OK I admit it. This is not the first blog I have started. I was trying to compartmentalize everything into neat little subjects - but I'm just too eclectic to stick to just one topic for long. So here is my new attempt - write about what I'm figuring out, as I live my life. Record my lightbulb moments, not just for myself but hopefully for a wider audience. Some of the things I figure out are life-changing, some are not, but all of that experimentation in life can be recorded and hopefully help someone. So, here I am.
For my first post, I would like to talk about something near and dear to all of us - money. Everyone already knows how important money is. It gives us power. It helps us enjoy our life. It helps us survive. But not everyone has the tools, or the knowledge, to take control of their money. For me, money was one of those topics I desperately tried not to think about. Whenever I did try to improve and bought a book, or a new budgeting tool, I quickly became frustrated. It just never clicked. I lived life from paycheck to paycheck, gleefully (or guiltily) spending whatever came through my hands. I was unable to spend on larger-ticket items like home improvement projects because the money got dribbled away on small things. I lived in a mindset of scarcity. I had large debt on credit cards, and paid way too much interest on that debt (you can thank me now, Capital One).
What did I do when it all got too much to handle and I started going into the red? Consolidate! You've heard that advice, right? Get home equity loans and pay it all off, then pay back the equity loan at a lower rate of interest (and if you work it right, take the interest off your taxes as well). So I did just that. Numerous times! Problem is, every time I paid those stinkin' cards off, I used them and built the debt back up again. Then I had more debt than I started with - the equity loan, plus new debt on the cards. At one point I had three mortgages! Yikes!
My strategies clearly did not work. We've all heard the cliche' that the definition of insanity is doing the same thing over and over and expecting different results. It was going to take that awful b-word - you know the one - BUDGET - to get me out of the endless cycle I created for myself. And I had no clue how to do that.
I needed a tool - and since I don't mind computer work, I figured a software program would work. Quicken, however, was way too time-consuming and not user-friendly enough for a spender like me. Looking at their prediction that it would take 15 YEARS to get me out of debt did little to inspire me. I tried Mint as well, which is a free online budgeting tool. But I mistrusted putting all my financial data "in the cloud." I even tried going old-school and using budget envelopes.
Enter a budget-saving tool that, at least for me, clicked. YNAB.com. You Need A Budget. Because everyone does. Not only is the software user-friendly, with an easy-to-manage interface and a handy app to help record purchases on-the-go, but they also offer training tutorials taught in real-time virtual classes! They start from the basics - philosophy - and help you to get out of your old mindset and into control. They offer lots of assistance, from daily "tips" that you can access on Facebook, to user forums that let you connect with others who use the system.
I started my YNAB experience in October, 2013. At that time, I had thousands of dollars in credit card debt. I had no clue what I was spending my money on, but never had enough to last (thus the credit dilemma). I entered everything into the YNAB software, recorded all of my accounts, all of my budget categories, and started that first month by noticing what I was spending and by thinking about what a good target for spending in each of those categories should be. This system completely revolutionized my life. I started wondering about why I was spending so much on certain items. Take cable television for example. I was paying for 300 channels when we really only used 20, plus the on-demand feature. Making this connection empowered me to call my cable company and inquire about whether I could downgrade to a more basic service and still keep on-demand. Why, yes, I could (though it took me three calls to connect to the right person who was willing to help me downgrade). And voila, I saved $80 a month. I did the same thing with car insurance and cellphone bills. I remortgaged one last time - at a much lower interest rate (from 9.9 down to 3 percent interest). The important thing here - I saved money because I made a connection and thought about it - and I did that, because I began budgeting in YNAB. Once you see where the money is going, it gives you insight and empowers you to take control.
So here it is, May of 2014. I have zero credit card debt. Yup. For the first time in my life. I still use the cards, but pay them off totally at least once a month. Since I have already budgeted the expenses I put on the card, it's no big deal to pay that out - the money is in my account. I have saved about $300 a month on the monthly bills (by making those phone calls), another $200 on the mortgage, and I have found ways to save money in other categories, like groceries. I just took a trip to Europe - which would NOT have been possible if I had not budgeted. This month I could not believe that even after my two weeks in Italy, I was able to sock away $400 in savings. I retired in February and we're doing all this on less money than I was bringing in when I was working!
The only thing I feel badly about, is that it took me so long to have my lightbulb moment. Everyone Needs A Budget. YNAB, thank you!
No comments:
Post a Comment