Years ago, before we began budgeting, we used to make financial decisions using this six step scientific system:
I want that…
I need that…
I need that now…
How much per month?…
(Wet finger in the air) we can “afford it”
Pay for it later
There are many problems with this plan, mostly the endless pit of stuff we were able to talk ourselves into “needing.” A king sized bed, a $15,000 Jeep, a brand new home, etc.
None of this stuff produced more than momentary happiness, and most of which came with guilty baggage, and a craving for more stuff. I’m by no means perfect today, but I’ve learned a lot through the process of paying off our debts, creating a plan, and saying NO for awhile.
Debt is Not Forever
Getting out of debt isn’t near as easy as getting into debt. We don’t have DVR, so let me tell you about something called “TV commercial breaks.” During a 30 minute TV show, the television network will take breaks to show you some advertising (how they make their money). Typically three or four commercial during a give break. I typically spend this time trying NOT to lose to my wife in Words with Friends.
But, I was actually watching the commercials the other day and guess what all of the advertising was related to… money.
Let us help you file for bankruptcy and wipe your slate clean.
This credit card has no black-out dates
Use our company to file your taxes
Get zero percent financing for 5 years on a brand new money pit (car)
I’m a big fan of saving money when possible, and in general a do-it-yourself-er. And when it comes to preparing our taxes, we’ve done them ourselves the past 5 years or so. The first few years we were married, we had a friend prepare them for us, but then we started using Turbo Tax, and found the process less scary than we previously thought.
Plus, over the years, Turbo Tax has become more and more user friendly and extremely helpful in walking us through our tax situation, asking us questions and helping us make our way toward a completed tax return.
Our filing hasn’t been too complicated over the years and we’ve always felt our situation to be pretty normal and that we could save some money by preparing our taxes ourselves.
However, this year the decision wasn’t quite so easy. In September of 2014 I became self-employed which made me pause to think twice about our yearly “Ok, I don’t want to, but let’s sit down and do our taxes, night.” This year we’re opting to leave our tax preparation to a professional.
While this may cost us more for the preparation and filing of our taxes, we’re doing it for the peace of mind knowing that we didn’t miss anything in this year of transition. And to be doubly sure, we’ll run our numbers through TurboTax to see what their proposed return says.
But, when and how do you know if you should file your taxes with an online service like Turbo Tax, or entrust a professional tax advisor to help out.
I recently received an email from a reader who was checking out You Need a Budget and was wondering if it was right for him or not? He had a series of very specific questions, which were really good and detailed. And given the fact he had over 35 years experience budgeting, it was clear that there were specific things he wanted his budget to do for him.
Finding the right budget tool that works for you is important, and once you’ve built the habit of budgeting, you’ll want to find the best tools to help you manage your money more effectively, and efficiently.
Disclaimer: You don’t need to have sophisticated software, or elaborate spreadsheets to be an effective budgeter. It’s more about discipline than it is about the tool. But, if you are looking for a tool that makes budgeting more convenient, and accessible on the go, then I highly recommend YNAB.
We used the same free budget spreadsheet that you can get when you sign up for the newsletter on this site when we were getting started. It worked great for us and helped us develop the budgeting skills we needed to pay off $40,000 of debt in 23 months. So, again… not about what tool you use, but YNAB does make the budgeting process easier for us on a monthly basis.
So, let’s look at all the ways YNAB does make it easier for us. And I thought the best way to do that, would be to give you a guided tour of how we use YNAB on a monthly, weekly, and daily basis.
How We Use YNAB on a Monthly Basis
Let’s start with the big picture… putting together the initial budget before the month begins. As with budgeting in general, the first one is always the hardest. Determining categories and thinking ahead to all the expenses that might come up that month, not to mention saving for particular categories in the future. (Hello Christmas, car repairs, and those annoying non-monthly bills)
For these reasons, the set up of a budget is just as difficult in YNAB as it is with your first budget on paper, or in a spreadsheet.
Enough of the bad news! Let’s get down to setting the budget for the month. For us, I typically set the budget first, then ask Kelsey to review it and make initial changes if she doesn’t agree with something.
Our budget is typically pretty static from month to month. We try to eliminate chaos in our budget by breaking down savings for things into small monthly goals and that keeps us from having to shift a lot of things around in our budget.
Built-in Budget Savings
This is our favorite feature in YNAB. Each category acts as it’s own savings account, and the money we do and don’t spend (transactions) from that category carries forward to the following month. We don’t have to worry about transferring the money, or keeping track of how much we’ve saved and spent from our personal accounts every month.
We simply log the transactions as we go (I’ll talk about this more in the daily section) and YNAB does the rest.
Scheduled Transactions in YNAB
Setting up Scheduled Transactions is super helpful in automating our budget process. First, you’ll want to set up auto-payments for your bills through your bank account, or billing service (gas, electric, water, cell phone, internet, insurance, cable just cancel cable).
All the things that get auto-drafted from your bank account on a monthly basis can be set as a scheduled transaction in YNAB to come out in the appropriate timeframe on the appropriate date. (see screenshot)
This saves from having to manually log those transactions every month. It makes the budgeting process simpler and allows us to then focus on our discretionary spending… a.k.a. the stuff that makes your money disappear.
Mid-Month Management of YNAB
On a bi-weekly basis, I try (not perfectly) to clear our transactions and reconcile our transactions with our accounts online. I’m not overly nerdy about this, but it accomplishes the following:
Ensuring we entered numbers correctly (it can be easy to transpose numbers… I have giant hands)
Double checking if we missed anything (like a second sweep of the hotel room before you leave)
Flagging any suspicious activity (My debit card number has been compromised twice in the last year, both caught by my bank)
We also pull out cash from the ATM every week or so for groceries, and eating out. The process is pretty simple.
Pull money from ATM
Log the transaction with the YNAB mobile app as an expense to our food category.
During the month we also make adjustments as needed. For example, we keep a category called “payback” for things that we’re waiting to be reimbursed for. Kelsey wrote a check to a friend to make some monster cookies when Kelsey told her co-workers she was pregnant. A few others went in on it with her and we were waiting to be reimbursed. So, when that check comes in, we designate it toward the “payback” category so we know everything is squared away.
If something unexpected comes up, we talk about it and try to see what categories we can borrow from to make the budget balance. -$20 from our fuel category, because we don’t need as much (hallelujah!), and apply it toward toiletries, because we didn’t account for the fact that we would run out of laundry detergent this month and it’s a bigger cost than our toiletries budget allowed for.
I call this active budgeting. As much as we want to set our budget and watch it perfectly unfold throughout the month, that’s as mythical as a unicorn. Life is too dynamic for it to be that way. We had to embrace this early on and it saved us a lot of frustration when it came to our sticking to a budget.
Daily Tracking / Logging Transactions in YNAB
The magic behind YNAB in comparison to our budget spreadsheet is the cloud sync technology. It’s connected to our DropBox account, and is synced between all of our devices (computers, iPhones and iPad although Rooney has a Monopoly on that last one).
We can access our budget from anywhere, and can log transactions often before we leave the checkout counter. My favorite part of this is how YNAB gets smarter the more often you use it. Here’s a short video of Kelsey live at one of her favorite stores… H&M.
When I’m pumping gas, and log the transaction, all I have to do is input the total amount, and YNAB knows where I am and what category I usually plug that expense into. YNAB auto-populates “Gas Station X” as the Payee and “Fuel” for the category. Approve the transaction and BOOM, you’re done.
So, that’s how we use YNAB on a monthly basis. I also put together a video tutorial walking through the software and the features we use and love. It’s eight minutes long, but if you’re interested in how we use it to keep up with our budget I think it’s worth the watch before making the investment in the software.
Last week I mentioned we would be spending a day talking and dreaming about what we wanted to accomplish in 2015. And, after the planning, I thought I would share what came out of that meeting for the Williams Family.
I think it went better than expected. Perhaps because I lowered my expectations this year. I’m learning (I’m 30 now!) that dreaming and planning are only the start of it. The doing… the work is where the magic happens. Setting goals is one thing, but achieving them is a whole other beast. So, here we go… It’s on the internet now for all to see. We’ll see how this year shakes out and what actually happens and what changes.
It’s a good reminder… things change. We’re planning the best we can knowing that we may have to adjust, delay, or scratch parts of our plan. It’s still worth it through. Last Wednesday was a much needed day away with my wife to re-connect and breathe inspiration into 2015 for our family.
This was both exciting and disheartening at the same time….
What we liked about 2014
I pursued my dreams.
Embraced the Lord and direction He was calling us to.
We had an amazing week in Okoboji watching Rooney on Papa’s boat, and enjoy Arnold’s Park.
Capturing memories via photos, videos, and blog posts. (Kelsey has done an amazing job of this)
What we didn’t like
At times it felt as though we were living separate lives. We’re hoping it was for a season, but in some ways feels like we’re still in the thick of that right now. But, as I’ll note below, we’re working on ways to ensure it doesn’t stay that way in 2015.
2015 Financial Forecast
This being the first year one of us doesn’t have a steady paycheck, it’s a bit difficult to forecast as we have in the years past. (See: 2012, 2013, 2014 Financial Forecasts)
We’re putting some numbers down and leaving others on a “if it happens, it happens” list.
If it Happens, it Happens List
Computer: Kelsey has an ancient macbook laptop that we purchased before we moved into our house… so… 8 years ago! It’s been a heck of a machine, but is on it’s last leg.
Car: My car is still in the shop, and we’re not sure what the diagnosis is yet. Depending on the cost of the repair, we might have to purchase another vehicle.
Basement: While we’d love to finish this off completely, we’ve decided that our best plan would be to minimally finish a few spaces; they playroom, and the spare bedroom. This will give us enough extra space until we can save up for the rest of the space to be finished.
Working Into the Budget For 2015
We’re working a few things into our monthly budget because we know if we don’t they will sneak up on us and we’ll end up in panic mode.
Baby #2: Well… this is still somewhat unknown and on our action list. We need to do some fact finding into how much this baby is going to cost and what we’ll be responsible for paying after insurance. (Post: How a Baby Affects Your Budget)
That’s about it for non-monthly budget items for 2015.
I could have come up with a dozen or so goals for myself, but figured that I would keep it to a few important goals that span the important areas of my life. Focusing on deepening my relationship with God and improving my health from the inside out, pretty much sum it up.
Weekly Sermon Sketchnotes: I received “The Sketchnote Handbook” by Mike Rohde for Christmas and devoured it in few days. I decided to kill two birds with one stone. Improving my sketching and learning comprehension and capturing how God is speaking to me through Sermons.
I’ve gotten a lot of positive feedback after the first few weeks, and have really enjoyed the process of creating these. I had no idea they would be helpful to others as well.
ESV Study Bible Plan: I’m reading through the Bible in a year using this plan. I like that I’m reading a mix of the Old Testament and New Testament everyday. Starting out reading through 1 Chronicles though… woah! You can find this on the YouVersion Bible App.
Whole30: We’re going to attempt our first Whole30 program coming in February. I’m super pumped to do this and see what it feels like to eat clean, whole, and sugarless food for a month and see how much better I feel overall.
I’ve just finished reading the book “It Starts With Food,” and it’s really taught me a lot about what eating healthy really means, and has been a great motivator to do a Whole30.
Our eating habits have evolved over the years in a good way, but I’m excited for this cleanse and hopefully a lot of it will stick with us as we move forward. I’m thinking about documenting everything through blog posts, but can’t decide. I’ll definitely do a few posts on the financial side of the program.
Wednesday’s With Husband: Currently, Kelsey has every Wednesday off with our daughter Rooney. She’s made this a “thing” between them and I’ve seen their relationship flourish over the past couple of years. It’s official with it’s own hashtag and everything #wednesdayswithrooney.
So, I’m inserting this into her schedule (she approved by the way). We’re going to do quarterly “Wednesday’s with Husband” where we dedicate a Wednesday to send Rooney to daycare and spend the day with each other. We both think it will do wonders for our marriage!
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Six days into 2015 and we have yet to create our family playbook for the year. To be honest, the end of the year crept up on us, and we weren’t able to find a day to devote to the cause as we have in the past.
Typically, we take a personal day to ourselves, pick a local coffee shop, and intentionally look at the next 12 months to dream about what we’d like to accomplish, both as a family, and as individuals.
We use the Family Playbook to devise a plan of attack for the year. The intent is not to bore ourselves to sleep with details, but rather, get back to dreaming about what we want out of this year. Kelsey is much more of a “day-by-day” person, so these kinds of meetings don’t get her too excited.
I entice her by letting her pick the venue (food is the key to her heart). The planning takes a couple hours and this year we’re doing something fun afterward… going to a movie! (more food)
Rooney will be in daycare all day, so we are taking full advantage of our adult-time.
Breakfast and meeting at a new bakery in downtown Des Moines
Movie: The Hobbit
Afternoon snack? Perhaps if we’re not stuffed with popcorn from the movie?
A simple, but ideal day for the two of us. A time to slow down and enjoy each other’s company… just the two of us.
This year is completely different from any other year we’ve created a family playbook in the past. Mainly because my work life has changed dramatically to the point that our budget fluctuates drastically from month to month. Which, in the short-term stinks, but the long-term benefits of running my own business will (hopefully) prove to be more fruitful (God willing).
Regardless, we’ll dream, and plan just the same, and be willing to adjust the plan to our resources as needed. Prioritizing wants and needs will be key (as always).
While there is a financial component to most every goal, this is more than just a yearly budget meeting. We try to make this yearly meeting about being intentional with our lives. By carving time together to strategically think about what we want to accomplish this year, we’re resolving to make the most of 2015.
The past three years have flown by so stinking fast! I can hardly believe that in less than two months, we’ll have a threenager and Kelsey will be entering the third trimester for our little June bug. “Survival” might be the theme for us this year….
What are you hoping to accomplish this year? Personal goals? Family goals? Financial goals?