I just spent a bit of time staring at my budget for August. It doesn’t look so bad on the surface. I just paid my insurance bill and had enough money in that budget category to cover the bill, thanks to planning ahead. I’ve started putting away a little bit of money every month to pay for my eye doctor appointment and new contacts in December. I’ve got a plan in place to save for the roadtrip I’m taking with friends in October. This is all very good.
One glaring problem, however. I have $100 in my “pet care” budget category. My cat is having surgery in a few weeks, and the estimate I was given was close to $400. Plus I will likely need to buy food and litter at some point this month.
The question now is how to deal with this. Admittedly, it’s a minor problem. I use YNAB, and for those of you not familiar with the system, one of the key points is to live off of last month’s income. What that means is that the money that I have available to spend this month is actually from the paychecks I earned in July. August’s paychecks will be used for next month’s budget. So even though there might not appear to be money in the budget to cover the vet bill, there is money in my bank account. Sure, it’s money that I’ll need for next month’s budget, but one of the great things about YNAB is that these unexpected expenses can happen, and you just tighten the budget each subsequent month until the problem is solved.
For example, let’s say I absolutely cannot tighten the budget at all this month and go over budget by $300 this month. So in September, I have $300 less to budget. But what if I need that money next month and can only cut $200 from my September budget? No worries. I can just keep things tight again in October, and suddenly, my budget is looking perfect again. Confusing? Kind of. That’s why I have a spreadsheet to keep me on track.
Of course, my plan is to not go over budget by $300 this month. But looking at my budget, there just isn’t room to tighten things by $300. Not unless I pull money from the savings categories, which I refuse to do, or take money that I have budgeted for my upcoming eye exam, which I could do, but I’d just have to re-budget it later, so it doesn’t actually change anything.
It’s not a huge problem, and part of the reason I used YNAB was so that if these large, unexpected expenses occurred, I wouldn’t have to touch my savings or my emergency fund. But even knowing that, it bothers me to look at my budget and know that I’m going to end the month in the red. Not much I can do about it, but I am going to really watch my spending this month so that I save where I can. I’d like to finish out the month less than $200 over budget.
It’s also incentive to finally deal with the box of stuff labeled “Things to sell on eBay” that has been sitting in a corner for a month.
I think once this is all said and done, I’m going to start setting a bit of extra money aside every month in my pet care fund, just to have a bit of padding in case of unexpected expenses. Even though I have an emergency fund, a little extra preparedness never hurts.
I completely understand your budget woes. I have pets too & sometimes they can be extremely expensive when something unexpected happens. I just recently had to take one of my dogs to the vet because she was sick & that took quit a toll on my finances. I’m seriously considering YNAB. I’ve seen a few other pf bloggers mention it. How long have you been using it? Is it really worth the money? I’ve been reading your blog for a little while. I really enjoy it. I just decided to start a pf blog myself. I would appreciate it if you would check it out sometime & feel free to leave comments & suggestions. – Luna
Hi Luna,
Pets can be extremely expensive, but even in the mornings when I am woken up by a furry paw in my face, I always remember that they’re so worth it.
I love YNAB. I started using it in January of this year. I use the spreadsheet version, which is the cheaper version. I’m kind of a geek about spreadsheets, and wanted something that I could very easily use from wherever, rather than risk installing in one place. That’s just me though – I’ve heard rave reviews about the full version as well.
For me, it’s been worth every penny that I paid for it. My finances are in much better control than they were. I am planning ahead, so it means that the month my insurance bill hits, I’m prepared for it. I also am paying much better attention to where my money is going. I am often horrified to see how much money I’ve spent on certain things in a single month.
For me, it’s also created somewhat of a bit of a sense of accomplishment. One thing YNAB does is shows you the percentage you spent out of budget that month. I love the idea of finishing the month as much under budget as well. I’m kind of a geek like that!
I’ve written a bit on YNAB on my blog, and just so there’s full disclosure I do advertise it as well, but I advertise it because I love it, not because I plan to make a fortune from the referral. I want people to try the system, regardless of whether or not they sign up through my referral link.
So that’s my opinion. Congrats on the PF blog! I’m going to check it out as soon as I post this!