash.

So I have a different opinion of the emergency cash account. This comes about because many people don't have any money saved and that is how people end up in debit to their eyeballs because one small emergency can wipe someone out easily and before recovery happens here is something else. The point of emergency cash is to have some on hand when anything hits the fan.

I have three savings accounts total. I have the dream house/retire from the army house fund, the regular savings account (where the majority of money is funneled), and a just because savings account. My regular savings account is my emergency, travel, car down payment, and what knot account. If it goes below a certain number I am happy with, then spending is decreased elsewhere until we raise the numbers back up.

I do not have YNAB. I use an old fashion notebook honestly because a hundred years ago that was what we started with when we were poor. Now that we have more money, I just keep using the notebook. We do a $0 dollar budget which means every dollar of the paychecks are earmarked for something. If I have leftovers after each paycheck, I transfer them in the just because savings account.

 

[RobbW]

I do not have YNAB. I use an old fashion notebook honestly because a hundred years ago that was what we started with when we were poor. Now that we have more money, I just keep using the notebook. We do a $0 dollar budget which means every dollar of the paychecks are earmarked for something. If I have leftovers after each paycheck, I transfer them in the just because savings account.

That's exactly how YNAB works! But I can carry my "notebook" around in my iPhone, and YNAB does all the adding and subtracting with me. Prevents the unavoidable ink stains from always having to carry a pen around in my pocket, too!

 

[PsychoCelloChica]

YNAB really helped me... I'd been budgeting, but basically living paycheck to paycheck and throwing any 'left-over' money onto my credit card bill. Then, I'd get hit with something unexpected and put it on the credit card because I had nothing left in checking. YNAB helped me 1) to see WHERE I was spending my money, 2) to plan for occasional expenses 3) to not feel guilty about spending money on fun things as long as I'm making progress toward my goal of being debt-free by 40. It also was a tool for my spouse and I to start some serious money conversations. I've been using it for 3 years, but she just started 2 months ago and she is already so much less stressed about things. For example, 2 nights ago she said "I just reconciled and I'm $70 under food budget for the month. Let's order dinner!" It's not that we wouldn't have ordered dinner before, anyway. It's that she thought about it and made sure it worked in the budget before she suggested it.

 

[RobbW]

It's definitely a much more stress-free method of budgeting. It provides a lot of latitude for making adjustments where needed without throwing your whole budget off balance. Plus, it gives you ways to gradually correct for any "missteps" that may come about unexpectedly.

 

[erin1715]

So I just downloaded the free trial of YNAB yesterday. Previously, I would use an excel spreadsheet with all of the formulas for adding/subtracting. My spreadsheet was broken down for each month, and then each week that we would get paid. So I would able to look to the future and see what bills I might have coming and which paycheck they would come from.

So far, YNAB is confusing to me. It's only showing the income for the entire month, so it doesn't break it down by week. And even if I add a future paycheck transaction it just adds the entire amount onto the month shown. I guess I just like seeing it broke down per week instead of the entire month lumped together. With my spreadsheet, I was also able to keep in mind what bills are due when based on when I would get paid. With YNAB, I see the bills that are listed but it seems like I have to keep track in my mind when they're due each month. I'm going to give it a try a little longer but I might just go back to the way I was doing it.

 

[happybaker]

So I just downloaded the free trial of YNAB yesterday. Previously, I would use an excel spreadsheet with all of the formulas for adding/subtracting. My spreadsheet was broken down for each month, and then each week that we would get paid. So I would able to look to the future and see what bills I might have coming and which paycheck they would come from.

So far, YNAB is confusing to me. It's only showing the income for the entire month, so it doesn't break it down by week. And even if I add a future paycheck transaction it just adds the entire amount onto the month shown. I guess I just like seeing it broke down per week instead of the entire month lumped together. With my spreadsheet, I was also able to keep in mind what bills are due when based on when I would get paid. With YNAB, I see the bills that are listed but it seems like I have to keep track in my mind when they're due each month. I'm going to give it a try a little longer but I might just go back to the way I was doing it.

I'd be interested in hearing your thoughts after you've used YNAB for a bit. I do my budget exactly like you do with an Excel spreadsheet. Much like you I can see how much from each paycheck I should hold over for bills coming due later in the month or the next month. Curious to see how it works for someone who's doing what I'm doing now.

 

[RobbW]

YNAB works on a different method than most other budgeting programs. It isn't necessarily showing the income lumped together for the whole month. What it's *supposed* to be doing is showing you the income you have actually just received (i.e. you just got paid today) as "Available to Budget." You then budget out every single dollar to all your different necessary categories, whether those be expenses or savings categories. What you're supposed to be doing is budgeting out for what *needs* to be taken care of between now and the next time you get paid. You are NOT supposed to be entering future period paychecks. That's kind of opposite the whole premise behind the YNAB method. You only enter and budget out the income you have actually received. If you try to enter future period paychecks into your budget, it opens the door to the potential for spending money you don't actually have yet. That's a YNAB no-no.

When you click on each of your bank and credit card accounts that are listed on the left-hand "Outlook" pane of the YNAB window, it will bring you into the register view for that account where you can see all the actual transactions you have entered for that bank account or credit card. At the bottom of the register view, you can enter "scheduled transactions." This gives you the ability to enter recurring bills, payments or future paychecks, the dates they should recur, and their amounts. On the dates that you scheduled, YNAB will automatically enter those transactions into your register and give you a little notice that you have transactions that need to be reviewed and approved. THAT is where you can enter future bills and paychecks and keep tabs on items that are coming up and when.

As I said in my original post, YNAB requires a complete mind-shift in your way of thinking about budgeting. You will not budget out your expenses and income in advance for months at a time. It's more of a paycheck-to-paycheck budgeting method. By that, I don't mean that YNAB is meant for people who live from paycheck to paycheck. I mean, that's how you budget out your dollars. That way, you're only budgeting money you've actually received as income. And as long as you don't let any of your budget categories fall into the red/negative territory, you never have to worry about if there's enough money to pay your bills when they come due.

 

[Where'sPiglet?]

So I just downloaded the free trial of YNAB yesterday. Previously, I would use an excel spreadsheet with all of the formulas for adding/subtracting. My spreadsheet was broken down for each month, and then each week that we would get paid. So I would able to look to the future and see what bills I might have coming and which paycheck they would come from.

So far, YNAB is confusing to me. It's only showing the income for the entire month, so it doesn't break it down by week. And even if I add a future paycheck transaction it just adds the entire amount onto the month shown. I guess I just like seeing it broke down per week instead of the entire month lumped together. With my spreadsheet, I was also able to keep in mind what bills are due when based on when I would get paid. With YNAB, I see the bills that are listed but it seems like I have to keep track in my mind when they're due each month. I'm going to give it a try a little longer but I might just go back to the way I was doing it.

You can do a "split transaction" for both income and purchases. For example, when I shop at Walmart, I'll do a split transaction so some of the transaction goes into groceries and some into HBA categories. You could do the same with splitting income, placing some of the income into one month and some in another. Splitting is available in the drop down menu when entering a line item; it's the first item on the list and adds multiple lines below the main line item.

You might want to watch this video [link] from the YNAB website about setting up creative categories. They give multiple options to modify the default set-up, including categorizing by week and editing the bill name to include the date it's usually due. You can choose to use YNAB to continue budgeting in the style you have been, or you can choose to use YNAB as the default settings are, and switch to budgeting by month even if your paychecks aren't monthly. I get paid every two weeks; I allocate two paychecks to the next month and budget each month as a whole. Two months out of the year I get an "extra" paycheck, so some months have a larger balance to use.

 

[jedijill]

Take the webinars! I just spent yesterday watching them again and it really helps understand the system! They are free and they give away a copy of the software at the end of the class.

Jill in CO

 

[RobbW]

I get paid every two weeks; I allocate two paychecks to the next month and budget each month as a whole. Two months out of the year I get an "extra" paycheck, so some months have a larger balance to use.

Getting to the point where you can operate on YNAB's #4 tenet of "Living off last month's income" is a huge milestone that will undoubtedly help relieve a lot of financial stress for many/most/all YNABers!