Three years ago when buying our house and property, we had a wish list of what it would have; ideally:
- 5-10 acres
- 3 bedrooms, 2 bathrooms
- house that needed work but not MAJOR work
- good sunshine to garden
- sustainable distance for commuting to the city (ie: North end of the island)
- house with character
- smaller to medium sized
- and most importantly, something we could afford and ultimately support on just one income
This final criteria ended up being our #1 priority, which in turn meant we had to sacrifice some other ideal aspects. All in all we bought a great little house that we do love, and for the past 17 months, we have been owning it on one income. Not a small feat in the greater Seattle area.
We were fortunate to not carry any student debt, and our single car is paid off. On top of that, both Matt and I had always been good savers. In our single days we both had saved up for a house and that significantly helped with our down payment.
Matt has always left the “money business” to me. I do our taxes, pay the bills, organize savings and retirement accounts. Honestly I enjoy all of it except the retirement piece. I would rather just let someone else handle it but struggle with the right balance of engagement and dealing with fees (a topic for another day). For savings, I had put together an elaborate structure of 10+ savings accounts that my weekly paycheck would automatically fund: house, travel, medical, emergency, car etc. Whether it was $5 or $100, it was a “self funding” system that helped us save.
While these buckets of money were helpful for saving, they were not very useful when it came to spending. Since we do use credit cards (but never carry a balance) I was always shuffling money around between accounts and sometime ran into problems. I knew I was “borrowing” funds without really replacing them when bills came around, but always felt like it was still ok.
This spring I read some reviews of a new approach called YNAB (You Need A Budget) and was intrigued to try it. My thrifty side hates paying extra for things so paying for a software program was not really something I was jazzed about. After all, I had some free tracking software through my credit union that I liked, and did diligently track every dollar we had spent. It was useful and I could see where our money was going.
But it did not give me a clear picture of where our money WOULD GO in the future. I watched some webinars and read a bunch about YNAB and decided to give it a go. Couldn’t hurt right?
First off, it was hard to learn a new system. I did not find it all that intuitive and felt like the program was not step-by-step enough for what I was looking for in HOW to consolidate my accounts. It was a leap of faith and a bunch of emails to tech support before I finally consolidated my savings accounts into just savings and checking and really started to use the budget.
What do I think?
#1: it has forced me to be more honest with our spending. I realize that I have been “behind” our credit spending and although we carry no balance, I do shuffle money monthly more than I thought, so our “automatic savings” was not a true picture of what we were saving. It was saved, then transferred to cover expenses. Ie: very short term saving that was not really meeting our needs.
#2: I did not have clear savings goals or spending goals in the past. At the end of the month I would report to Matt, hey we spent less on food this month! Go us! But that really was not helpful. What is more helpful is saying hey, we are in the middle of a massive remodel and need to make sure that $5,500 of those “house “ dollars are available for refinishing our floors (our only hired out portion of this job). It always sounded like those dollars where there in that savings account, but they were mixed in with everything else so they tended to slide around and probably were being “counted” towards multiple things (like the random $20-$50 Home Depot runs…those add up!) With YNAB I have $5,500 for hardwood floors and the rest of the house budget is in a different category. All the same dollars are there but they have jobs in the future so are not to be touched….unless we specify it! It is pretty empowering…and eye opening. Sometimes you learn you have more than you thought, other times it is actually less. But now we KNOW.
#3: I need more practice. 5 weeks in and I am still honestly trying to reconcile where dollars REALLY are, and what they are REALLY needing to do. YNAB support has been so helpful in helping me untangle what I thought was a pretty clear system I had going. Really, my general buckets were not very helpful at directing what our dollars needed to do for us.
#4: bottom line: I like YNAB. I am not loving it yet but that is likely because I am still adjusting. The credit card syncing has taken some serious brain power to get straight for me. Thank goodness for responsive email help! I do greatly appreciate how flexible the system is, and how it is just clear. It is a serious wake-up call on not tricking myself. It is very honest, very real, and VERY helpful.
Now those long term goals? Buying the property next door? Future kids college funds? They have a line item and will actually be goals that we can work towards, and the dollars won’t be shuffled to cover hardwood floors.
You can sign up for a free trial yourself at their website.