From Bankruptcy to $50k in Savings as a Single Mom
If you’ve followed the YNAB blog for a few years, then you’ve already met me—and you can read about my personal armageddon here. The timeline, which I shall shorten here for your benefit, encompasses debt, a lack of communication about that debt (although there were other things, too), marital separation, foreclosure and bankruptcy.
Pretty much all the things we don’t sign up for when we say “I do.”
The Messy Part…
We walked away from a half-million-dollar house in a down market and lost nearly a hundred grand. Coupled with our consumer and tax debt of about $40,000, declaring bankruptcy made the most sense. It was a difficult decision. But it was one of the best decisions I have ever made.
I filed for insolvency in June of 2012. YNAB was my fierce guardian throughout my nine months of bankruptcy, during which I piloted a family of three on a severely restricted budget. And when I was discharged in March 2013, YNAB stayed at my side, faithfully reminding me that I had the power to control and direct every aspect of my finances.
Figuring It Out…
I have managed to amass just over $50,000 in my savings account. Now please understand: I am by no means a six-figure earner. I am an author, freelance writer and editor. I homeschool my 11-year-old and drive both of my children here and there to lessons and playdates like any other mum. I am fully middle-of-the-road when it comes to the demands on my time and the amount of money I make. Ain’t nothing special here.
Which I hope makes my story even more inspiring. Because hell, if I can do this, anyone can do this.
Not only have I managed to save a bundle of dough, I’ve still been able to take my kids camping, to area attractions, to musical concerts and to the swimming pool whenever they want. They get swim lessons and trumpet lessons (and now, thanks to a little more chip-in from their dad, acting lessons, karate and sleepaway summer camp). I enjoy wine and great food (but never in a restaurant), keep my 10-year-old car in great shape and am able to spring for highlights every couple months. New boots once a year. Just bought my first Miele vacuum a few weeks ago—cash.
There are sacrifices, of course. I don’t join my friends for movie or pub nights; I wait for the cheaper walking or coffee dates. I use Nivea instead of Lancôme. I shop almost exclusively at thrift stores. I plan my car trips carefully to conserve gas. I wear the same pair of brown boots every day. (It hasn’t negatively impacted my romantic life.) I’m on my fifth year with my running bra—but I’m ready to bite the bullet and shell out for a new one.
The magic of saving lies in these little decisions. That’s half the battle.
The other half is socking money away. That’s YNAB’s magic. The software helps you stash little bits of money in teeny weeny pockets that, if ignored for long enough, turn into great big pools of cash. For me, it looks something like:
$15 a month for if and when a small appliance breaks down.
$40 a month for the kids’ summer camps.
$10 a month for school fees.
$20 a month for birthday gifts and parties.
$60 a month for Christmas.
$60 for business expenses.
$40 for business travel.
$45 for conferences.
The medium-sized numbers add up even more powerfully: $200 a month into my car repair category has given me a healthy float in case something should happen to my unsinkable, unstoppable 5-speed Ford Escape (120,000 miles and counting). $100 a month into my car replacement fund. $100 into our international travel category. $100 for regional vacations. A two-month buffer. A variable income category.
Oh, The Possibilities…
Many of these categories don’t get drawn down fully over the course of a month, much less a year. And when they don’t, the dollars really start to add up. So much so that you might even get to the point where you can look at your chunk of change and say, “Huh. There’s a lotta dough here. Why don’t I make some new spending decisions?”
I might just do that. I am looking at 2016 and am thinking about maybe reprioritizing and taking a big trip with my boys. And my cushion also gives me a fund to draw down should I choose to take fewer clients and focus instead on producing more books.
YNAB is powerful at stashing money away. Its power is compounded by your own day-to-day decisions to delay gratification and employ reasonable fiscal restraint.
What Gran said was true: Look after the pennies, and the dollars will take care of themselves.
I’m living proof.