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The YNAB Podcast
A weekly dose of just the right medicine to help you get out of debt, save more money, and beat the paycheck-to- paycheck cycle.
We have a podcast where we talk about debt (not getting into it, but more of the whole getting out of it thing).
Episode One: Meet Angela
Angela’s family slowly sipped their way through to-go coffees until they’d reached a staggering $85,000 in debt. Just kidding, they bought a house and a pink Toyota, too. Find out how they paid it all off.
Hello everyone! This is episode 1 of a new YNAB podcast series, Debt Stories; real people beating debt and winning financially. I am super excited to get this out there. I want you to hear these stories of real people overcoming obstacles, large and small, to get rid of their debt so their money can start doing what they really want it to do — Rule 1, after all. We hear these stories every day and they are powerful, each one uniquely their own. We’re always looking for ways to keep you, the listener, motivated in your budgeting journey and we thought simply sharing these stories could be very impactful. They are! Wherever you find yourself on your own financial journey, you are not alone and there is power in that and how we can relate and learn from one another.
One key thing about hearing a story is just to pull from it. Don’t judge it. Don’t say it’s not you. Of course it’s not you. Don’t try and explain away the how or the how you couldn’t; just listen and pull learning from it, whatever that learning may be. I’m especially excited about our first episode because Angela is one of our early hires. She’s been with us since 2011, after she and her husband found YNAB; I just didn’t know the details of their story until now.
“Peter and I got married really young; we were still in university when we got married, and we actually made some pretty smart decisions when we first got married. We didn’t pay a lot for our wedding, which I though was smart. We didn’t end up with any debt from that and we also worked while we were in school, so we came out with about $15,000 in debt there.”
Okay, they’re young, they’re married and they’ve got $15,000 of student loan debt. No big deal. This is a story we have heard before.
“And then we decided, about two years later, to build a house, which we thought would be cheaper in the long run. And it wasn’t. We had looked at houses in the area and we thought we can build something much better for what they want for these houses that are already here. We ended up doing all of the carpentry work ourselves. We did all the finishing work ourselves. Peter built the cabinets. But I think it was the finishing. We had decided that this would be our forever home, which was very naïve of us at 25. But we had decided it was going to be our forever home so we put a really nice wood stove in. We put heat in the floors. We put really nice light fixtures and the master suite was amazing. But we came in about $50,000 higher than we expected on our expenses.”
They also bought a car, which of course meant a car loan.
“It was a pink Toyota Tercel. My husband will say it was salmon until the day he dies, I’m sure!”
Life just happens, doesn’t it? Maybe your story doesn’t involve a pink, or salmon, Toyota Tercel, but all of us have been surprised by a baby or a breakup or a move or a health scare and had to deal with the financial ramifications of moving through the unexpected. Often, these are the make or break moments, when you realize you need to get serious about your budget and your finances, really crack down or you’ll be in real trouble. For Angela and her husband, unfortunately they were in real trouble.
“We would spend every month and if we didn’t have money to pay off the credit card we would move it on to a line of credit and it just kept growing, growing, growing and growing… I remember he left the house…”
Peter, her husband.
“…and I said to him, I said if you get a speeding ticket, we can’t pay it because he used to drive fast, and now he’s a police officer, which is hilarious. He actually ended up getting a warning and I was like, I don’t know what we would have done if you’d got a ticket because everything was maxed out.”
And what was their tipping point?
“We got to $85,000 in consumer debt, outside of our mortgage. I’m telling you, YNAB saved our life!”
So here they are. A young family with everything ahead of them but saddled with $85,000 of consumer debt, which colored every facet of their lives.
“We had just recently moved across the country too, away from our whole support system and all of that, so I think that emotionally I was in a rough place at it was being pregnant in a new place. I felt ashamed; I didn’t want anyone to know. I think I broke down when Peter was in training to my mom and just said I don’t know what we’re going to do. We will go bankrupt.”
I always find it very interesting, and unfortunate, that shame is so often the strongest emotion in situations like this because shame usually leads to secrecy and isolation. And the truth of the matter is there are so many people in this same place: your neighbors, your friends, your co-workers, unless you work at YNAB of course. But no one is talking about it and so the shame, the secrecy, it just continues. It’s easy to stand on the outside and say oh wow, $85,000 in consumer debt, that’s a lot. But when you aren’t in control of your money and you’re just trying to stay afloat, it’s just one little decision after another. It happens, little by little, and unless you change your behavior, it just keeps inching forward, getting bigger and bigger.
“Oh how did we not notice? But it was all split up too in a way and you would justify things like, we were going to buy a vehicle anyway and everyone we knew had a car loan. So instead we just put it on the line of credit because we knew things were going to be tight. You can justify almost anything on a decision-by-decision basis but then everything stacks up and then you don’t know how to get out of it.”
While the debt is building, Angela has one plaguing thought.
“We need to sell this house.”
So many times when people think budgeting, they just set something up, maybe write it all down, get out a fancy spreadsheet, stick it in a drawer or whatever and then that’s the end of the budget.
“I had always thought we needed to do something budget-related, so I would write down at the beginning of the month, this is what we’re going to spend…this is our income; this is what we’re going to spend.”
The budget is never this active, living, engaging thing. It’s just completely wrong.
“But I never went back and actually looked at what I wrote down or what we had actually spent in relation to what I wrote down. So I thought, yeah, we do budgets.”
The budget is only really working when you set the budget and then, of course, you track your plan against your budget. How are you doing against the actual plan? When that’s the case, then, finally, you are really budgeting.
“I saw this reference to YNAB — this was the tipping point — so I downloaded the software, YNAB 3 at the time.”
Angela does her homework and calls up Peter, her husband.
“I called him up, I said, hey, we’re going to do this budget thing; I think it’s going to work. I don’t know why I thought it was going to work at the time, but I told him, we have some money on our credit card, let’s put it on the line of credit for the last time and we’re not going to do that again. This’ll be the starting amount of debt that we have. And that was the last time that we did it. It was amazing. We did that transfer, so we started out with, kind of, a clean slate. For some reason, I remember we had $142 in our checking account. We budgeted that $142.”
I love hearing about the moment; the moment you really decide. You have nowhere else to go. You have to commit. A lot of people can pinpoint the moment that things change, the moment they decided to face it wholeheartedly, to give it everything they’ve got. And the crazy thing is that deciding is the hardest part.
“I don’t feel like we’ve made any drastic changes, other than eating out, which I think everyone who starts to budget decreases how often they eat out. I think the first month we spent $400 eating out, and after that it’s been $100 or less pretty much every month.”
The cut down their eating out by about $300 a month, and also…
“One thing was…”
You’ll notice here, and you can hear it in Angela’s voice that she plays this decision off. She just plays it off as if it’s just not really that important but it is extremely important…
“…and this is going to sound really minor, but Peter used to always get a coffee out every shift that he worked. When we set up our budget, I said, okay, well those are going to come from your fun money category at this point. And he immediately started coming home because he only worked two blocks away from our house. It was really little things like that. Instead of just running through the drive-thru and getting $4 for two coffees or whatever, we would really watch that kind of stuff. I know people say that either it doesn’t work or it does work; it did work for us because we weren’t paying attention before. Just that whole, oh my goodness, if I don’t spend that $4 here, I can buy an extra whatever at the grocery store or I can put it against the debt.”
I love this clip. This explains how just paying attention can make a difference. It’s such an important point. I don’t want anyone to miss the power of awareness. Just being aware of where your money is going, and where you want it to be going is a huge, huge powerful shift.
“I feel like even just not having credit card debt that wasn’t accounted for at the end of the first month was amazing because we had the money to pay it and we knew exactly…we knew how much the bill was going to be for one. We didn’t have to worry about it coming in the mail and not knowing how much we owed. And we knew that the money was sitting in our checking account to pay it off. That was huge. Then I think the second moment was…the first debt that we paid off was our student loans actually, the $15,000 that we had from our undergrad. So when we paid that off, that was a big deal. It was in two separate loans, so when we paid the second one off, I feel like that was a turning point. Okay, we can do this.”
How much debt did you guys end up paying off?
“We paid it all off!”
They paid off all their debt. They’ve learned from their past. They’re never going to take on any debt again.
“We do have a car loan, a new one. It’s, kind of, a marriage concession to have a car loan at this point.”
Okay, they do have a car loan.
“I guess I feel like if everything blew up and we both lost our jobs and we couldn’t do it, we could sell the car, pay off the debt, buy a new car with the cash that we have on hand; it wouldn’t be the end of the world.”
They paid down every drop of their credit card debt and they are entirely in control of their money and in so doing, they’re in control of their future.
“It’s not the emergency that it was before. Before, it was we literally have no money. Now it’s, we have to shift these around and I really don’t want to but we can.”
For so many years where they were stressed and anxious, uncomfortable, Angela and Peter were struggling to budget because it felt restrictive and limiting — just another opportunity to feel like a failure and never get to have any fun. Ironically, it was freedom that they experienced once they fully committed.
“That’s one thing I like about YNAB is that there’s not that judgment of, well you made the decision to do it this way; that’s wrong. It’s just okay well this is what works for your family. It may not be the ideal from a numbers perspective but from maybe a relationship perspective, it’s the ideal.”
It’s exhausting being the one that says no.
“Just not having that feeling of me having to say we can’t do this or we really shouldn’t do this or just, yeah…”
I’ve dealt with that forever. I’m the spender and I’m the one that also says no, so it’s, kind of, a weird combination.
So what’s next for Angela and her family? Whatever they decide is the biggest priority.
“We would like to take the kids to Florida for a Disney trip. I did the same when we were about that same age and so I’d like to take them.”
If you’re ever so lucky, you may write into YNAB and Angela will be the wise sage, the source or all wisdom around how you should handle your debt, how you should do all of your budgeting. She knows it all. I was particularly interested to hear from her how her own experience with debt, and frankly beating it into the ground, has helped her as she’s offered support to YNABers all along the years.
“I share it with some users sometimes who feel really discouraged, and you can tell that they feel discouraged. It’s nice to share that I’ve been there, I get it; I know exactly how you feel. But you can get out of it.”
If you are still drowning in debt, always stressed about your finances and your future, I’m here to tell you that it doesn’t have to be that way. There is another way, and it doesn’t involved doubling your salary or an inheritance or winning the lottery. It does require a commitment, opening yourself up to a different way of approaching your money. But take it from Angela and Peter, freedom and choices are abundant on the other side.
That’s a wrap for our first episode of debt stories. I’ll catch you all with our next story.
If you liked this episode and want to hear more like it, let us know by leaving a review on iTunes or Stitcher, those reviews really help us out. Or send an email to Debt Stories at youneedabudget.com. Also, share this episode with a friend. We love you for it.
Episode Two: Meet Tom
Find out how an IT business analyst from Kenton, Michigan, realized that it was cheaper to quit his job!
Hello everyone! This is episode two of a new YNAB podcast series, Debt Stories; real people beating debt and winning financially.
Today, I want to introduce you to Tom. Tom lives in Kenton, Michigan, a city that’s located between Detroit and Ann Arbor. He’s a retired IT business analyst, a career that helped him earn pretty good money. But, as you’ll soon hear from Tom, even a six-figure salary isn’t enough to guaranteed stress-free finances, in a realization that became crystal clear to him during a conversation with his-then wife.
“I don’t remember the exact question, but I remember the response. She was running up from the basement and she said, “Hah, we’re going to work until we die.” Wait, I didn’t sign up to this! That was the first wakeup call and then….”
How did Tom get into such a tight situation?
“I got into debt the same way I think a lot of people do. I had a pretty good job and my wife was a teacher and she had a pretty good job. So it’s like, let’s go and buy a house. I said, sure. Then let’s go buy a car. Let’s go buy another car because the other car was having trouble, so we just went out…actually, we went out and bought two new cars the same day. That set up a really ugly cycle of cars falling apart at the same time and needing new parts at the same time. Yeah, it was, kind of, brutal.”
The house, the cars, car maintenance and repairs, toss in a couple of student loans and they’re just your typical modern day family, right.
“…she went to school to get her teaching degree and went on to get her masters.”
Tom says those were around 20 to $25,000.
“So I had two car loans. I had two student loans. I had the house mortgage. I had a credit card that was pretty much at the top most of the time”
The credit cards were around 3500.
“I didn’t even have a white picket fence.”
In 2008, when the stock market crashed, Tom had $500 in his bank account, a 150-175,000 salary, and he was barely staying on top of his finances. It was like a game of financial Whack-A-Mole.
“I’m making way too much money to have nothing and I was trying to figure out what to do about it. I was still trying to figure out what’s all this 401K nonsense and I was watching co-workers getting just crushed. It really brought it into perspective. It was like, this isn’t just not working for me, but this whole scheme doesn’t work. I’m not alone so I started looking out, looking outside of myself and my small circle to see what works out there.”
For the next four years, Tom experimented but his budget didn’t take shape right off the bat. He was in a bit of a panic mode, just shaving money off of his expenses wherever he could. So where did he cut back?
“I didn’t have a specific spot because I wasn’t that organized but I just knew there was so much fluff with my income and my-then wife’s income. At the peak of this, we were over $200,000 a year. It was like, there’s money to be had, but rather than trying to figure out exactly where I’m going to take it, I just said, I can live with $100 out. Do that for a couple of months, I can live with $200 out; did that for a couple of months. And then I could start building out a picture of what the budget was going to be as that was going on. I didn’t want to wait until the budget was perfect and fine-tuned and running like a well-oiled machine, I’ve got to start bailing water.”
But those squirreled away dollars added up, and soon enough, Tom had enough in savings, while maintaining his cost of living, that he was no longer afraid to commit cash towards his debt. So he did, and between 2008 and 2011, he paid it all off except for the house. Then he saved some more.
“…and then I was able to also build up about $35,000 in the bank. I remember the time by which I was getting into a routine where I was running all of my budget on last month’s income. I was that far ahead in my savings. I realized I was actually sleeping better, literally sleeping better. I was no longer worried about what are my finances doing? Am I going to have money for this? Am I going to be able to pay for that? It really brought in a lot of confidence around the ability to, I guess, roll with the punches.”
Now that he was living on last month’s income, with considerable savings in the bank, it’s a way better place to be, especially when life inevitably surprises you. Or maybe it doesn’t surprise you because I’ve never met a house that didn’t need repairs.
“…I had to get work done on the roof. And of course, the guy goes in there, it’s like, “Okay, we can do this,” and then he finds out, “Nope, it’s a complete tear-off. We have to replace half the boards underneath.” It was a big project all of a sudden.
The furnace and the air conditioning was another big project. And I remember my son going up and asking me, “Dad, how do you do this? How did you pay for that?” I said, I wrote a check. And he’s like, “What?” He goes, “Well, how did you pay for the furnace?” I said, I wrote a check for that too. He said, “Wait, I don’t understand.” So then I had to sit down and start explaining more of this to him. It’s like well you don’t have to always put everything on the credit card.”
And that, dear listener, is how you get your kids to budget. Lead by example.
“I can roll with the punches by choice. I’m not getting beat to the mat. Rather than just being driven by whatever’s broken next, by whatever bill’s coming next, I can start moving forward and say, no, I’m going to do this instead. I have the ability to respond to the situation as opposed to just reacting out of panic. It was really empowering.”
Now, in the years that I’ve been talking to people about they paid off their debt, very few folks have done it all by themselves. Once you start chipping away and you’re really committed to becoming debt-free, you tend to realize that you’ve got more money than you thought. And even better, it’s not uncommon for life to have a surprise or two in store. One of Tom’s lucky breaks was the result of following his gut and taking action.
“The crash worked out really well for me. I got wind of it coming about the day before it hit. Literally because I was watching TV and I realized this guy in Bloomberg was literally scared. He was genuinely scared as a human being. It’s like, I don’t know what he’s doing but I’m going to transfer what I have in a 401k into the most boring, pathetic bond fund that exists. That was the perfect timing, perfect move because the next day, all hell broke loose. That was luck. That was not smartness. I waited three months and I threw everything to the other extreme.”
I have to interject here. This is not how you make investment decisions. Luck is the key word. If you want to do well with your investments, check out our Whiteboard Wednesday series Invest Like a Pro, or check out JL Collins Stock Series. We’ll link to it in the show notes. Tom’s other windfall came via an inheritance.
“I sat on that for three months, just to get used to the idea that I have more money now. I made a list of everything that I want to do; pay off the house was actually the first one but I wasn’t going to do it yet.”
“I believe some of that credit goes to the Behavior Gap, Carl Richards, and that’s the one that talks about if you get a windfall, just park it. Get used to the idea that you now have a lot more money. At the end of three months, I paid off the house and moved pretty much everything else into investments and then got myself a little treat.” I bought a Tesla Model S.”
Today, at the age of 54, Tom has been comfortably retired for three years. And he’s proof that a big salary isn’t a foolproof way to financial freedom. In fact, his budget helped him discover that his job was actually costing him money.
“By the time I got to 2013, I had a budget that was refined enough and working enough that, yeah, I had a lot of history I knew what was going on with it. I knew what worked. Then I started applying Your Money and Your Life into what I was actually spending money on. How much am I spending on clothes, the food, the gas, the maintenance on the car, all this stuff? I believe it was something like 30 or 40% of what I was spending was in some way attributed to my job. So if I didn’t work, I could take a 30% cut. Then I went back, I was doing the math, it was like, okay, do I have enough or do I have to cut other things. I was able to sort that out; it looked like I could. Terrifying concept! I literally sat on that for six months. After six months, I felt bad because I realized I don’t need to come into work.”
Today, Tom still follows his YNAB budget and he’s just enjoying life.
“This summer, some of the things I’ve been working on is putting together some cycling trips, little bit of camping. And I’m getting a little more active in the community and getting a little more friends because when you’re working all the time, sometimes they’ll tend to be work-related friends. Also trying to figure out if this is where I want to actually live.”
And the YNAB love is contagious.
“Both my kids use it and their significant others use it as well.”
Tom even shares his love of budgeting with his community. One woman in particular was having a tough time managing the budget for her yoga studio. She didn’t think the business was doing well, which couldn’t have been further from the truth. Tom recalls her saying…
“”I don’t have any money. I don’t know what I’m doing. I can’t figure any of this out.” I was like here, let me show you this then. She asked me a couple of questions about how to get it set up. It was like text, text, text, text, text, quiet. Two hours later, I’d get a text, she goes, “My God, this has changed my life!” Things started to click with her very, very quickly and she realized she was better off than she thought, which is really common. They’re terrified of setting it up but once they everything entered in and look at it, it’s like okay I thought it was worse.”
We hear that a lot. If you’re struggling with debt, the hardest part is just to face it. Once you do, when you’ve got a plan in place, you just feel better. You can get out of debt and the best tricks for doing that are simple, if not easy.
“It’s living below your means and also you define what you do with your money. It’s okay to like money. There is a lot of messages that come in about money is evil. Money itself is not evil. Money is what you get for your life when you go to work. It allows you to take your work and convert it into something else, whether it’s a vacation or a car or whatever. It’s that option.
Everyone is out there telling you what you need to have in your life to be happy. I think that was one of the things that I got first from Early Retirement Extreme is those gadgets don’t do anything for you. I think part of the wake-up there is I realized, like with the credit card, I have bought things that I’m still paying for and I can’t even tell you where in the house they are. That’s how much I don’t care but I’m still making payments against it. You’re robbing your future self so badly.”
Well, there you have it, boring but true. At the end of the day, whether you earn a little or a lot, the challenge is to live within your means, and grow them, if you can. Spend less and set aside a little whenever possible. Those little amounts will add up and they could make all the difference when life throws you an expensive surprise.
“I was surprised at how quickly I was able to turn things around when I started. I started pushing, and just keep going, keep going, keep going. And every time you start hitting a little win, a little milestone it gives you more power to say, okay, I can get the next hill. At a certain point look around, it’s like, wow, everything has changed. It’s a great awakening I guess.”
Meet Andy & Melissa
Episode Three: Meet Andy & Melissa
He’s a pastor, and she’s a stay-at-home mom. With five kids and $30,000 in debt, stress levels were high. Find out how a spice jar solved their money problems.
Welcome, everyone. This is Episode 3 of a new YNAB podcast series: Debt Stories: Real People Beating Debt & Winning Financially.
Today, I want to introduce you to Melissa and Andy, who live in The Southeastern United States. Andy is a pastor, and Melissa’s a stay-at-home mom.
Like with many couples, Andy and Melissa haven’t always seen eye-to-eye about how to handle money—and it wasn’t until their debt reached $30,000, for the second time, that they finally got on the same page.
Today, we’re going to hear how they paid off their debt, and the surprising secret ingredient to their success … a jar of basil.
Now, let’s flash back twelve years, to when Andy accepted his job in their current city.
Andy: Yeah, we live in the south east and we’re blessed to be in an area that has relatively high incomes and low cost of living.
Andy: When we came from Southern California we lived in a much smaller house because that was all we could afford. We actually made a lot of money coming out of Southern California. We didn’t hit the very peak of the market but we were just after the peak when we left. We owned for two years and made a pretty good chunk of change but when we got here, we kinda got wide-eyed because they were taking us around houses and looking at houses that man this is incredible!
Andy and Melissa were blown away by how much more they could get for their money. And, as you can imagine, extra square footage was enticing to their family of seven.
Melissa: We have five kids. Our oldest just started college; she’s 18. One is 16, one 13, one 9 and one 6, so we have a 1st grade to freshman in college.
They bought their first home in The Southeast and, bit by bit, began to rack up debt on their home equity line of credit. That debt was, ultimately, what attracted them to YNAB. Hey, maybe debt can be a good thing. Oh, wait …
Of course, living beyond their means wasn’t exactly a new problem …
Andy: I would say for us, throughout all of our married life, which is over 20 years now money has always been a point of difficulty and contention. And it’s kind of been something that we had a hard time talking about and it was always the hot potato that we would pass back and forth. One of us would deal with it for a while, get frustrated and then would hand it to the other one.
Hot potato—not fun, and much less effective than budgeting.
Andy: We had debt in excess of $30,000. It was all in a home equity line. It was the dumping ground where we would accumulate debt in other spots and then we would dump it in as it was smaller interest rate and made us feel a little bit better that we had debt but it’s the “good” debt.
“Good” debt, it turns out, looks a lot like … just, regular, old debt.
Andy: We bought some cars and those had been out of that home equity line. We had actually refinanced at one point and got rid of it and actually built it back up. So really, when we hit that 30,000 that was our second time around building it to that spot.
Now that their home equity line of credit had hit $30,000, for the second time, Andy and Melissa’s ears perked up when some friends mentioned their budget.
Andy: In the beginning of 2015, we had some friends that were using YNAB and they had been using it for quite some time and said, hey this is a little bit different; you might want to try this.
And they did, but it took a little trial and error to learn to love YNAB.
Andy: I have to be honest. My initial reaction to budgeting was very negative. My wife has always been the driving force of, make budgeting happen and make paying off debt happen. This was not something of me leading it; it was really her leading me and encouraging us to really think about how that would happen. We were paying it off when we started doing YNAB, and even in a slightly bigger way or faster way than we were doing it, but it was really about eight or nine months after we started doing YNAB that we really decided we’re going to take this much more seriously. It was actually some of my wife’s actions that made that happen.
Melissa, it turns out, was a natural budgeter. What prepared her?
Melissa: Well I think part of it was just how I grew up versus how Andy grew up. We, growing up, did not have a lot of money. How we spent it was just we were very, very frugal and so being in debt was very concerning to me. It felt very insecure. That was very difficult in how we were communicating. Whenever we would try to talk about money, we would start fighting about it.
This is the part of the podcast where we discover that leading by example is the best way to inspire others.
Melissa: In January 2015, I found a little savings challenge on Pinterest. I kept it a secret and I had a little spice jar in my drawer and just started socking away money. That was in January. In March, we started YNAB. After a fairly large fight, it was the point where we realized we had to do something.
Since they had started giving every dollar a job in YNAB, it became difficult for Melissa to keep her Pinterest savings challenge a secret, but she got creative. For example, if she was returning something to the store, she’d ask for cash back, and set that aside.
Melissa: Throughout the year, I thought what am I going to go do with this money. I wanted to do something at Christmas time. In the meantime, I’m starting to build up, what was for us, a fairly substantial amount of money.
Then Melissa had an idea. She’d heard about a website called mapyourprogress.com (that we featured in Episode 189 of the show) that offered coloring-book-style posters. The idea behind the posters is that, as you work towards a goal, you color in a new section of the artwork to visually represent your progress. Melissa liked that idea, so she made her own.
Melissa: Then at Christmastime, I wrapped up a canvass and I wrapped up my jars of money. … I want to say it was about $1300, a little over that. I was so excited. I’d been waiting for a year and I was jumping up and down in the living room, taking this to him.
Melissa’s gift was a turning point for their family.
Andy: When she presents this to me, I was thankful and dumbfounded and then a little confused.
Andy: After the initial shock wore off of, like, wow this is an amazing thing that she’s done and it’s not just she figured it out the beginning of December, but she’s been doing it all year.
Melissa: So we sat down that day after Christmas and did the math and started coloring. We did a big floral leaf design, and for every $100 that we paid off, we colored in a leaf. We went from paying off $30,000 what would have been 30 years paying the minimum down to $10,000. Then when we started coloring, we thought it would take us three years and it ended up we got really excited about it and cut back in a lot of areas.
Andy: And that picture that sat on the wall became a tradition for us every budget meeting of, okay, now we’re going to take this down. We’re going to have our budget meeting, we’re going to color and let’s see how many we can color in this time.
Melissa: So we established skinny January, that month right after Christmas, and we slashed every category that we could. Food got cut in half. Clothing was zero. Just stuff like that. All of our budget categories that could be cut, we slashed. We got our 30-year debt down to about 15 months.
Melissa: We were a team and we were communicating better than we had ever been before. We both might disagree about something but there were ways to compromise. It was so much better.
Imagine that! Not only were they communicating better, Andy and Melissa had found a way to cut their debt repayment from 30 years, to just 15 months. Incredible.
Andy: We started seeing that we could get control of what we had. Before we were using YNAB, where our money went was just a mystery. You’d look up sometimes and be like, hey, we got this amount, we can go and do this or we can buy this. And then a couple of months down the road, you’d come up against something like insurance and be like, oh well, I guess we can’t pay it all right now or we’re going to have to defer this. Why do we not have money in the checking account for this? There was no understanding about where our money was going or what our money was doing.
Once we started using YNAB, we had a much clearer picture and we had better communication about who was spending what and how that money was transpiring.
So, where did they cut back?
Andy: I think over the year of doing YNAB up to that point, we figured some things out. When we first started, things like eating out were much higher. We realized we can do this easier and cheaper if we have stuff at home. That was a huge adjustment, not only for me but for our kids too because they were used to … if it’s after church, or we don’t want to do something, then we’d just go out.
Andy: But with a family of seven, you don’t go out anywhere for under 60 bucks.
Predictably, getting their kids on board was an entirely new step in their family’s adjustment to budgeting …
Melissa: Well when we first started, they were not excited, especially about skinny January. They were not happy. But now they’ve got used to the fact that we have budgets. My son loves higher-end shoes, … if he wants a new pair of Nikes and we make him wait and we shop around. We say sorry, buddy, we have $1.50 left in the clothing budget, got to wait until next month of your work hard and buy them yourself. Our oldest has been doing her own YNABing for about a year now when she started working and it’s been great. It’s been great for her to learn how to budget. It’s hard when all their friends are getting their own brand new iPhones and they get to go to Cancun on spring break and stuff like that. Trying to help them realize that’s not necessarily the best choice for our family.
With their financial goals in mind, Andy and Melissa worked intensely at cutting back for short bursts of time—sometimes having as little as just $10 of spending money, each, per month. But, as we all know, budgeting is a marathon, not a sprint.
Andy: Well I think we wanted to try to figure out a balance of what we could throw at the debt and at the same time, make sure that we had enough to live. That was the constant push and pull of like, we could throw this much at it but we’ve still got to think about these things that are coming up. We were working as hard as we could but that didn’t mean that we were eating peanut butter and jelly sandwiches every day. We still had kids playing high school sports. We still actually took some vacations. We still had a hot water heater break down in the middle of it.
Andy: We did have one fortunate shift with some things at my work and the way health insurance was handled that was a pretty significant help to us. But what I was grateful for was that we had the tools to manage that. Before, I think it would have just been oh well here it is, and then I don’t know if we’d have done a good job of saying what do we need to do with this.
This ‘balance’ thing was Melissa’s break-through—budgeting wasn’t just an exercise in cutting corners, it was an exercise in using money to create a life that her family loved:
Melissa: When we were on vacation, I remember stressing because my kids wanted to buy a $6 coloring book at a gift store. but then coming to the realization was like, wait, no, we have the money for this in our vacation fund and it’s okay to spend it. This is going to make our kids happy on vacation, let’s do it. That’s definitely been a lesson I’ve had to learn, realizing I don’t have to be super frugal all the time. It’s okay to spend this money and enjoy it because that’s what we’ve set it aside for.
Getting there wasn’t easy, but they’d finally found their financial stride. When I asked how they managed to stay motivated through those skinnier months …
Melissa: even in the most difficult months, try to make it fun. I did a lot of baking with the kids, watching a movie on a Friday night, just naming something skinny January, and I think also having our big 20 x 24 canvass on the wall in the kitchen, where it was a visual reminder where we were at. How far we’d come, how far we have to go … just the excitement, when someone would come over and say what is that!? And it was so fun to be able to tell them and they would get excited for us. And it was a good reminder for the kids too. When we would color in a whole bunch of leaves and then they would walk in and say, wow you guys did a lot today.
Financial peace is among the best gifts you can give yourself but, as Andy points out, their budget is about so much more than money:
Andy: Some of the fighting we had really wasn’t about the money; it was partially about our differences in the way we saw things in background. It was also my fear and my, just even shame, of the way that I had done poorly handling money and having to admit that. But there is such freedom in honest communication, being able to, both of you together, deal with it. It can be really, really scary, threatening even to your relationship, but it’s worth it.
I’ll leave you today with one final budgeting tip. Melissa says, if you try the spice jar Pinterest challenge, be sure to choose a spice you really like because that’s what your money is going to smell like.
Basil worked, pretty well, for her family.
Episode Four: Meet Daniel
He and his wife paid off $30,000 of debt in three years. It was all about choices–find out whether they picked air conditioning or Amazon Prime.
Welcome, everyone. This is Episode 4 of a new YNAB podcast series: Debt Stories: Real People Beating Debt & Winning Financially.
In today’s show, we’ll meet Daniel who, along with his wife, paid off a formidable $30,000 of debt in just a little over three years.
So, let’s go back to the beginning. In 2011, Daniel and his wife were married. In 2012, they purchased their first home in Newburgh—a town just outside of Evansville, Indiana—and,
by 2015, they were greeting their newborn daughter.
Daniel: Yeah. We were down here in 2012 and very shortly thereafter we bought a house. Did an FHA loan, which I think at the time was 3 or 3.5% down, which we actually had to get from my wife’s family.
So colossal mistaken number one there!
A down payment of only 3 percent meant more mortgage to repay and, therefore, more time stuck with debt payments.
… and, it was at about that time that Daniel started car-shopping.
Daniel: We had already been talking about maybe having kids in a few years, so I thought, in my infinite wisdom of “Hey, I’m never going to be able to get a real sports car any time in the … uh … future … I’m going to be in the future, at least for another, say, 18 years or so. So I sold the car I had for barely what it was worth, maybe even less than what it was worth. Ended up buying a sports car, and the guy lived in eastern Pennsylvania. He picked me up at the airport in the car. I gave him the cash. He directed me to the highway and I drove back home.
Colossal mistake number two there.
He didn’t actually have the cash and, since the car was older, Daniel didn’t qualify for an auto loan. Instead, he’d taken out a higher-interest-bearing personal loan from the bank.
The total I think on the loan was maybe $4,000. It was an old car; it was 1989. I got home. Made my first payment on that and that’s about the time it dawned on me that I had made a mistake. You know, Dan, this is really stupid. I started thinking about how do I pay this off a little quicker? We were still living paycheck to paycheck and not able to really pay any extra between a bunch of credit card debt. I think we had close to $13,000, maybe a little more, credit card debt at that time.
Daniel: Can I afford to buy this car was never a thought that really crossed my mind. It was I need to have this car; I’ll just make it work.
Daniel: Spoiler alert – I didn’t need to have the car.
Daniel: I carried on paying minimums on everything for a little while. Always in the back of my mind was we’re not getting ahead. We’re spending every cent that comes in, a lot of it is going for interest, what are we going to do?
In addition to paying their minimum debt payments, Daniel and his wife had a household to run, including the expense of their daughter’s daycare while they were at work. They each earn a modest salary—Daniel’s degree is in computer science:
Daniel: I do QA. QA doesn’t seem to be quite the great way to make money that actual development, software engineering is. But it’s plenty to pay the bills with I suppose.
His wife is a teacher.
Daniel: She teaches high school chemistry let’s see, this year she’s teaching chemistry, biology and physics, I think.
Living paycheck to paycheck just wasn’t cutting it (read: it was incredibly stressful), so Daniel’s interest was piqued when he stumbled across YNAB.
Daniel: Again, buried my head in the sand and kept going. I was actually on Steam, the video game. Actually, YNAB popped up. It was part of the Steam sale in 2014, is when I bought it.
I had heard a little bit about it on the personal finance subreddit that people saying they’d used it before. I was like, what the heck; we’ll give it a try. I started reading everything that was available on the website. I was like alright, this guy is making a lot of sense. So gave it a shot, and many, many arguments and adjustments later, we are starting to be able to pull ourselves out of a hole.
Daniel: It was mostly me reading all of this and taking it in, and I didn’t really involve her in the process until I had already started. I started playing with numbers, and I was being the no-you-can’t-do-that guy and that [11:00] very well.
Arguments, or as I like to call them “thorough discussions” can flare up a bit for couples that are brand-new to budgeting, especially when one partner has to win over the other, but they always pay off …
We have a lot of, now, good conversations and worked out how we can make this whole thing work.
… worked on a lot of problems and our hang ups around money and really started making progress. My wife had to give up getting her hair and nails done as often as she liked, but we’re working back towards that actually.
Of course, Daniel sacrificed some things, too.
Daniel: I have a big obsession with really anything with a Nintendo label on it, old video games, new video games, really anything in that realm. That and a long time ago, my brother got me into working on cars and so I got a little bit into doing performance-related stuff, new wheels and upgraded suspension and exhaust. An old car I had, it just had to have that new $900 turbo. So I gave up a lot of car and video game stuff in the meantime.
Even before they started using YNAB, the couple kept things simple with joint-accounts:
Daniel: We had one checking account, one savings account, everything would go in there and then we would just run that thing down by the end of the month.
As for “savings”, Daniel says:
Daniel: That had, if I remember correctly, about $50 in it and that was it. That was all that it ever had.
And then there was their debt: the mortgage, the car loan, student loans and their credit card … which, by this point, they were managing with their budget.
Daniel: Grand total I was looking at, yeah, about $13,000 from just credit cards starting out. By the time I really started gaining footing with YNAB, I think I had about $3,000 left on the car. Since then, we started doing biweekly payments on the house. We paid about an extra $3,000 or $3,500 there. Then more recently, just within the past three months, I think you may have seen it in the bio thing I sent, we paid off $12,000 worth of student loans, not all in one go but one chunk a month, about $4,000 a month.
You heard that right, they made three $4,000 monthly payments on the student debt! But how?
Daniel: Yeah! We had been saving up because we wanted to get on a better footing with the house because we were still paying more in interest than we were in principal every month, and for almost five years at that point. I was like, you know what? Let’s go crazy. Let’s refinance to a 15-year loan while interest rates are still low.
So we’ve actually started saving up money because we weren’t sure if we were going to be able to hit that magical 20% loan-to-home-value ratio. So we’d saved up almost $10,000 just from any little windfall that would come in. If she got a three paycheck month, that whole thing would go straight into saving. If I got a bonus at work, which is generally once a year I’ll get one and it’s a paycheck and a half to two paychecks, we’ll say, that would go straight into it. Then we’d save every month; any little bit of extra cash would go straight toward that.
Then right before we started refinancing, we got a letter in the mail from the County Assessor and our home value had actually shot up.
With the increase in their home’s value, Daniel and his wife were able to reach a 20 percent loan-to-value ratio which enabled them to refinance on better terms, with a 15-year loan. So they went for it …
And we didn’t end up having to put anything into it, so we had almost $10,000 at that time just sitting around. I said alright, you know what? Let’s chop off one of these loans, so I picked the highest interest one and killed that. Then the next month, killed one more because we still had enough money left over to do that. Then we got a check in the mail from our previous mortgage servicer, our escrow refund, which I had completely forgotten about and that put us over enough to be able to kill one more loan and that put us at like $11,965, super close to $12,000.
That all totaled up to around about 30 grand over the course of … it seems insane because we just started using YNAB in June of ’14 so a little over three years and that amount of extra debt gone is just insane to think about now.
That unexpected $12,000 was a great start, most certainly, but now let’s hear how Daniel and his wife cut back to pay off the full $30,000.
Daniel: It was a little crazy. If it’s hot out, we generally have the air conditioning off unless it’s absolutely unbearable. So things are a little sweaty in our household and it sucks as much as you can imagine it sucks. I’m trying to think of what else we did that was extreme. We live technically outside city limits, we’re in a county so trash service costs us I want to say $25, $30 a month. We canceled that and I take the trash to the dump myself. It started getting a little extreme. We could probably start trash service back up at this point in the deal.
Daniel: Other than that, we dropped our cable. We do internet only now. Our cellphone plans used to be with a … we used to have unlimited data on Verizon back when we first got married. And that was actually one of the first things to go. We’ve cut that down now to about $55 a month for the two of us combined, where it used to about $160 or $170. We use Republic Wireless.
Daniel: Then we canceled a gym membership because we weren’t it enough and that was close to $70 a month.
We used to eat out all the time. We would easily spend $300 to $400 a month just on dinners for the two of us, not including going out to eat on lunches or waking up on Saturday morning and going, I don’t want to make eggs. We stopped going to the movie theater. That was always going to be our thing. We would go the movies all the time. Now it’s Netflix or Redbox. And we do have an awesome drive-in theater that we still go to probably once a month during the summer.
Daniel: The people I work with think I’ve either gone insane or that I joined some sort of cult by doing the budget. They like to, jokingly, invite me out for lunch every couple of days. They’re like, “You going to lunch or is that not in the budget.” And I go, “No, not in the budget.”
They also mind their grocery budget.
Daniel: We try to keep it around $500 for two adults and a small child. We’re doing okay with that. Generally, we’ll have some left over at the end of the month that I will roll toward a debt payoff or something like that, to try to keep from inflating it too much as we go.
Still, Daniel and his wife have agreed that some things are non-negotiable.
Daniel: Let me look at my budget here. We make sure we have fast internet, we have new phones, we both want to have late model phones. We basically refuse to give up anything that would directly benefit our daughter. She does tumbling classes right now, so that was a red line. She is going to tumbling. She will do something fun. Us saying we don’t have enough money is not an option for that.
Then our guilty pleasure is we still have Amazon Prime, which we try not to use extensively. Prime Day got a little expensive in our household. Prime Day got a little expensive in our household …
I’m actually doing this from our dining room and I can look across to the kitchen and can see an instant pot right now, which we actually got this year on Prime Day.
They’re still paying off their home, and have about $37,000 of student loans to repay which, Daniel estimates, will take another four years but things are looking up. As Daniel explains, their efforts are snowballing …
Now, they aim to keep a cushion in the checking account, and they were even able to pay cash when a household emergency popped up.
Daniel: Yeah, after cutting all those expenses back and finding a thousand places to save a dollar, we’re starting to make some headway. One credit card payment has gone so that just freed up a load more that can still go on the next one and the next. Very quickly it gets out of control to where we were able to start actually saving. When the new roof popped up, it wasn’t the end of the world. I’d much rather just thrown that at the student loans but a leaky roof has got to be taken care of.
Daniel: … we try to keep at least 10,000 in checking right now. [27:42] is our monthly expenses we’re fully buffered. Age of money right is 50 days, as of today.
With a load of debt gone and an Age of Money of 50 days, life is feeling a lot sweeter these days …
Daniel: Oh yeah, it’s night and day. I still have worries in life but none of them are money-related.
Now I worry about having enough saved up for my daughter’s college education or being able to make fun memories while she’s young, that sort of stuff.
Decreased financial stress has made their marriage happier, too. Money conversations are …
Daniel: Completely different. We have our budget meeting, and I try to budget mainly on the weekends or right after a pay day. I’m basically in charge of the budget but she has, essentially, veto power on whatever. [29:09].
Daniel says that the biggest mindset shift was realizing just how much every bit counts.
Daniel: It’s not about finding one place to save $100. You try to find a hundred places to save $1. If you’re getting by now, and by getting by I mean you’re spending basically down to zero every month, then you’re making it work. You’re just not making any progress. The progress you can make from there is just going to snowball. It’ll keep getting faster and better.
Some people might be in the situation where they’ve cut all they can and they’re still barely getting by, so I don’t have good advice for that situation. But if you can find a place to cut, then that’s a place where you can use that money to move yourself ahead in life, as opposed to what we used to do. We would say “we had an extra 30 bucks so let’s treat ourselves.”
We try to think of extra money coming in as something we can use to improve our lot in life instead of another place to spend.
If you’re feeling overwhelmed by debt, Daniel’s advice is:
Daniel: Just keep at it. Just Rule 3 it until you make it through. We started out barely making it by. I think we both have a salary in the mid-30,000 range.
Every time you get a bit more money, instead of thinking I deserve this or I need this, think, how can I use this to put myself in a better position.
The most important thing is to just get started! Life is full of unexpected twists—and some of them will be in your favor. When you’re actively working towards paying off debt, you’ll be positioned to make the best use of any windfalls …
Daniel: … every time we find a way to move ourselves forward, it seems like a new door opens and we find another way to move forward a little bit more.
Episode Five: Meet Brittany
This family of four in Marietta, Georgia, had racked up $263,000 of debt–a number that used to keep Brittany awake at night (and that was before the job losses). Still, they made it work.
Welcome, everyone. This is Episode 5 of a new YNAB podcast series: Debt Stories: Real People Beating Debt & Winning Financially.
Today we’ll meet Brittany, who lives with her husband Keith and their young daughters—first-grader, Amelia, and pre-schooler, Charlotte—in Marietta, Georgia … a suburb just outside of Atlanta.
Between student loans, a mortgage and credit cards, Brittany and Keith were in debt to the tune of $263,000—a number that used to keep Brittany awake at night …
… and that was before she left her full-time job and Keith was laid-off …
Brittany: He works for CSX, for the railroad. Right now, he is a dispatcher, which is, kind of, like an air traffic controller but for trains. He’s worked for CSX for nine years. For the last several years, he’s actually been an electrical trainer. He’s the manager of the trainers essentially, or he was.
Very recently, CSX have gone through massive layoffs and he, unfortunately, was part of those waves of layoffs. Incredibly fortunately, we have continued to pay his union dues in the time that he has been working as a manager, for almost five years. So when he got laid off, it was incredibly easy for him. He had a one-week enforced vacation and then went back to dispatching.
Jesse: Just months before Keith lost his job, Brittany underwent a huge shift in her career, too.
Brittany: In February of this year, coincidentally about a month before the layoffs at CSX started happening, I quit my well-paying government full-time job with pension and benefits and salary and paid time off to start freelancing because I was miserable.
I am a freelance marketing manager/consultant/whatever project work I want to pick up.
Jesse: So, how did they wind up with so much debt, in the first place? Like with so many other people, it happened bit by bit …
Brittany: The easiest way to look at our debt and that build-up of debt was a slow uninformed creep. Really that’s what it was. It was not really being on top of the total. I’ll be perfectly honest, when I finished my Masters degree, I didn’t even know what my total student loan debt was.
And I didn’t know how common that was until I started talking about it, which no one does, and until I started getting that paperwork. Then there the middle-of-the-night panic attacks and how am I ever going to get out from under this and what have I done with my life, I’d graduated with a Masters degree in a field that I didn’t necessarily want to pursue.
While I think it’s opened some doors since then, I’m still not totally sure that it was worth all of the student loan debt that I have. But, you know, those were the choices that I made and we made those choices very incrementally.
It would be a vacation here or a car payment there and all of a sudden we were just building massive amounts of debt that we didn’t even realize we had.
At the same time, that there’s the large chunks of debt and then there’s that creep of credit card debt that I was really unaware of. Because I had a credit card, but for a long time we maintained separate credit cards.
Jesse: When Brittany discovered YNAB, those middle-of-the-night panic attacks made the decision to sign up easy. At that point, she had just started at her full-time job.
Brittany: In November 2015, when I signed up for YNAB, I was like okay I have to figure this out. I found a job where I was making pretty great money and came to this realization of Keith is making good money, I’m making good money, I know we’re going to have a lot of expenses in terms of daycare and that sort of thing but there’s no reason that we can’t start to really hone in on debt.
We were at a point where we weren’t putting any more debt with either our credit cards or those large expenditure car payment, student loan kind of things, but we weren’t getting on top of it. We were just paying those minimum payments every month; maybe an extra $50 or $100 here or there but we weren’t really paying anything that felt substantial or felt like progress.
Jesse: With Brittany’s $52,000 graduate degree complete, they stopped the slide into more debt, but the realization that minimum payments, alone, weren’t the way out from under their existing debt felt unbearable.
Brittany: In November 2015, we had our house, obviously, so that was around $190,000 in debt. We had a $21,000 credit card balance on one card. So the student loan, the car payment, the mortgage payment, all of those felt very within the realm of normal for me.
Jesse: It was the credit card that really had her worried.
Brittany: We were paying hundreds of dollars a month in interest. I was like, this is ridiculous. We’re paying nearly $300 a month to maintain this balance that I don’t even want.
Jesse: A balance that never seemed to go down for stuff they didn’t even care about.
Brittany: Dinners that we had many years ago, crappy Ikea furniture that we had thrown away a long time ago. It all felt very pointless a The balance wasn’t going down; we were paying I think $450 a month and something like $40 a month was going towards the principal of it. It was foolish!
My husband is a little bit more laissez-faire when it comes to our budgeting. He was not staring at the ceiling in the middle of the night. I would have a panic attack and not really understand why. Then all of a sudden realize I was worried about money. I was worried about buying groceries the next week and not having to put it on the credit card. That was where I was like something is not working.
Jesse: In November 2015, Brittany and Keith had been together for twelve years, and they couldn’t have had more different outlooks on their financial situation. That was before YNAB.
Brittany: When we started using YNAB, it was really interesting because it actually became a whole new way for Keith and I to, like, work through things in our marriage. Now we have these state-of-the-union talks, where we talk about money in a very concrete way, not just like, oh did you pay all the bills? Yeah, I paid all the bills. Okay.
Now we talk about, okay so what do we have coming up in the next year, what do we have coming up in the next quarter, where are we thinking about spending, where can we be saving, what can we eliminate that’s not necessary, what are our priorities. All of those kinds of conversations had never happened before.
We just spent money and we were like, as long as we can the bills it’ll be fine. Keith’s constant refrain is, “It’ll work itself out.” That was just infuriating.
YNAB became a tool for us to have those conversations within a framework that was like we’re being proactive and we’re doing things about it but we’re not getting on each other’s nerves. We’re not insulting one another. We’re not saying that your priorities are wrong just because they’re different from mine. And we’re still working through it. We work through it every day. It gave us the tools to be able to do that with a website. That’s the part that feels very revolutionary for our marriage.
We had used other tools. I can put together a heck of a spreadsheet but if it’s not getting used, it doesn’t really mean anything.
Jesse: Brittany and Keith’s budget gave them the framework to have meaningful conversations about what they really wanted their money to do. And that communication, and compromise, is how they got results:
After Christmas 2015 our total credit card debt was right at $21,500. We have since paid off 100% of that, which is really incredible
When we started using YNAB, my goal was debt pay-off. I want to pay off all of our debt. My husband’s goal was, “Let’s pay off our debt in a way that doesn’t make me feel like we need to be reusing toilet paper. I want to be able to take vacations. I want to be able to live our life. I want to go out for dinner once in a while, maybe not as often…”
So we’ve been able to pay off that amount of debt in coming up on two years, still being able to live our life, still being able to go on vacations and buy Christmas presents and all those kinds of things. We’ve paid off debt, not accruing any more debt and living our life, that’s where I feel like we’ve really succeeded in that.
Jesse: Not only did they manage to pay off the credit card without totally sacrificing their quality of life, Brittany and Keith wisely set some money aside …
Brittany: We had to take a really hard look after Keith got laid off. We have about a four-month emergency fund, which includes paying our other debt. Our student loan, our car payments none of that is in jeopardy. That also includes being able to pay for daycare and pay for all of the other things. Essentially, stripping out all the extraneous stuff, we could live for about four months with no income coming in, from either of us.
Jesse: Imagine the relief of knowing that, if you lost your job today, you could continue living, same as usual, for the next three months or more. That’s financial peace. And it’s a good thing that Brittany and Keith set money aside. Their next goal was going to be paying off more of Brittany’s student debt—now down from a total of $52,000 to $36,000—but with Keith’s transitioning employment, their priorities have shifted.
Brittany: We have found out that there’s a potential that Keith would be getting transferred back to Jacksonville. So there’s a lot of question marks there. And the only thing that we definitely know is that we don’t want to move Amelia in the middle of the school year. Right now, our goal is to save as much money and be as liquid as possible so that if we do end up having to maintain two households for a few months, we can make that happen.
Jesse: If you’re wondering where Brittany and Keith cut back in order to pay off so much debt while saving for the uncertain times ahead …
Brittany: The easy answer is Target. I love Target. Target is my happy place some days but it became untenable at some point to continue spending in the way that we were, so I just don’t go shopping that often. Unless it is an absolute emergency, if I can get by without it until the following week, when I already have a grocery store trip planned, I don’t go.
Even if the money is there in the budget at the end of the month, it feels a lot better to move that money either into the next month or into that pay-off category, instead of being like, okay well there’s technically money there, we can spend it, right?
Jesse: Panic attacks aren’t worth it and, at least for Brittany, they seemed to be the result of ignoring their money problems. Looking back, she offers this:
Brittany: Awareness was really important for me. There was a lot of fear in the unknown and letting that unknown of my own budget … Coming to terms with that was really step one and that was by far the hardest part. Once we got there, then you can do something about it. But that sticking-your-head-in-the-sand policy that doesn’t work.
And the simplest way to pull your head out of the sand?
Brittany: I wrote a list. I just listed out Brittany’s smaller student loan; Brittany’s larger student loan; Keith’s credit card; Brittany’s car payment. It was just itemizing it.
Jesse: The other tip she offers is to be realistic. Keith made it clear, and Brittany agrees, that stripping their lifestyle back too dramatically wouldn’t work. They needed to build a budget that got them ahead, financially, but that also provided for some of the things that make their life enjoyable.
Brittany: At the end of the day, what works the most is what’s sustainable for the long term. We’ve been doing this for almost two years. If I went off the deep end, I guarantee it would not have lasted for more than maybe three months. Moderation and mindfulness has been much more important than just attempting to not spend any money, ever.
Jesse: When it comes to paying off debt and getting ahead, I talk a lot about doing it marathon-style versus in sprints. While sprints can be a useful tool, I totally agree—the marathon mentality will keep you focused on the bigger picture, and it’ll pay off big. And if you’re budgeting with a partner, it’s an excellent way to find compromise in your budget.
Brittany: That was a lesson learned after many years of marriage and many years of negotiating skills and many tearful conversations. Those conversations about money, you know, it’s not easy. But it’s definitely given us a new tool deck of ways to have conversations about things.
Jesse: And, with all of the progress they’ve made under less-than-ideal circumstances, Brittany and Keith’s family has taken notice.
Brittany: They’re using YNAB too, which just makes the heart so happy. Yeah, my mom is using YNAB now. She works in real estate and my stepdad is a contractor so they’re variable income people. But they’re using YNAB now to great success, in a really different time of their lives. They’re focused on they’re going to be retiring in the next ten years and how do they get on top of their… their challenge at the time was where are we at in terms of that ten-year retirement goal, whereas Keith and I are where are we at in terms of saving for college for our children. And we can each use this tool in a way that makes the challenges of two very different financial situations with two very different sets of goals.
Jesse: In spite of major transitions, Brittany and Keith are keeping the trains going. They’re making progress on their debt, padding their bank account for the unknown and—instead of worrying—they’re just getting it done.
Brittany: I’m on YNAB every day, and we have that framework to be able to rise up to these challenges. I don’t want to say it solves the problems because they’re not really problems; they’re just different challenges, and we have the tools to be able to rise up to those.
Jesse: What a great note to end our show on. If you feel overwhelmed by your money problems, reframe them. Find the challenge, make a plan and tackle it!
When you do, maybe we can have you on the show?
Episode Six: Meet Sydney
This family of four lives in Downsville, Utah. When her husband lost his accounting job, they turned to the credit card. When they hit a $15,000 balance, she discovered YNAB.
Jesse: Welcome, everyone. This is Episode 6 of a new YNAB podcast series: Debt Stories: Real People Beating Debt & Winning Financially.
Today’s story is a testament to the power of budgeting—and how, no matter how responsible you might already be with your money, what a difference a budget can make.
We’re about to meet Sydney. She stays home with the boys, and her husband is an accountant.
Sydney: We were always fine. We always had enough to cover our needs and put a little bit away and we didn’t really have to think about it too much. I did try to budget before YNAB, but mostly to me it just ended up being that I tried not to spend any money at all …
Jesse: And, just like any diet that’s too restrictive, when the frustration becomes too overwhelming,when it really just gets to you, well …
Sydney: I would sort of binge.
Jesse: Sydney said she’d notice something like her clothes were old and falling apart so she’d go on an $800 shopping spree.
Sydney: It wasn’t very planned out so it didn’t work super well.
Jesse: So, not bad. They were getting by and even saving a little. But when Sydney’s husband lost his job things started to turn …
Sydney: … almost a year and a half there where we were just living off of savings and then we still had all of our expenses. When it came to September 2016 and he got another job, it was like we just hadn’t been paying attention at all. We knew that things weren’t really good but we didn’t really want to look. We were about $15,000 in credit card debt. So that was, like, really depressing.
Jesse: A $15,000 credit card bill, plus interest, is no joke. But, considering that they’d gone for more than a year-and-a-half without income, it could have been much worse. Thank goodness they had savings to lean on.
Sydney: I actually knew about YNAB during that time because I had a friend on Facebook that just raved about it.
Our living expenses were fairly, it was fairly inexpensive. I kept thinking, well, as soon as we have an income I really want to try out this YNAB. Looking back, I’m like, it would have been perfect; I could have budgeted out every month and said, this is all we have for this month until, you know. So I finally signed up for the free trial, and it just made all the difference.
Jesse: As you can probably imagine, it wasn’t hard for Sydney to convince her accountant-husband that they should try out budgeting to pay off their credit card balance.
Sydney: We’re lucky that we’re like-minded in that way about our finances. He was definitely on board to just hit it hard and take care of it as soon as we could. We just went through, went down the list of our expenses and found where we could cut back. We changed our phone plan so we weren’t paying for as much data, and realized that we were still spending $500 a month eating out, which is just ridiculous now, looking back on it. It really just made us super aware of our spending habits in a way that we hadn’t been before.
It was just so nice to have things like clothes built into the budget. You know, I kind of talked about how I would binge, and it was just so nice to, kind of, have permission.
Jesse: You know what else is nice to have? A zero-balance on your credit card. And that’s exactly what Sydney’s family achieved. Her husband started his new job in September of 2016 and, by March 2017—just six months later—they’d paid off the entire 15 grand!
Sydney: It’s gone!. We hit it so hard. It was our main focus and I think focusing on it like that for any longer than that probably wouldn’t have been super healthy. But it’s just all that we thought about. You know, my husband picked up overtime and I picked up babysitting jobs and, yeah, as of March it’s paid off.
Sydney: We have some student loans now but now that we’re in the groove, we’re like we should probably work on these pretty hard too. It’s definitely changed our mindset a lot.
Jesse: What a change. A year ago, Sydney’s family spent $500 a month eating out. And now?
Sydney: I budget about $75 to $100, but it still is a little bit of a guilty pleasure.I am kind of like that.
When we were in strict pay down of that debt phase, it was nothing. It was $20, if that. I remember having a cousin come in from out of state and her wanting to go get a smoothie. And, so, took my kids with me and I ordered a medium smoothie and had them split it into three cups so that I could just pay for one smoothie.
Jesse: Talk about a shift in mindset—cutting back from $500 to less than $20 a month as they paid off their credit card, and now feeling guilty about spending under $100 per month.
Watch out, debt repayment is addictive. Now, Sydney and her husband have their sights set on paying down roughly $20,000 in student loans, although they’re factoring in quality of life, as well.
Sydney: Now we’re at birthdays; one of them is having a birthday next week and we might get two presents or something. Maybe go and do something fun that costs money as family, that type of thing. I’ve definitely let off a little bit on that stuff.
Jesse: Compared to before, they’re still spending far less at restaurants, obviously, and there’s the phone bill …
Sydney: We were probably paying 200 a month, honestly, and then it’s gone down to 150.
Jesse: Sydney also keeps an eye on their grocery spending …
Sydney: We were spending about 650 for our family of four. I like to make sure that we’re eating healthy so it’s something that I don’t want to give up too much of. I’m just grateful for the change in the mindset really.
Jesse: Their current situation is a 180-degree turn from where their family was a year ago—financially and mentally:
Sydney: I was so stressed out, and honestly when I first put everything into YNAB the first time, that didn’t help! The very first time that I saw it all written down, I was like, oh my gosh I can’t believe it. I was so stressed out and so depressed. It’s definitely a lot better. It’s just so nice to know that if I use the credit card, I automatically have the money put there to pay it off.
We tell everyone that it has revolutionized our finances. We’ve never felt so in control
Jesse: Never felt so in control. That, to counter your possible negative self talk that you’ll never be able to do this. You can, you are. You’ll get there. And you’ll also be able to say you’ve never felt so in control.
You can do this! Right now! For free!
Budgeting is not restrictive. You won’t be spending less, you’ll be spending right. So what do you have to lose? Except all that debt and stress?
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