I am a web application developer by trade and on the side I got sucked into following our state's unique politics. I do freelance photojournalism when I have time and enjoy photographing the many rowdy political rallies we have. As a result, I will be blogging mostly about politics but will probably throw in some other topics for fun.
While I am thinking of a good first topic to stir everyone up with, I thought I would put a plug in for some financial things I have been working on during the past few months. Many people I run into say "If I have to balance my checkbook every month, why can't the government do the same thing?"
It is a valid point. However, how many of us are very good at balancing our own budgets? Truth be told, it can be a real pain to figure it out. It takes a lot of work and who wants to sit in front of a computer for six hours with a pile of depressing bills when we could be playing on Facebook instead?
I would rather do my taxes. At least I get a refund for my trouble.
I suspect I am not the only person who found it easier to wing it every month and whenever I needed to make a purchase, just check the bank account to see if I had enough. And if I guesstimated wrong and the quarterly HOA bill was drafted from my checking account the same day I bought a stack of Justin Bieber CD's (to cut into ninja throwing stars...yeah, that's it), then that is why I have overdraft protection.
A couple years ago, I ran into the daily Dave Ramsey podcast. Like most people, I have a little bit of credit card debt and listening to his podcast every day motivated me to try to get it paid off. So I setup my budget in an Excel spreadsheet and started cutting back on eating out at lunch every day.
It worked for a few months and I made some real progress. However, trying to track everything on a spreadsheet is a real pain. I eventually grew tired of the effort and lapsed back into my bad habits of just peeking at the bank balance.
Eighteen months and $3,300 later and noticing the growing minimum monthly fee, I decided I needed to stop doing that. I started looking online for some software that would help me out. I've used Quicken before, but like Excel, it always seemed like it was more trouble to keep it updated than it was worth. It probably isn't, but I like things to be easy.
Sure enough, I found what I was looking for. The software is called YNAB and stands for "You Need a Budget." Obviously, they hit the nail on the head. I found it at www.youneedabudget.com and downloaded the trial version. Last year, when I started using it, the trial version only lasted for seven days. Now it is thirty-four days.
I was skeptical that seven days would convince me to shell out $60 I didn't have but I gave it a go. That's only the cost of four Bieber throwing stars. I could always substitute some late 90's Britney Spears for my growing arsenal.
I was surprised at how easy the software was to use. Getting the budget sorted out was a little more difficult. YNAB has some good documentation online that explains the concept behind their zero-based budgeting.
The basic idea is that every dollar coming into the bank account has a job to do. The goal is to use every single dollar before you actually use it. At the same time you are setting aside any leftover money (yeah, right) to act as a buffer to eventually be able to pay the next month's bills in the current month. In other words, no more checks bouncing.
Dave Ramsey sort of has a similar plan for getting out of debt. His idea is to first save up a $1,000 emergency fund, then start paying off debts smallest to largest and as each debt is paid off, take the money from the previous debt and add it on to the payment for the next one.
It isn't exactly what YNAB does but YNAB makes it very easy to implement the Ramsey plan. Both advocate zero-based budgeting and planning all expenditures before the month begins.
After several months of using YNAB, I have to say that it works very well. The software is very easy to use and paid for itself in two days. I found $60 pretty fast after deciding to eat peanut butter and jelly for lunch instead of eating at Tom's BBQ every day. And the leftover money is going toward paying down my overdraft credit card.
So if you think the government should do something like this but you hate counting pennies, try this out. It makes budgeting a bit more fun and you will enjoy the lack of stress in your life every week instead of praying to the gods of pop rock that the bank account makes it one more day without bouncing.