|
I agree that the "thinking out loud" gets people (myself included) riled up. But history is on our side. It's really hard to tell what's a wish list, what's a troll, and what's something that's about to happen tomorrow. What worries me are these windfalls... and if I'm reading correctly, a loan against retirement accounts? I was the same way at that age. Piles of debt, and huge infusions of cash, with an incredibly turbulent life and uncertain future. After paying down student loans, I bought iMacs, PowerBooks, other electronics, and a bunch of crap. I had pie in the sky dreams, but no solid plans on how to make them happen. You've made great steady monthly progress, but I fear these windfalls will give you a false sense of security. You still owe more on your car than I've ever owed on a car in my life. Regardless, it's pretty cool you have that cottage. I just hope you don't take out a mortgage on it. Keep paying down your debt, put money away in savings, and plan ahead for what you want. It's easy to sacrifice savings for nice things. It's more responsible to sacrifice discretionary spending in order to save for nice things.
|
#
?
Aug 28, 2013 23:05
|
|
|
|
| # ? Jun 3, 2024 15:04 |
|
|
So you got a cabin in the woods without spending any money! I do, however, suggest you take a shotgun in case of demon infestation. (And find out what the taxes are, who you're supposed to pay, when they were last paid, and when they're due and then make sure they're paid before they take your poo poo, because yeah, that's what happens.)
|
|
#
?
Aug 28, 2013 23:28
|
|
|
tuyop posted:To be fair, the "pile of debt" at this point is a 16.8k car loan at 1.9% interest with a >100k/year gross salary. It's a big problem because I'm upside-down on the car by probably about 10k, but it's not what most normal, middle-class people would consider a crippling debt burden. No, but it's not just the dollar amount of your debt that's a worry; it's your attitude towards spending. A moderate debt with good attitudes towards spending and saving can lead to a much brighter future than no debt and an attitude of 'play now, pay tomorrow'.
|
|
#
?
Aug 28, 2013 23:45
|
|
|
Breetai posted:A moderate debt with good attitudes towards spending and saving can lead to a much brighter future than no debt and an attitude of 'play now, pay tomorrow'. And that's the attitude I've got when we're talking about saving only 45% of my income for a month* instead of 60%? Right. * Assume, just for a moment, that a person can buy a large thing once and then not buy another large thing again for awhile. I am OK posted:Any debt that isn't a mortgage or student loans is a burden. And you're offsetting it against assumed earnings when you KNOW from your own experience that poo poo often hits the fan. What's special about student loans or a mortgage? I mean, student loans are: Unsecured, Undischargeable by bankruptcy (In the US, at least), Hurt your whole family's debt service ratio if someone cosigned, and Often have higher APRs than auto loans (in my case, at least). And many people are in ridiculous mortgages where the interest and insurance alone will keep them from making significant equity for like 12 years. There's a reason that I'm paying off the car loan last.
|
|
#
?
Aug 29, 2013 00:02
|
|
|
IMO student loans are far different and worse than a mortgage. Mostly for what Tuyop just specified. I'd snowball them against other non mortgage debt, like Tuyop did. However, of all non mortgage debt, student loans are one of the only long term debt instruments I definitely see the point to. They can aid one in massively increasing earning potential. Or stress potential.
|
|
#
?
Aug 29, 2013 00:28
|
|
|
Not sure if this would apply to you Tuyop, but it seems that pension payouts have been lower than estimated recently: http://globalnews.ca/news/791818/veterans-devastated-after-pension-payouts-plummet/
|
|
#
?
Aug 29, 2013 00:39
|
|
|
tuyop posted:And that's the attitude I've got when we're talking about saving only 45% of my income for a month* instead of 60%? Right. Because you're creating debt to better yourself and increase your earnings potential. Who cares about other people's mortgages? You should hold yourself up to your own standards, not those of some yahoos who got burned by greed.
|
|
#
?
Aug 29, 2013 01:14
|
|
|
Yeah my pension lost like 13% of its value based on my most recent set of estimates from July. No idea what it'll actually come out to when I get it in Sept-Oct. It's kind of a dumb thing to get riled up about because there's absolutely no recourse for that kind of "correction".
|
|
#
?
Aug 29, 2013 02:33
|
|
|
So have you figured out where your August surplus is going? How are September's projections looking?
|
|
#
?
Aug 29, 2013 02:55
|
|
|
tuyop posted:* Assume, just for a moment, that a person can buy a large thing once and then not buy another large thing again for awhile. Yes it's possible to do this, but your previous actions suggests that you aren't the kind of person who can do that.
|
|
#
?
Aug 29, 2013 12:05
|
|
|
Old Fart posted:So have you figured out where your August surplus is going? Well in August we paid down the student loan and had a wedding ceremony. It all fit into the budget perfectly and we still haven't gotten my movement claim stuff (not to mention the costs of driving across the country that I haven't been reimbursed yet), which is worth about $5000, so September will have that windfall as well. As of now, we're still sticking to the budget in the top of the OP. Part of our wedding line category was to pay for a little honeymoon in a campground and doing some outdoor activities or something, so we're going to Banff this weekend, we also got a hotel room for Saturday as a wedding gift. 
|
|
#
?
Aug 29, 2013 12:33
|
|
|
Can you give us some hard numbers? Unless I'm reading the wrong thing, the budget said something like "$3000 overage that we need to figure out how to distribute." How was it distributed? Post some YNAB screen caps.
|
|
#
?
Aug 29, 2013 12:37
|
|
|
Old Fart posted:Can you give us some hard numbers? Unless I'm reading the wrong thing, the budget said something like "$3000 overage that we need to figure out how to distribute." Well we still had the student loan debt in August, and most of it went to the wedding after the debt was gone. The whole thing ended up being pretty complicated. We made and budgeted 8100 for August. Still not sure how it's all going to work out in September.   Some notes: Home insurance just got paid for the next 12 months. Misc goods is including a cord thing from BestBuy for a camera (leant to record the wedding), leaving it with the carryover amount is a reminder to take it back because it didn't fit. And a printer and some stuff that factored into my move. My phone bill is crazy from the phone calls related to my move. Any overage in minutes is covered. Fees is positive because of a weird NSF charge thing that got fixed. Car maintenance is high because there's some mechanic work that the car needs like a new clock spring for the steering wheel and stuff. Car insurance is high because we still have to transfer to an Alberta provider once I get my licence here (and then we can register the car here). I'd like to pay this in one lump sum to save the financing fee. Oh, and this morning there was a $120 transfer into my account that I don't recognize, so I left it uncategorized until I call the bank.
|
|
#
?
Aug 29, 2013 14:20
|
|
|
tuyop posted:Yeah I just don't think it's me. You need to figure out how much this land is going to cost you per year so you can figure it into your YNAB immediately and aren't blindsided when you really you owe a thousand bucks in property taxes or something
|
|
#
?
Aug 29, 2013 14:27
|
|
|
Groovy, thanks. And wow, that's confusing. So if I read it right, all of the inheritance and some of the buffer went to student loans? And it looks like there was a huge sports overage from a previous month? And what's this family entertainment? Or Misc Goods? I'm mostly curious what happened to the $3k that was supposed to go to savings this month. I worry that you're not being honest with yourself. You said that 45-65% of your income was going to savings, so... where is it? I'm not really sure paying for a wedding the month it happens counts for "savings". That's just spending. In my mind, savings is loooong-term. Like, retirement or children. You have your own goals and stuff, but a couple of weeks ago you said that $3100 was going to savings. Then it was going to be $2100 plus a $1k laptop. I don't even see a laptop line item, and I don't see even $2100 into savings. Not trying to bust your balls, just giving feedback as requested in the OP. E: FWIW, that's a really cheap wedding, so good for you on that. It's also awesome you're building up car maintenance savings. I'm just trying to keep you honest with yourself. Old Fart fucked around with this message at 14:36 on Aug 29, 2013 |
|
#
?
Aug 29, 2013 14:30
|
|
|
Just a general 'budgeting' comment, but you should probably kill "Misc Goods" and categorize those purchases better -- household goods? toys? webcams? basil? what did you actually spend on? $400 is a decent enough chunk to no longer be 'misc'.
|
|
#
?
Aug 29, 2013 14:49
|
|
|
Old Fart posted:Groovy, thanks. And wow, that's confusing. Thanks, and it's complicated. It's 3100 to savings/debt which is captured by that 14131.49 pre-YNAB Debt budgeted amount + the car loan. I just lump the two together because it's really the same goal. Once the debt is gone, then it's all savings. Paying off debt or funding an investment account both achieve the same thing: long-term financial health. This month we used savings and a bit of that 3100 budget balance. Including the car payment as debt. Now that the student loan is gone, I think I'm saving to "Emergency fund" (maybe buffer is better?) to make that lump-sum payment to my car loan. So in the debt chart I post each month, it'll look like a large increase in savings and then a sudden decrease in savings and debt. The wedding confounds things as far as the rest of the normal budget goes. The whole matrimony thing (over the past 8 months) cost a bit less than 6000, including 1800 for air fare and travel costs. I was hoping to keep it under 5000 (which is why it was 2100 this month instead of the planned 1100), but oh well! The sports overage covered a membership fee for some toeshoes thing and a larger protein order than usual. I'm torn about the sports category because it's almost all stuff that we eat to save money on the grocery budget. Seems like we should count whey as groceries, protein bars as fun money, creatine and BCAAs as sports, and multivitamins as pharmacy. Right now it's all "Entertainment > sports", apparently because this is a discretionary expense. But a large part of our grocery bill is discretionary as well.  Grocery is over because we made a Costco staple run. The three lines of his fun, her fun, and family fun, are basically one envelope with some granularity in it. So yeah, family entertainment is huge, but that's because we "borrowed" his fun and her fun as we did things together instead of individually. It's supposed to be 220 altogether, but we spent 270 and pulled money out of fuel which I overestimated, IIRC. Finally, a lot of items like TV, Laptop, bicycle, vacation, are unfunded so I just took them out for the screenshot.
|
|
#
?
Aug 29, 2013 15:05
|
|
|
tuyop posted:This month we used savings and a bit of that 3100 budget balance. Including the car payment as debt. Now that the student loan is gone, I think I'm saving to "Emergency fund" (maybe buffer is better?) to make that lump-sum payment to my car loan. So in the debt chart I post each month, it'll look like a large increase in savings and then a sudden decrease in savings and debt. If we're talking 'YNAB Buffer' when you say buffer, no. Your buffer and your emergency savings should be separate entities, because they're two separate goals. The point of the buffer is to start living off of last month's income rather than paycheck to paycheck. Your emergency funds, ideally, shouldn't impact your buffer. The buffer is a 'lifestyle' type thing, emergency funds are for emergencies.
|
|
#
?
Aug 29, 2013 15:08
|
|
|
tuyop posted:Thanks, and it's complicated. It's 3100 to savings/debt which is captured by that 14131.49 pre-YNAB Debt budgeted amount + the car loan. I just lump the two together because it's really the same goal. Once the debt is gone, then it's all savings. Paying off debt or funding an investment account both achieve the same thing: long-term financial health. Sports should be food - if you eat it, it's food, unless it's for medical purposes, then it's a medical expense. Also, you have a 'fees' category? What fees? Why are you paying fees? $218 in phones? Didn't you get rid of phones and get cheap prepaids? Are the cheap prepaids costing you $218 a month? And yes, $400+ in misc means you probably should have seperated categories for stuff since that's turning into a junkdrawer of your budget.
|
|
#
?
Aug 29, 2013 15:17
|
|
|
Me in Reverse posted:If we're talking 'YNAB Buffer' when you say buffer, no. Your buffer and your emergency savings should be separate entities, because they're two separate goals. The point of the buffer is to start living off of last month's income rather than paycheck to paycheck. Your emergency funds, ideally, shouldn't impact your buffer. The buffer is a 'lifestyle' type thing, emergency funds are for emergencies. Yeah I don't really care what the line is called. "Emergency fund" isn't accurate for what I'll be using it for, though. I think we'll rename it to "Debt pool" or something. cstine posted:Sports should be food - if you eat it, it's food, unless it's for medical purposes, then it's a medical expense. "Fees" was created to capture a few ATM fees  that toeshoes incurred in some sort of housing emergency. That little slipup has cost us like $15 in tertiary bullshit from a cash advance. It's upsetting."Phones" is high because I had to sit on the phone for 60-90 minutes a few times to sort out a bunch of release and moving stuff with Halifax, Edmonton, Gagetown, and Ottawa. I only have 100 minutes and that usually works out perfectly. This time it wasn't enough and there was no recourse with Koodo for adding some minutes to my plan mid-month. The balance will be reimbursed because it's work related. "Misc" is captured by Mint, it seems like a waste of time to double-categorize that stuff. I don't think we use YNAB in a way that makes adding misc granularity useful, but I might revisit that.
|
|
#
?
Aug 29, 2013 15:28
|
|
|
tuyop posted:Yeah I don't really care what the line is called. "Emergency fund" isn't accurate for what I'll be using it for, though. I think we'll rename it to "Debt pool" or something. That mostly make sense - the only problem with 'misc' stuff is that clumping a lot of stuff into 'misc' is a good way to avoid actually following a budget - I know that I have a tendancy to view things outside of categories as 'DIDNT SPEND IT WOO UNDER BUDGET WOO' and that's been kinda harmful long-term - $300 here and $500 there in 'misc' a month and suddenly you've spent $5000 in a year outside of your intended budget.
|
|
#
?
Aug 29, 2013 16:41
|
|
|
cstine posted:That mostly make sense - the only problem with 'misc' stuff is that clumping a lot of stuff into 'misc' is a good way to avoid actually following a budget - I know that I have a tendancy to view things outside of categories as 'DIDNT SPEND IT WOO UNDER BUDGET WOO' and that's been kinda harmful long-term - $300 here and $500 there in 'misc' a month and suddenly you've spent $5000 in a year outside of your intended budget. The way it works in practice is like this: Hypothetically, it's August 25th, we're out of printer ink, a lightbulb has burnt out, and we need more laundry soap. We budget, say, $60 for all that stuff in the misc category and buy the stuff. Each month I think we usually budget about 50 and there's rollover. Mint tracks the transactions separately as: $45 office supplies $5 household goods $10 laundry This way I can tell that I spent $115 this year on office supplies and $40 on laundry, which is useful. YNAB made sure that we had the money, which is also useful.
|
|
#
?
Aug 29, 2013 17:12
|
|
|
tuyop posted:The way it works in practice is like this: Okay that seems reasonable - I don't use YNAB for actual budget tracking. For personal stuff I use Mint and fairly fine-grained categories, and for the corporation I spend a large amount of time hating my life and wishing for death (Quickbooks). I've made sure that in mint everything has a specific category, since I'm certifiably crazy and have a tendancy to spend money if it's there, regardless of budget - which was being aided by loose categorization making my spending seem 'on track' when it really was a thousand bucks in the wrong direction due to little things here and there that didn't end up in specific categories.
|
|
#
?
Aug 29, 2013 17:30
|
|
|
cstine posted:Okay that seems reasonable - I don't use YNAB for actual budget tracking. For personal stuff I use Mint and fairly fine-grained categories, and for the corporation I spend a large amount of time hating my life and wishing for death (Quickbooks). The more I think about it, the less I like it. Especially after reading this YNAB Blog post by Jesse hisself. I mean, we have a ridiculous number of accounts. Mint is tracking 22. YNAB has 9 on-budget and 2 off-budget. So yeah, I may spend some time soon fixing up the number of categories. The next couple of months should have the number of accounts improved. Hopefully to: Chequing Savings Credit Card 1 (everything, reward card) Credit Card 2 (groceries, better grocery rewards) And I'm not sure if I should bother tracking my questrade accounts on YNAB or not. I mean, soon those alone will be: His TFSA Her TFSA His LIRA His RRSP Her RRSP Possible RESP?
|
|
#
?
Aug 29, 2013 19:05
|
|
|
I started out with my retirement accounts as off-budget, but I regret it. Jesse has a post somewhere about this too and he doesn't include them. Those transactions to put money into them are just spending, not transfers. I haven't gotten around to fixing this yet. The reason I don't like it is because the value of the account changes every day, and I'm not going in and updating it for market fluctuations because there's no budgeting value to that. YNAB isn't a net worth tool; Mint is better for that. So for now, I continue making my investments transfers into the off-budget investment accounts, but the balances in those accounts are just wrong (and I don't care). Eventually I need to get rid of them and somehow convert all the transactions into spending (I hope YNAB makes this easy). Also it will be nice to be entering transactions on my phone without someone peering over and seeing a big net worth number, if you care about that kind of thing.
|
|
#
?
Aug 29, 2013 19:30
|
|
|
Yeah I think I like the sounds of that. As it is now, I have the 1000 that I put into my RRSP as a transfer and a budget line, and the QT account is on-budget but the amount is not updated. It's a bit of a mess and treating it as a straight budget line and output in the register will really simplify that stuff. Edit: Also, what do you use a TFSA for? I've never understood its purpose. Like, I understand what it is, but why isn't clear to me. It seems wrong to use it for something like a vacation because space in your TFSA can be used up. Does your TFSA room come back after you spend from it? tuyop fucked around with this message at 19:43 on Aug 29, 2013 |
|
#
?
Aug 29, 2013 19:39
|
|
|
tuyop posted:Edit: Also, what do you use a TFSA for? I've never understood its purpose. Like, I understand what it is, but why isn't clear to me. It seems wrong to use it for something like a vacation because space in your TFSA can be used up. Does your TFSA room come back after you spend from it?
|
|
#
?
Aug 29, 2013 20:15
|
|
|
tuyop posted:Does your TFSA room come back after you spend from it? Question answered: Yahoo Finance posted:Now, here's where things get tricky. You can also put back as much as you've withdrawn (contributions and interest). What you need to avoid is recontributing that money in the same calendar year. Doing so could put you over your contribution limit, making you subject to an overcontribution penalty of 1 percent per month on the amount you've over-contributed.
|
|
#
?
Aug 29, 2013 20:30
|
|
|
I think I'm tracking about 60 accounts in Quicken, lol! I setup YNAB a couple days ago, and have about 15, which will probably expand a bit as I keep using it. I'm going to use YNAB for budget tracking, and continue using Quicken for detailed tracking of everything. Every transaction will be in both, but things will continue to be broken down more in Quicken. I just like how Quicken does it a lot better. Tuyop, I agree with calling your debt lump sum payment accrual something other than buffer or emergency fund. I'd call it debt payment accrual or something like that. Btw thanks for posting all the YNAB crap over the last few months. It really pushed me to buy a copy when it came on sale this week! Two, actually, but one is sitting to be gifted. Turns out you can use it w multiple accounts on each computer, with Steam only on one account, so my gf can use it on any of my/her computers as we both have logins on them all, and she won't have to mess w steam period! Score.
|
|
#
?
Aug 29, 2013 20:54
|
|
|
tuyop posted:Thanks, and it's complicated. It's 3100 to savings/debt which is captured by that 14131.49 pre-YNAB Debt budgeted amount + the car loan. If I'm reading it right, about 2500 went to this, on top of pulling out inheritance and buffer? I strongly recommend building up the buffer and living on last month's income. It's one of the YNAB goals. I recently achieved this goal and it's changed everything for me. tuyop posted:overage words Notice how there are a lot of overages? If you're frequently over budget, then maybe your budget is inaccurate? Adjust your budget to meet reality. That way you don't get it in your head that you have so much extra, and then have to scramble at the end of the month while feeling bad about failing goals. Ideally you should be over-estimating categories so that you don't spend that money on other stuff. tuyop posted:So yeah, I may spend some time soon fixing up the number of categories. It took me a while, but I finally found a category system that works well for me, especially when analyzing spending trends. Monthly Bills: stuff like rent, Netflix, gym, utilities. Things that go towards keeping me housed and that are under contract. Monthly Consumables: food, home utility, personal care. Things that go towards room and board, but that I choose when and where to spend. Quality of Life: allowance, restaurants, home improvement, etc. Things that make life fun on a daily basis. Travel & Activities: camping, music, sports, small trips, big trips. Savings & Big Items: retirement, baby savings, immigration, moving, buffer, toys, furniture. A new SSD/HDD fusion drive upgrade for my old iMac counts as "toys". Obviously line items are your own, but these master categories have helped me analyze my spending. Bills and Consumables are basic "cost of living" stuff, so I can see what percentage goes to just living a basic life. But what's been a real eye-opener for me has been Quality of Life and how small it is. Not that I've been depriving myself, but I can see how a little goes a long way. When I compare that to my "big trips" subcategory, I really think about the value of my dollars spent, and plan better for the future. Even "small trips" is relatively small. Reducing my big trips and reallocating some of the spending to these other categories plus savings goals has really affected how I feel about everything. Anyway, just an idea, as you work out what suits you best. I love the poo poo out of YNAB. Old Fart fucked around with this message at 21:05 on Aug 29, 2013 |
|
#
?
Aug 29, 2013 21:01
|
|
|
Old Fart posted:If I'm reading it right, about 2500 went to this, on top of pulling out inheritance and buffer? I believe that's how it worked out, yes. Old Fart posted:Notice how there are a lot of overages? If you're frequently over budget, then maybe your budget is inaccurate? Adjust your budget to meet reality. That way you don't get it in your head that you have so much extra, and then have to scramble at the end of the month while feeling bad about failing goals. Ideally you should be over-estimating categories so that you don't spend that money on other stuff. I'm comfortable with the craziness because we're just dealing with the chaotic ripples of both of us getting cost moves to Alberta and my incredibly atypical posting(s) and release. This is not your typical "there is no average month" stuff. I mean, since May our incomes have been: 10442.90 4472.97 11498.91 8282.00 For each month, respectively. Most of that income is complicated reimbursements that have been very hard to plan and end up getting retroactively tracked. We planned using the base income and spending patterns, then work made everything pretty extraordinary. Old Fart posted:Quality of Life: allowance, restaurants, home improvement, etc. Things that make life fun on a daily basis. Yeah I like these distinctions. I think our problem has been that we (ordinarily) run the budget pretty tightly to debt payment and haven't accounted for room for saving for large purchases and trips. Automating that stuff and treating long-term savings like bills would be a pretty big step forward. So, Old Fart, what would you do next month in my shoes? Forget the windfalls, debt, and the bills. You (25) and your spouse (23) make about 5800/month. Rent is around 800 in your area. Your insurance obligations are about 225, other bills are up for grabs.
|
|
#
?
Aug 29, 2013 21:21
|
|
|
After paying bills and allocating modest yet not stringent amounts towards quality of life categories, I would power-save to build a month's buffer. Trying to plan for money not yet earned sucks. Budgeting money you already have is the tits. Old Fart fucked around with this message at 21:34 on Aug 29, 2013 |
|
#
?
Aug 29, 2013 21:32
|
|
|
Do you not have a 'base' budget? I mean, figure out what you spend as a monthly average in every required category over the last year - that's your 'base' cost for your set bills. Rent, utilities, insurance, taxes, debt repayment, your car, gasoline, food, clothing. These are the 'required spends' Then, a six month buffer of living expenses from the above categories should be saved up as your emergency fund. This means *all* of those expenses - if all those categories are $3000 a month, then a good goal is $18,000 in a liquid emergency fund. This means keeping it out of retirement accounts, instruments that may lose value, have any fees of penalties for taking the money out early (bonds, cds). Then, figure out what your long term savings goals are, and save for that. This means retirement, kids you want in 3 years, your house, a new car savings. THEN whatever is left over is vacation in cuba/visiting the parents/buying a macbook air/buying wonderhangers/a new dresser/yurts/basil money. Edit: it's occasionally hard to follow if you're doing this or not - it seems quite often you're not funding things in that order. It seems like you find something you want rather than actually need, and it goes to the top of the list, rather than being at the very bottom. cstine fucked around with this message at 00:45 on Aug 30, 2013 |
|
#
?
Aug 30, 2013 00:41
|
|
|
cstine posted:Do you not have a 'base' budget? My life has changed a great deal over the past 12 months. I've lived in three different provinces, four if you count the 8 weeks (cumulative) or so that I've spent living in Nova Scotia. My marital status changed. My address changed almost seven times with rent ranging from 165/month to 825/month. My commute has changed seven times as well, from a 35km drive/bike ride each way, to a 6km walk/bike ride, to no commute at all now, next month will be different again but essentially free because of my bus pass. I've had a significant career change. There's even more that I can't think of right now. I assume it'll normalize, but right now we're just rolling with the punches and trying to minimize expenses where we can. Our "new month" routine is basically to insert those numbers from the lines that have numbers (Rent 825, for instance) into the budgeted amount. Or divide by 2 for that pay, if it makes sense. For the stuff with no numbers, we take the average of the past seven months. For the stuff that is absurd and unusual because of work or moves lately, we just kind of guess.
|
|
#
?
Aug 30, 2013 01:01
|
|
|
tuyop posted:My life has changed a great deal over the past 12 months. I can see the issue with that - if it's not stable it's a pain to budget around. I'd say, then, that once that's NOT the case do the prior post I made/what Old Fart is talking about. It's going to quit being insane at some point, right?
|
|
#
?
Aug 30, 2013 01:24
|
|
|
Me in Reverse posted:If we're talking 'YNAB Buffer' when you say buffer, no. Your buffer and your emergency savings should be separate entities, because they're two separate goals. The point of the buffer is to start living off of last month's income rather than paycheck to paycheck. Your emergency funds, ideally, shouldn't impact your buffer. The buffer is a 'lifestyle' type thing, emergency funds are for emergencies. I have a question about the bold sentence: what? I don't understand the sentence because I don't understand the alternative to spending money you have. I guess it is spending money you don't have, but how? Where does it come from? Just to make sure I understand what you are saying here, let me outline how I am planning next month. Tomorrow, my paycheck will come for the hours I worked in August. Throughout September I will spend this money on things like savings, food, rent, and so on. Is that the one month buffer? I didn't even realize there were alternatives, so I'm not sure why this is called a buffer rather than 'spending money that you have'? So I don't think I understand what you mean by buffer here.
|
|
#
?
Aug 30, 2013 02:42
|
|
|
MickeyFinn posted:I have a question about the bold sentence: what? I don't understand the sentence because I don't understand the alternative to spending money you have. I guess it is spending money you don't have, but how? Where does it come from? Just to make sure I understand what you are saying here, let me outline how I am planning next month. Tomorrow, my paycheck will come for the hours I worked in August. Throughout September I will spend this money on things like savings, food, rent, and so on. Is that the one month buffer? I didn't even realize there were alternatives, so I'm not sure why this is called a buffer rather than 'spending money that you have'? So I don't think I understand what you mean by buffer here. What you're describing is "living paycheck to paycheck". The buffer objective of living off of last month's income is basically: Say you earn 3000/month. You're ignorant to the virtues of frugality so you spend all of it every month. To establish a one month buffer, you could cut your expenses by 30% and instead spend 2000 and save 1000. In three months, you would have a fund with 3000 in it, which was your old spending amount. On the third month, you could take that fund, empty it and count it as income, and then save all of your current month's income for the next month. So: January, earn 3k, save 1k, spend 2k February, earn 3k, save 1k, spend 2k March, earn 3k, save 1k, spend 2k April, "cash in" buffer, earn 3k, save 3k, spend 3k from buffer (if you're so inclined) May, "cash in" buffer, earn 3k, save 3k, spend 3k from buffer And onward.
|
|
#
?
Aug 30, 2013 02:54
|
|
|
Perfect explanation of what it means to live on last months pay. A lot of people get confused (I guess) when they get paid at the end of the month. How I've always thought about it (but not done it..) was pretend you don't get paid AT ALL next month (sept), do you have the required money set aside for the following months expenses (oct)? If so you're good, if not you're living paycheck to paycheck. Tuyop, I'd still do an average of most of your budget categories. Except for fixed changed poo poo like insurance, rent, maybe utilities, etc. Or perhaps average since you guys got the most recent place this summer, so <2mo ATM?
|
|
#
?
Aug 30, 2013 03:03
|
|
|
tuyop posted:My life has changed a great deal over the past 12 months. And this is exactly why you shouldn't base your spending on future income.
|
|
#
?
Aug 30, 2013 04:23
|
|
|
|
| # ? Jun 3, 2024 15:04 |
|
|
tuyop posted:What you're describing is "living paycheck to paycheck". This is simply an accounting trick where if you have (for example) 6 months of savings in one account that you touch in emergencies only and your "daily/monthly" account where you have 1 month of savings. The same goal is accomplished by having 7 months of savings in a single account. So, in your hypothetical the person in May is still living paycheck to paycheck, just with a 7 month reserve instead of a 6 month reserve. Based on SiGmA_X's comment it seems like this is something for people who don't already have months of expenses in reserve.
|
|
#
?
Aug 30, 2013 05:01
|
|