Sunday, December 28, 2008

YNAB for the New Year

One reoccurring problem I have with budgeting is mentally spending allocated money more than once. Since this is physically impossible, my debt-reduction plan is not very realistic. For example, when I first began trying to pay off my debt in June 2007, I estimated that I would be debt-free in December 2008. While I have made great progress--reducing debt by $7500, my estimates were way off! I need a system that keeps me accountable. My budgeting tools in the past were pencil and paper first, then last April I found an Excel worksheet from Mr. Debtbeater based on bi-monthly pay. I was diligent about planning my budget, but not so diligent about entering actual expenditures. I tried jars and envelopes, but was still able to avoid the consequences of overspending. In September, I looked at spreadsheets to track expenses, but my brain was so stressed with school and then moving that I couldn't get started with anything new.

I first saw YNAB online awhile ago and was intrigued by it, so I decided to give the Excel version a try. YNAB stands for You Need a Budget, and is based on 4 Rules of Cash Flow that merge nicely with Dave Ramsey's Baby Steps and the envelope system. What I like about it is that if I overspend in one category, I have to figure out a way to "fix it" either this month or the next. I can spend less in that category next month, or move money from another category. My budget will be a better reflection of my actual spending.

I'm sure I will make mistakes and miscalculations, but with the YNAB software, at least I'll be aware of them and be more likely to correct my errors. I am excited to try January's numbers.

Does anyone else use YNAB?


jpkittie said...

no - I just use an excel spreadsheet as well as paper & pencil... I have tried others, but just seem to keep going back to old faithful

Sharon Rose said...

Hi there-a spending diary is an excellent way to see where your money is going too and to track spends. Good luck for 2009!

Anonymous said...

For a long time I mentally spent money twice, sometimes three times! I've worked (am still working?) hard to get out of THAT habit.

I've not heard of that habit, but I'll look into it. Thanks for the tip!