Monday, December 2, 2013

Financial Update: You Need a Budget

Instead of blogging about budgeting, I've been searching out personal finance blogs. This one software program, You Need a Budget, kept coming up. I ignored it the first few times because I thought, hey, I have a budget! But then I couldn't help myself. And I'm really glad I did.

I don't want to sound too much like a sales pitch (though that link will get you $6 off and the software is on sale til end of day), but here are the reasons why I decided it was worth it for me:

  • I can see the big picture. Yes, the Magic Little Notebook was great for ensuring that I budgeted enough for all my bills, but it wasn't user-friendly when it came to making decisions about anything left over. With YNAB, on one screen I can see everything and easily make changes as necessary. 
  • I was already following the first 3 rules for the most part in the YNAB method; spending less than what I earn (Rule 1), starting to build Rainy Day funds (R2) and rolling with the punches (R3), but Rule 4 was a brand new concept for me that breaks the living paycheck-to-paycheck cycle: live on last month's income. Of course, this doesn't happen overnight, but thanks to the savings I already have, I believe that I should be fully buffered (using YNAB terms here) by the end of this month!
  • I can enter purchases on my iPhone, my Kindle or in the software on either of my pcs (and I don't have to carry a notebook around). And there's a reconcile feature so that I can make sure that the bank and I match up. I'd been doubling up entries in both the notebook and the check register and then of course, reconciling at the end of the month with the bank. There was a time when there were two check outstanding for MONTHS. I hated that because I always had to make sure I remembered that! With YNAB, once I've entered it, it is gone for good from my available income, and then whenever they did clear the bank, I could just mark them as cleared and move on with my life. 
  • I love their classes and forums! I am not the only one obsessed with budgeting. At the forums, there are a ton of us :) And YNAB also has free classes (including two email courses). I started with their 9 day email course and reading articles and after I took the first class, I could see all the benefits of the software, so I decided to go for it.
  • Once I'm fully buffered, I will be able to stop the madness of dividing each monthly bill by 4 to save enough each week. Instead, at the beginning of the month, I will be able to enter all the amounts, know they're covered, and then determine which of the other categories need a little love.
  • I can change, add, and hide categories. YNAB reminds you that there are lots of expenses that do not come up every month. When you're first starting out, you'll most likely follow Rule 3, which is what I did when I remembered that my AAA bill was due this month. I created another category strictly for AAA and then moved some funds from the Car Maintenance category to cover it. But it was worth creating the AAA category so that I don't forget next year! 
  • I can also create notes for each category, which I'm doing for the bigger annual bills so that I can determine how much I need to budget each month before the big bill (car registration, for example) is due.
  • YNAB version 4 seems pretty new so I think it will be a while before the next version, but I believe they do offer a discount to current users to upgrade to the next version when it becomes available. And they have been around long enough that I feel confident that it will be around for a long time to come. 
  • You do not have to enter any sensitive information. If you would like, you can import bank statements into the software, but you can do it all manually if you prefer (which is what I do). 
  • I can track, budget and run reports all in the same place. I was budgeting one place, then tracking in 3 different places so that I could have reports, too. 
  • My mom will like the way YNAB treats credit cards, too. For me, I'm using the pre-YNAB debt feature, which keeps track of the outstanding balance as I pay it down. But YNAB doesn't insist you never use credit cards again; it just helps you use it/them most effectively.
I've created a Journal in the forums at YNAB (under the name aprilabtbalance), so I will try to keep the financial updates here to a minimum - and maybe find other things to blog about here!

1 comment:

HeatherAnne Norbury said...

Thanks, April! YNAB has been GREAT!