Budget Project: Baby Steps #1 and #2

Update on my Budgeting Project! Which thankfully, has been going extremely well. As I've mentioned before, I'm following Dave Ramsey's Baby Steps to work on getting out of debt. Here's a quick update.

Baby Step #1: $1,000 into an Emergency Fund -- DONE!

I am now complete with Baby Step #1. I have to admit though, I've done baby step #1 multiple times and I *always* ended up tapping into it! This time, I'm going to make sure I'm more disciplined and held accountable and NOT touch it.

Reasons I tapped into the emergency fund: travel expenses, holiday costs, TTC costs. Not true "emergencies". So, now I've completed Baby Step #1 for the 5th or 6th time! Time to stick with it. So far, so good.

Baby Step #2: Pay off All Debt with the Debt Snowball -- IN PROGRESS! 

Things that have stalled my debt snowball: The holidays, the adoption costs, December birthday costs, and the IVF charges.  Haven't made much dent into my debt snowball. But good news is, I'm curving my spending somewhat. I have the following debt to pay off:

1. Student Loan debt
2. Outstanding Credit Cards - only 2 cards carry a balance. Out of those, only 1 of those I actively continue to use for the above mentioned debts.  

Budgeting using YNAB

I've been using YNAB consistently for 3 budget months now (Nov, Dec, Jan).

First, I'm BUDGETING! Sadly, this is the first time in my adult life that I've kept to a real - true - honest budget. After the hurdle of getting acquainted with YNAB, I've really gotten used to it. What I've changed about my habits:

• Daily: I input any expenses "on the go". For example, if I get gas - I input it at the gas pump on my app. Makes life easier to have everything in there as the expense happens. The great thing about YNAB is it remembers your payees, so this is really quick. I have gotten behind on this a little bit because I seem to be spending left and right for Christmas. Need to be more consistent! 
• Time: Takes only a few seconds. 
• Weekly: I have a Reminder set on my phone to review expenses / clear transactions from my accounts. Why weekly? Honestly, it was just to keep me honest and to keep me on top of it! It only takes a few minutes. I only have 3 accounts I really "work" with: my checking account, my savings account, and my only active Credit Card. This is also when I reconcile my accounts. I've started off doing it weekly, so I can get into a habit. Also, so there's "less" to reconcile at a time. 
• Time: maybe 10-15 minutes (tops - but this is mostly due to learning curve, I expect this to be more like 5 minutes in the future). 
• Monthly: Once a month (usually on the 20th of the month) I've been setting my budget for the next month. I chose the 20th because all of my current-month expenses are cleared by the 20th.
• First, I reconcile my accounts, to make sure I didn't miss anything from my weekly reconciliation. I was importing the transactions from my accounts, but since I'm inputting my expenses "on the go" - I do not have a need to import. This saves me time. 
• Second, I input all income I expect for the month I'm budgeting for. I'm a month ahead, so what I earn in one month, I spend for the next month (i.e. November earnings go to December expenses). 
• Third, I input all the planned expenses into my bank ledger for the next-month, so I can get my "working balance" (just a thing for me - I like knowing how much to expect in my account, one way I reconcile). This makes weekly reconciling easier, since I do the majority of the work here. 
• Time: 15-20 minutes 

I'm in the process of seeing where I can curve expenses. Expenses that I plan to cut in 2016: 

• Massage - Yearly Savings $708
• Gym Membership - Yearly Savings $245 

Rainy Day Funds and Savings Accounts 

Something new that I'm going to start, now that the new year is rolling around - I'm going to start allocating funds to my Rainy Day Accounts and Savings Accounts. I just need to assign values to each category: Ultimate Goal, Time to Goal, and then monthly allocation. What's great about this is that I can figure out the values relatively easy since I'm in the mist of the holiday/birthday season. Here's what I'm planning to save for: 

• Christmas Fund
• Kid's Birthday Fund
• House - Hardwood Floors 
• Travel/Vacation 
• New Car 
• Pet Care - these costs always seem to sneak up on me! 
• Gift Events 

Rainy Day Funds: 

• Emergency Fund 
• Clothing 
• Car Repairs - going to need new tires soon 
• Home Maintenance 

I totally customized my Budget Categories. The goal around this was to look at my optional spending and see about curving the costs. I also wanted to lump together my expenses that I need to report on my taxes. I work from home and track my utilities for tax reporting. I love how you can totally customize YNAB categories to whatever you want. Originally, I had the traditional categories (House, Utilities, Food, Auto, etc). This works so much better for me. It just took me a little while to get used to the different organization, as I prefer the traditional categories for mental peacefulness. 

• Mandatory - Monthly Fixed
• Mandatory - Monthly Variable 
• Mandatory - Not Monthly 
• Tax Reporting - Monthly
• Tax Reporting - Variable
• Savings - Mandatory (Rainy Day Funds)
• Savings - Optional 
• Optional - Monthly Fixed 
• Optional - Variable 
• Giving 
• Pre-YNAB Debt 

What's been difficult: It's hard because I normally like going by the balance in my account. Previously, I would move all my extra funds into my Savings account and keep the balance in my checking account at $100 (one way I reconciled). I have a higher interest rate in my savings account, the main reason I moved the funds.

Now, I'm going by the budget since I'm saving for future costs and just keeping the funds in my checking account. Was thinking I could still move it to Savings, but it takes too much extra time to look at each category, add it up, and move the right amount. So, now the balance in my checking account is higher than I normally keep it because all the "savings" funds are staying in there. I'm still working on overcoming this mental barrier to accept that since I've been doing my old method for the last decade or so!

Overall, I'm extremely happy with YNAB! I just need to stay on top of things. Now, I need to curve my extra spending and start making a dent in my Debt Snowball.