You Need A Budget https://www.youneedabudget.com Personal Budgeting Software for Windows, Mac, iOS and Android Tue, 19 Oct 2021 15:07:20 +0000 en-US hourly 1 Budgeting Lessons Learned From My Six-Year-Old Temporary Blinds https://www.youneedabudget.com/budgeting-lessons-learned-from-my-six-year-old-paper-blinds/ https://www.youneedabudget.com/budgeting-lessons-learned-from-my-six-year-old-paper-blinds/#respond Wed, 20 Oct 2021 11:00:00 +0000 https://www.youneedabudget.com/budgeting-lessons-learned-from-my-six-year-old-paper-blinds/ Question: How long will a set of temporary paper blinds (the kind you first put up in a new home before you install the permanent window coverings) last? Answer: At least six years. I’ll let you know when they fall down or disintegrate, but they appear to be going strong. The paper blinds hanging in …

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Question: How long will a set of temporary paper blinds (the kind you first put up in a new home before you install the permanent window coverings) last?

Answer: At least six years. I’ll let you know when they fall down or disintegrate, but they appear to be going strong.

The paper blinds hanging in my bedroom (that happen to be about a year older than my almost-kindergartner) perhaps could’ve been replaced a long time ago.

Instead, we keep them. 

Six-year-old temporary blinds
My temporary paper blinds with real staying power.

Why We’ve Kept Our Temporary Shades

I’ve had this conversation a couple dozen times with my wife as we’re headed to bed:

Do we have the money to get some permanent window coverings in here?

I don’t know – probably? How much do they cost?

They’re pretty expensive. $800 – maybe more.

Well, do what you have to do. That’s a pretty good chunk of cash – wouldn’t hurt to wait a while.

So, we waited a while. Because temporary blinds are pretty cheap. And permanent window treatments are not so cheap.

And while we waited, $800 passed through our hands many times. But we never bought permanent window coverings.

Window Treatments Just Didn’t Seem That Important to Us

All because every time we considered the purchase, it just didn’t seem all that important. It didn’t really line up with our priorities, there were other things we’d rather spend the money on, and the temporary blinds were working just fine.

And this frequent decision wasn’t just a hypothetical floating around in our heads. We use a zero-based budgeting system that clearly lays out everything we need and want to spend money on. So that $800? It literally got earmarked somewhere else every time.

I don’t know about you, but purchases in the $200 to $1,000 range always trip me and Kate up. They seem too big to just run out and buy, but too small to save up for. So they get pushed off until we finally give up and just buy them. Or, in the case of the long-living temporary blinds, we stand our ground. Neither makes sense.

A Solution That I Can Live With for Window Shades

I’ve figured out a way to have my cake and eat it too when it comes to getting new window shades. After all, those temporary blinds will need to get replaced eventually. In my budget, I set up a category called Home Repairs & Improvements. I set aside $50 a month, and eventually we’ll have however much money we need to buy permanent window coverings.

Even better than having the money, we’ll have given ourselves permission to make the purchase. And until then, our six-year-old temporary blinds are working just fine.

Start setting your mind at ease for those big purchases that feel too small to save for with your own budget in YNAB, an award-winning budgeting app. In the meantime, enjoy those temporary blinds and see if you can outdo me. Six years people…let’s see if you can set a new record.

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How Do I Handle My Savings Account In My Budget? https://www.youneedabudget.com/your-budget-is-your-savings-category/ Tue, 19 Oct 2021 11:00:00 +0000 https://www.youneedabudget.com/?p=59081 When you’re setting up a budget and trying to get specific on your long-term financial goals, you might wonder how to treat your savings account in your budget. Well lucky for you, it’s actually pretty simple to start saving. Here at YNAB, we think about things a little differently—especially how something like your bank account …

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When you’re setting up a budget and trying to get specific on your long-term financial goals, you might wonder how to treat your savings account in your budget.

Well lucky for you, it’s actually pretty simple to start saving. Here at YNAB, we think about things a little differently—especially how something like your bank account fits in with your budget. 

We’ve got a proven method, and the reason that it works so well is because it helps change the way you think about your money, which leads to real behavior change.

The thing is, change can be hard sometimes!

And, one of the more confusing issues for new budgeters is how to handle savings. They worry about including their savings account(s) in their budget for fear that they’ll accidentally—or not so accidentally—spend it. But nothing could be further from the truth.

Let me tell you why and give you a tour of how to manage your saving account with a zero-based budget like YNAB:

Saving is Not The Same as Savings Account

If you asked the regular Joe what it means to save money, what would they say? Probably something like “Putting money into a savings account.”

YNAB’s method teaches you to give every dollar a job, and that includes your savings dollars—pretty much the opposite of letting your dollars lounge around in a cushy savings account without purpose. Right?

So, here’s a new definition of saving: “Deferring the use of your money for a later time, for a specific purpose.”

Your dollars just breathed a happy sigh of relief—nobody’s happy without a purpose.

Your Savings Account Doesn’t Matter … Much

With our new definition of saving, the question of location is moot. As far as your budget is concerned, it doesn’t matter if your dollars are in your primary checking account or a savings account. Confused? You’re not alone.

If you’ve never used a zero-based budget before, you’ve probably come to view a savings account as a safe space. Tuck your dollars away in savings, and they’ll be out of sight, out of mind (and still in your possession because you won’t accidentally spend them!). So, it’s no wonder that you’re nervous about including your savings in your budget.

The thing is, your budget is actually how you can protect, and even grow, your savings! Once you’re using a zero-based budget like YNAB, you’ll use your budget to inform your spending (not your bank balances, which can lead you the wrong way).

That big number, your bank balance, doesn’t tell you the full story. It can’t tell you how much cash you have to spend on groceries because it isn’t aware of your obligations and priorities. But your budget? That’s it’s job! Your budget can tell you, down to the cent, exactly how much money you can spend at the store. It knows, because you told it!

So, forget your bank balances, forget that balance on your savings account. Trust your budget. And, that brings us back to your savings account. It’s completely unnecessary to hold your dollars in a separate account because your budget will identify what each of your dollars is supposed to do, including being saved for some future purpose.

Keep in mind, too, that more accounts means more moving parts to keep track of. The more you use YNAB, the more you’ll see that having more accounts only adds unneeded complexity. For now, just remember that the location of your money doesn’t matter as much as the purpose you assign to your dollars.

So How Should I Save Money?

There’re a lot of folks out there (not me) who are natural savers. Even non-budgeters can be pretty good at saving money. But, often, they don’t save with a purpose. Non-budgeters typically save because they’ve been told they should. So they sock away money in a savings account because it feels like the right thing to do.

Putting money in a savings account makes them feel like they’re protecting those dollars. But that’s an illusion. When they see a shiny, exciting thing on Amazon, there’s nothing stopping them from taking that money and spending it. Why? Because that money didn’t have a purpose. It didn’t have a job.

Your savings account might look like this in your budget.
Your savings account might look like this in your budget.

So, give your savings dollars a real job, and be specific! Don’t just create a category called “Savings,” create a category group! And, under that group, set up categories with clearly-defined purposes like “Hawaiian Vacation,” “New Jeep,” “New Android Phone,” “Big Christmas Donation” or whatever gets you excited.

Why be so specific, you might be asking?

Because it’s a lot harder, emotionally, to pull money out of your Hawaiian vacation fund than it is to take it from your savings account. You’ll think twice about if the purchase is really worth it to you. That’s why. You might choose to take the money out, but only after you’ve carefully weighed your decision and Hawaii, for whatever reason, didn’t take priority.

Every Category Is a Savings Category

And how’s this for mind-blowing: your budget is your savings account! Think about it, every category is a savings category. Referring back to our new definition of savings, each dollar in your budget is given a specific purpose for a future use.

… the only difference between your everyday dollars and your savings dollars is how long you plan to save them. For example, the electric bill’s due on Monday, and you plan to buy that new TV in six months. And, then there’s your emergency fund.

All of the dollars have a job, but some will hang around longer in your account. (In the case of your emergency fund, hopefully it will be a very long time!)

The bottom line is that you’re intentional with every dollar. Give them a purpose, keep them happy, and I think you’ll be a lot happier, too! (It’s hard not to be when you’ve got total control of your money.)

Want to get your finances organized? Get started with a free 34-day trial with You Need a Budget, no commitment required. What have you got to lose?

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YNAB Widgets Now on Mobile https://www.youneedabudget.com/widgets-for-ynab-on-ios/ Fri, 15 Oct 2021 11:00:00 +0000 https://www.youneedabudget.com/?p=92853 You’re about to go by your favorite coffee shop. But wait, how much do you have left in your coffee budget? You only have seconds to make the decision. You open your phone, scroll, tap, tap tap tap, scroll, scroll. Alas! The moment has passed. It took too long. No coffee for you. But now…BUT …

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You’re about to go by your favorite coffee shop. But wait, how much do you have left in your coffee budget? You only have seconds to make the decision. You open your phone, scroll, tap, tap tap tap, scroll, scroll. Alas! The moment has passed. It took too long. No coffee for you.

But now…BUT NOW! Imagine this: the urge for a coffee strikes. You open your phone, and right there on the home screen you see your coffee category: $14 remaining. Instant feedback. Grande for me! And you shimmy into the coffeeshop for a guilt-free spending extravaganza. 

Yes. That day can now be a reality. Welcome to widgets for YNAB. 

Introducing YNAB widgets...
Introducing YNAB widgets…
YNAB widgets now on Android
YNAB widgets now on Android

Wait…YNAB Widgets? What?

If you’re a mobile user, you now have the ability to view categories right on your home screen. They may seem like a little thing, but trust me friends, they are not. You have not fully lived your best budgeting life until you’ve tried these.

Widgets are available in iOS 14 and Android 7 or higher and come in multiple sizes. They mirror important information from the app so you have quick and easy access to it. 

How to Add a Widget for YNAB on iOS

  • From the Home Screen, touch and hold a widget or an empty area until the apps jiggle.
  • Tap the Gray add (+)  button in the upper-right corner.
  • Select YNAB and choose from three widget sizes:
    • Small: one category
    • Medium: three categories
    • Large: seven categories
  • Tap “Add Widget”

In the example below, you can see this user has opted for two small widgets (one category each) and one medium widget (three categories).

Choose the size of your widget for YNAB
Choose the size of your widget for YNAB

How to Add a YNAB Widget on Android

  • From the Home Screen, touch and hold an empty space, or pinch the screen with two fingers. 
  • Select YNAB and choose from two widget sizes:
    • small = one category, 
    • large = scrollable list with as many categories as you’d like
  • For a large widget, tap Save after you’ve selected your categories. A small widget will take you back to the Home Screen after selecting the category. 

In the Android example below, you can see this user has opted for two small widgets (one category each) and one large widget.

Add widgets to quickly see the categories you use most often on your home screen.

Now, let’s say I don’t need to see your Vacation balance, but would rather see money available for gas in that widget. No problem. Just press and hold the widget, then tap “Edit Widget” (iOS) or “Reconfigure” (Android).  Just tap on the category you want to remove and select a new one. Use the hamburger menu to drag them into any order you want. 

Tip: If you don’t have an edit or reconfigure option, to make a change, delete the widget and re-add it with newly selected categories.

What Widget Size to Use

YNAB Widgets give you quick access to category balances you use a lot and a quick way to enter spending from those categories.

  • Small: The smallest widget gives you one category. (grocery balance check? Always)
  • Medium: Got a favorite three?  Use the medium widget on iOS. This is great for those flexible spending categories like eating out, coffee, groceries, or clothing.
  • Large: Have a gaggle of spending categories to keep an eye on? Use the large widget for your master view. You can choose up to 7 on iOS and Android will let you choose as many as you want in a scrollable large widget. 

These Large widgets show seven categories of your choosing on the home screen.

Tap a YNAB Widget to Enter Spending

Just tap the category you’re spending from in the widget, and YNAB opens up and ready to go–the category is already selected for you—and it’s just waiting for the amount from you!

YNAB widgets make budgeting on the go even easier
YNAB widgets make budgeting on the go even easier
Tap the widget to enter spending in that category

What’s Better than One Widget? Stacked Widgets!

On your iOS device you can have more than one widget stacked on top of each other to save space on your home screen as long as they are the same size. Just add another widget then drag and drop it on top of your first one.

You can customize the categories in each widget and a simple swipe will change which one you’re viewing. This is really convenient if you’re short on home screen space—just use the smallest widget with as many as you’d like stacked underneath!

Our Favorite Uses for YNAB Widgets in the Wild

1. Widgets for Your Not-So-Budgety Partner

One of my favorite uses for widgets is to get my not-so-budgeting husband on board. We’ve been using YNAB for years but it’s only in the last few months that he’s actually opened the app. But it can be overly complicated to him, and he really only cares about one category: his fun money.

So…widgets to the rescue! He can now add just his fun money as a small widget and always know the information that matters to him (and nothing more). 

2. Widgets to Keep Your Eyes on the Prize

You’re railing hard toward a financial Target, maybe that’s a down payment, a new puppy, or a new couch. Add that category as a widget and all of a sudden you’re seeing that reminder front and center on a daily basis. You want a little nudge to hit your Target faster? Well here it is. Add it as a widget and watch your progress build.

3. Widgets for Your Kidgets

If your kids have a category in the budget and you are the go-between every time they want to know the balance, reduce that friction/annoyance by adding a widget to their phone that will always show them their balance without immediately seeing the rest of your budget.

Widgets for YNAB give you even tighter visibility into the information you want to know. What categories are you adding to your widgets? What are your favorite uses? Let us know in the comments below!

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How to Go Grocery Shopping Once a Month https://www.youneedabudget.com/how-i-go-grocery-shopping-once-a-month/ Thu, 14 Oct 2021 11:00:00 +0000 https://www.youneedabudget.com/?p=88105 I do meal planning and one primary grocery trip a month, and I’ve been doing this since 2014. Grocery shopping once a month has a ton of benefits for our family and helps us in the following ways:  Save time—fewer grocery store trips.   Save money—no grocery budget surprises plus the ability to buy in bulk  …

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I do meal planning and one primary grocery trip a month, and I’ve been doing this since 2014. Grocery shopping once a month has a ton of benefits for our family and helps us in the following ways: 

  • Save time—fewer grocery store trips.  
  • Save money—no grocery budget surprises plus the ability to buy in bulk 
  • Less waste– fewer leftovers that get thrown out
  • Less stress—I never have to think about what’s for dinner before 4pm on any given day

I do pop into the store to pick up some produce (because I haven’t yet figured out how to make lettuce last a full month), but I don’t consider that “grocery shopping” as it requires no planning and doesn’t take more than 5-10 minutes (compared to hours).

Want to make your meal planning and grocery shopping more efficient? Pull up a chair, I’ll tell you all of my secrets. 

Why I Started Grocery Shopping Less

This all started out of sheer necessity when my twins came along. Any mom of twins (or really anyone with eyeballs) could understand the logistical nightmare of two newborns accompanying you on a shopping trip. Two car seats take up the entire cart—there’s no room for food! When I would go grocery shopping, I’d end up pushing a cart full of children and pulling a cart full of food.

It didn’t take me many rounds of this real-life game of Tetris to realize it was time for a better solution. I tried grocery delivery after I’d been given a gift certificate, and I was determined to make those groceries last as long as possible. I started doing grocery delivery regularly (and then grocery pick-up when it became available). Each time, I’d get a little better at making a meal plan for the month and using up all the food we bought. I’ve learned a few things since I first started, and I’ll tell you my best tips for how to grocery shop once a month.

How to Go Grocery Shopping Once a Month 

We plan out four to five dinners a week. Sundays dinners are with my in-laws or parents, and on Friday we get take-out. Lunches usually consist of leftovers from the night before or we have a short list of regular lunch options stocked (salad, pasta, sandwiches, soups, and quick instant pot options). When we don’t feel like cooking, we’ll have a quick meal like pasta, salad, or cheese and crackers. 

We’ve found that planning out four to five dinners per week is the sweet spot for us. Here’s how I do it:

1. Plan Out the Meals

On the 25th of the month, I have a reminder set to plan my meals for the next month. This is my family’s chance to put in their requests (to stock up on or never make again). Then, I start by building a monthly list of meals that we want to eat, usually a mix of interesting things we’ve found throughout the month and of course some old favorites. We use Plan To Eat to store all of our recipes and meal plans, and there’s an easy drag-and-drop feature to do this—but you could also use any calendar of your choosing. I open my real calendar simultaneously and make sure that I don’t plan meals requiring a lot of prep on a day that we have swimming lessons, PTO, or other evening commitments.

Here's an example of what a typical month of meals might look like if you plan on going grocery shopping once a month.
Here’s an example of what a typical month of meals might look like.

2. Make the Grocery List

Plan to Eat has a built-in shopping list generator, but you could also do this manually. Also, I realize this is starting to sound like a sponsored post, but I promise you it’s not! A lot of us here at YNAB just swear by Plan to Eat and it comes up whenever we talk about grocery shopping. 

The shopping list generator is a great feature, because it puts the pieces together for you. Say you only need half an onion for one recipe and half for another, Plan to Eat keeps that tally. You can quickly see where your cost savings come into play—it’s quite magical when you see these efficiencies come together! 

We also use our favorite handy devices (Echo Dots) to add to our shopping list throughout the month for things that wouldn’t necessarily be on the recipe list like condiments, peanut butter, spices, and snacks. 

3. Order Online

Once I’ve got my grocery list, I order online. I bring up the website of my online grocery store of choice, fly through the list, and add everything to my virtual cart (except for produce and the things I’ll pick up at Costco). Before I place my order, I’ll add in the produce for the first week or two, depending on the item (well-stored vegetables will last longer than you may think). 

4. Pick Up Groceries 

On the first(ish) day of the month, we’ll pick up our groceries or get them delivered. The same day, we’ll run to Costco to supplement our dinner needs and pick up lunch and breakfast food. Here’s what a typical Costco list might look like.

We have a pretty standard set of options we’ll eat for breakfast and lunch so this list stays relatively the same each month. These options are actually listed out on laminated menus that our kids choose from each night before bed to pick out their food for the next day. My husband then preps lunches before bed (or well, he did when they were still going to school). 

5. Quick Replenishing

Once our fridge is full, we usually wind up popping into our local market a couple times during the month for fresh produce, eggs, bread, and dairy. I don’t consider these stops as “grocery shopping” as they take a few minutes (rather than hours) and don’t require any of the pre-planning or mental decision making of true grocery shopping. These stops typically take no more than 5-10 minutes and cost around $20-$30 each. 

In our grocery budget in YNAB, we have three category lines: 

  1. Monthly Costco run: $250/month
  2. Monthly grocery shop: $150/month
  3. Grocery replenishing (for those quick market trips): $100/month

Benefits of 1x/Month Grocery Shopping

I don’t love grocery stores, and I don’t love grocery shopping. I’m not a person who is relaxed by a stroll through the aisles, and I’m not a person who thrives with on-the-fly planning (as you can probably tell by this system!). 

For me, there are three huge benefits to grocery shopping once a month:

Flexibility

I can easily swap one meal for another in my meal plan because I have so many choices! If the weather is nice and we want to grill, I can swap burgers with soup and be confident I have everything we need. 

Control Over Grocery Spending

When you grocery shop online, you see exactly how much your total will be. If things get a little crazy in your online cart, you can easily remove an item or rethink a meal to drop the total cost. You can also add a few treats (and not share with your family unless you want to) when you have a more budget-friendly month. Having a separate Costco line is really helpful for giving us a super clear framework for spending when we go.

Time

I spend two to three hours total per month to meal plan, order, go to Costco (eat at the food court), and pop into a local market for milk. Many people might spend that much time each week on groceries and and meal planning. Here’s how it’s broken down per month:

  • 1 hour: meal planning and ordering groceries (often with the TV on and my favorite beverage in hand)
  • 1 hour: Costco trip and food court dinner (we get relatively the same things each trip, so it’s quick)
  • 30-45 minutes: replenishing (we have multiple market options that are on our normal school/work routes so each trip ends up being no more than 15 minutes and we usually stop two or three times a month)

Our Setup

We spend about $500/month for a family of five on groceries. We eat mostly vegetarian, and at the end of the month our meal options are a bit more limited, the fridge is empty, and our shelves are nearly bare. On the upside, we haven’t thrown away produce or stale/expired food in years and have virtually eliminated food waste in our family. We’ve found this setup to be smoother and tastier than frozen meals, and it doesn’t take up as much space in the freezer.

My husband and I split the cooking half and half, and this method helps us share responsibilities (you just check the app for what’s on the menu).

Reducing your grocery budget is a slow process. And, like we talk about all the time at YNAB, how you spend your money is truly unique to your family! The number of people you’re feeding, the area you live in, your personal eating habits, etc. will all factor into your grocery budget and you shouldn’t feel bad about that at all!

While our setup might not be enticing to everyone or fit with your specific needs, we have found it useful for dialing in our grocery spend and freeing up time and mental space every month.

Interested in more tips and tricks on spending and saving your money? Check out the Weekly Roundup.

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How to Save $30,000 in One Year: Our 3-Step Plan https://www.youneedabudget.com/how-we-saved-30000-for-a-down-payment-in-1-year/ Tue, 12 Oct 2021 11:00:00 +0000 https://www.youneedabudget.com/?p=86971 Jacob and Connor thought home ownership would never happen. They made good money, but it never seemed to accumulate into a pile big enough for a down payment. Then with a simple three-step plan to save $30,000 in one year, that all changed. The word “down payment” has always given me a tinge of fear …

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Jacob and Connor thought home ownership would never happen. They made good money, but it never seemed to accumulate into a pile big enough for a down payment. Then with a simple three-step plan to save $30,000 in one year, that all changed.

The word “down payment” has always given me a tinge of fear when I hear it. It’s not that I don’t want to own a home—I do! It’s the seemingly-insurmountable amount of money I’d need to save before homeownership feels realistic. I would put off saving for it because, well, how will I ever get there?!

If this sounds familiar, I’ve got good news: you don’t have to be afraid, and you don’t have to put off saving any longer. A year ago, my partner and I had $0 saved for a downpayment. I’d basically written off the idea of owning a home altogether. I had consigned myself to a life of renting, forever at the whim of a property manager and their temperature controls. Today, we’ve saved $30,000 in one year for a down payment, and we’re steadily saving more each month.

We Saved $30,000 in One Year

Homeownership feels more within reach than ever. The best part? We didn’t do anything particularly special. We just did a little bit of work, a little bit of budgeting, and we saved more than we thought possible.  

The Secret? Use a Budget to Save Money

How did we do it? How did we save $30,000 in one year? Well, first and foremost: we budgeted. We’ve been using You Need a Budget for years, and it’s helped us not only gain total control of our money, but now it gives us incredible focus on where we want our money to go and how much we managed to save. In our case: toward a down payment.

Our Three-Step Plan to Save $30,000 in One Year

  1. Make saving for a down payment the highest priority and give it a separate category in your budget.  
  2. Funnel every extra dollar beyond regular income funneled into to this down payment category (Bonuses, tax returns, and extra money left over).
  3. We gave ourselves more “fun money”. (Yes, you read that right. More fun money. More on that later).
Setting up a separate down payment category was key (shown in our YNAB budget)
Setting up a separate down payment category was key (shown in our YNAB budget)

1. The Down Payment Was Our Top Priority

If six years of using YNAB has taught me anything, it’s this: define your priorities and your life will follow. In early 2019 we had a lot of priorities—new furniture, fun new gadgets, traveling, dining out—and our money was spread thin to accommodate all of them. We decided that saving for a house should be the priority we focused on in 2019. Two important changes followed: 

We prioritized more money toward our house. In YNAB, we gave a bunch of our dollars new jobs

The old jobs they had weren’t priorities for us anymore, so we took them out of their old categories and moved them to the house down payment category (picture the money moving from one virtual envelope to the other). That expensive gaming computer? Turns out I don’t want it that bad. New furniture? Maybe the house should come first. 

Define your priorities and your life will follow.

By reallocating money we already had, we were able to set aside a few thousand dollars immediately. That felt awesome, and it was a huge boost to our momentum right off the bat. 

We reprioritized money right away to get a nice head start on our down payment (shown in our YNAB budget).
We reprioritized money right away to get a nice head start on our down payment (shown in our YNAB budget).

We went through every category and adjusted our goals. 

Our income is predictable and we know exactly how much is coming in each month (we both work and have good jobs). Our plan: allocate less money for things like clothing, home goods, and technology, then hike up the goal for our house downpayment category. We ended up with a really healthy savings goal—we aimed to set aside $2,000 every month for our house down payment. 

We set a healthy saving target to save $2,000 each month for our down payment (shown in our YNAB budget)
We set a healthy saving target to save $2,000 each month for our down payment (shown in our YNAB budget)

This was all reflected in our budget category for a house down payment, but in addition you could choose to physically store this in a high-yield savings account to take advantage of the interest rates on that chunk of money. Granted, it’s not exactly a high interest rate, but with a .5% interest rate, you’d have just over an extra $100 by the end of the year.

2. We Saved Our Tax Refund

Have you ever received a big bonus or a fat check from the IRS? Those oft-unexpected windfalls can feel so exciting. Yet, more often than not, they’re gone before they hit your checking account. Having a pile of “extra” money can cloud your judgment, leading you to spend it on things that aren’t really a priority. Do you even remember what you bought last time? I sure don’t.

Because saving for a down payment was our number one priority, our money followed suit. When extra money showed up in our budget, we immediately sent it to the house down payment category. We tried to do this with everything—gifts, tax returns, bonuses, salary increases, etc. We missed the mark a couple times (I really wanted that new Kindle), but that was okay. Saving 90% of our windfalls felt so much better than saving 0% of them. And turns out when you want to really start building wealth, this mindset goes a long way.

Savings started accumulating faster once we saved tax returns, bonuses, and salary increases.
Savings started accumulating faster once we saved tax returns, bonuses, and salary increases.

3. We Increased Our Fun Money

The third and most impactful change we made happened mid-year. We weren’t saving as much as we thought we would be—that $2,000 we were setting aside each month had a habit of disappearing when we overspent in other areas. Overspending happens—it’s unrealistic to expect it won’t. But if your dining out spending is eating into your down payment (like ours was) it’s time to do something about it. 

My partner and I started brainstorming. We realized it was a mental game—we were being too restrictive! Our budget wasn’t realistic and we were feeling the effects.

To get back on track we decided to start budgeting more to our Fun Money categories (like…a LOT more. We more than quadrupled the amount in each of our fun money allotments). I have one and my partner has one. We put the same amount of money in each, and it can be used for anything, no questions asked. The one caveat—all overspending would be covered with dollars from our “fun money” categories, taken equally from both.

We significantly increased the amounts in our monthly fun money categories to save $30,000 in one year.
We significantly increased the amounts in our monthly fun money categories (show in our YNAB budget)

This change had an immediate and dramatic effect. The next time I wanted something (like that Kindle) I was able to buy it without overspending another category—I’d just use my Fun Money. And if I didn’t have enough, I could easily save for a month or two. 

The real win, though, arrived at the end of the first month, when we were deciding if we should go out to eat. Our dining out category was empty, and $40 of overspending didn’t feel that bad. Then I remembered that $40 in overspending meant I’d lose $20 from my Fun Money. I was faced with a choice: buy that thing I’ve been wanting or go out to eat because I don’t want to cook. That choice was ridiculously easy—we ate at home. 

Since we made that change, we’ve saved $2,000 every month, without fail. There’s something about that approach that helped us see our priorities even more clearly. Overspending still happens, but much less frequently. And when it does, we have a plan to cover it that doesn’t hurt our progress toward our down payment.

Month after month we saved. There were still times when it felt like the cash we were setting aside would never be enough, but we persevered. Despite my fears, the quality of our life didn’t have to change that much. And we didn’t miss the things that did change—they weren’t priorities after all. 

Let Your Budget Be Your Guide

A year later we sat down for a monthly budget meeting. I happened to glance at the house downpayment category and I was shocked to see $30,000! It’s not a category we touch, so months would go by without paying much attention to it.

During a monthly budget meeting, I realized we'd saved $30,000 without even realizing it! (Shown in our YNAB budget)
During a monthly budget meeting, I realized we’d saved $30,000 without even realizing it! (Shown in our YNAB budget)

That’s the true power of your budget—when you decide what’s important to you and commit to it realistically, you might just wake up one day and notice you’ve saved $30,000 without even realizing it.

Spring is (almost) in the air and we’ve started popping around to open houses in some of the neighborhoods we like. I’ve got Zillow bookmarked on my computer, too. A year ago home ownership felt impossible. Today it feels like something that’s right around the corner. We’ll keep saving, month after month—every time we sit down to budget we’ll be just a little closer to our new home.

This post was originally written in March of 2020. Since that time, Jacob and Connor made their homeowner dreams come true and just moved into their first home!


Want to make your homeowner dreams a reality? Supercharge your savings today with the help of You Need a Budget. You’ll be able to line up your spending with your priorities like never before. Try it free for 34 days, no credit card required!

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How to Separate Your Finances https://www.youneedabudget.com/how-to-separate-finances/ Fri, 08 Oct 2021 11:00:00 +0000 https://www.youneedabudget.com/?p=100242 We’re all raised to believe that sharing is caring, and in a general sense, that’s a good lesson to live by. In a kindergarten classroom, sharing is almost always a solid plan—not only are there a limited number of resources, sharing is a great way to learn the importance of working together and helps practice …

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We’re all raised to believe that sharing is caring, and in a general sense, that’s a good lesson to live by. In a kindergarten classroom, sharing is almost always a solid plan—not only are there a limited number of resources, sharing is a great way to learn the importance of working together and helps practice patience and compassion. However, real life is rarely like a kindergarten classroom. 

And that’s unfortunate, because the world would be a better place if everyone had a nap, story time, and recess daily. 

Sometimes keeping separate finances in a relationship becomes necessary for a wide range of reasons, and not all of those are negative. Whether you’re keeping separate finances as a couple in an effort to keep the peace or separating your finances to prepare for a new independent beginning, un-sharing can serve as yet another good lesson in the importance of working together, even if you’re moving forward separately. 

How to Separate Finances as a Couple 

“Happily ever after” doesn’t have to follow one set path. Maybe your happily ever after involves not having conversations about how much you spent on video games this month or why the stuff you bought at Target was essential. Maybe your happily ever after has evolved to enjoying your solitude as an individual instead of as half of a couple. The reason for keeping your money separate doesn’t matter, but creating a plan for separating your shared money is important. 

Let’s cover the two most likely scenarios when it comes to the decision to split up your money:

Keeping Finances Separate in a Relationship

Money can be an emotional subject and a significant source of stress. In some relationships, maintaining separate bank accounts and budgets ends up being the most financially responsible choice, but how do you do it fairly? 

Your best bet may be to keep separate accounts and budgets for personal use and spending money and to establish a shared budget and a joint account where you combine finances to pay household bills and save for shared long-term goals. 

So, let’s say that Jack and Jill tie the knot (because they love each other, sure, but also, because their names inspired so many hilarious wedding hashtag options.) 

Jill was the kindergartner who kept her pencil box pristinely organized and Jack was the kid who ate Play-doh. Their spending habits are reflective of those past behaviors (but Jack almost never eats Play-doh anymore.) To keep the peace, they do the following: 

  1. Budget their paychecks separately: Jack and Jill both have their own budget connected to their personal account with their own categories for discretionary spending, individual debt, gas money, and whatever other bills they don’t share. When they get a paycheck, they fund their personal categories with that money. They also each have a category in their personal budget called “Shared Budget” and they put a predetermined amount from each paycheck into that category. (If one partner makes more money than the other, it may be more fair to contribute based on a percentage of income.)
  1. Contribute to a shared account: Jack and Jill also have a joint checking account and a budget with categories that include household bills, shared expenses, and savings goals. They move their funds from their personal “Shared Budget” category to the budget (and account) that they share. From there, it can be assigned to cover their shared expenses. 
  1. Budget shared expenses together: From here, Jack and Jill make decisions about how to assign the money in their joint account to the budget that they share. They would also work together to make decisions about their savings goals, long-term financial plans, and how to prioritize funding things like vacations or home improvement projects. 

Read more about budgeting together with separate accounts.

How to Deal with Finances During Separation

Now, let’s say that getting married because you had a clever idea for a wedding day hashtag doesn’t end up being a good idea and Jack and Jill decide to call it quits. 

Separating your finances during a break-up or prior to a divorce is a more daunting task—not only is it likely that both parties are emotional, but the decisions being made now could potentially have legal ramifications. Talk to your lawyer or financial advisor for the best advice, but here are some preliminary steps to consider: 

  1. Make a list of your assets and debts: Figure out what you owe and what you own and start thinking about how to divide that up. You’ll have a better understanding of what your options are once you have a comprehensive idea of your actual financial status. It’s a good idea to print or download copies of your account statements to have a record if needed (we hope it’s not needed).
  1. Open separate accounts: If you share a joint account, it’s a good idea to open your own personal account and to have future paychecks deposited there instead, especially if your partner has been less than responsible with your financial life together. If you’re going through a divorce and open a new account, be sure to let your spouse and the court know about the new account, and just because it’s in your account doesn’t mean it’s considered off-limits in divvying up until the divorce is finalized. 
  1. Create your own budget: Much like in the example above, now is a good time to create individual budgets. Make a list of your personal expenses and create categories for expenses you may need to save money for, like attorney’s fees or first, last, and a security deposit on a new place. This is also a good opportunity for you to figure out how much you actually need to live alone, and to identify areas where you could cut back on spending. Make a category to cover any remaining joint expenses too. 
  1. Make a plan for joint expenses: Even if you’re no longer officially a couple, you’ll most likely still have shared expenses; for instance, if you own a home together, share child-related expenses, or have credit card debt to pay off. Try to work together to pay down any shared debts in order to have a little more freedom in the future. Figure out how you’ll pay for these expenses—will you divide them up equally and take responsibility for the ones you’re assigned to? Maintain a joint account that you contribute to and set up bill payments from there? 
  1. Look forward to the future: Breakups are hard. Add a heaping helping of life changes to the pile and it’s tempting to hide under the covers. Don’t panic. Don’t retreat. Don’t despair. (I mean, you’re allowed to do a little bit of each but keep it reasonable and temporary.) You are the main character, the architect, the author, the artist, the star role, director, and producer of your future. Read personal finance books, save money when and where you can, take naps when you need to, and have faith that things are going to get better and that you’re building a life you can love. 

Ready to build more control into a chaotic time? Try YNAB for free for 34-days and make as many budgets as you need with a supportive community along the way. Learn how to set up your budget with the Ultimate Get Started Guide

*This is meant for educational purposes and should not be interpreted as legal advice.

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Budgeting When You’re Barely Getting By https://www.youneedabudget.com/how-to-budget-in-ynab-when-youre-broke/ Wed, 06 Oct 2021 22:18:00 +0000 https://www.youneedabudget.com/?p=86299 It can be tough to figure out how to budget when you’re broke. Not only are you trying to adopt a new habit, you’re also learning a new method of managing your money, figuring out the technology of a new app…and you still have to go to work, feed the kids, clean the house, and …

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It can be tough to figure out how to budget when you’re broke. Not only are you trying to adopt a new habit, you’re also learning a new method of managing your money, figuring out the technology of a new app…and you still have to go to work, feed the kids, clean the house, and find money for the next bill.

Enter: a pounding, stress-inducing headache and a strong desire to avoid reality. 

Hold on a second. Deep breath. You’ve got this! And doing it will ultimately make your life easier. Let’s get started.

How to Budget When You’re Broke 

Let’s walk through what you can do—right out of the gate—even if you’re short on cash.

Step #1 : Rearrange your categories to better match your priorities.

Here’s an example:

Identifying your Musts, Wants, and Needs makes it easier to prioritize funding.
Identifying your Musts, Wants, and Needs makes it easier to prioritize funding.

The first group “Must” include fixed expenses. These are the bills that I know are coming. They absolutely have to be paid and I have a pretty solid idea of how much each will cost.

The second group “Need” is for variable expenses. These are the expenses I do know are coming, but I either don’t know when, or the amount varies. For example: Auto Maintenance. If you’ve got a car, it’s not a question of if it needs work, just when and how much. 

The final group “Want” is optional expenses. These are the categories I hope I can budget for, but if things are tight, they may get put on the back burner. I don’t need to buy music right now. I hope to, but I can skip it if things are tight.

Not sure how to change categories? Watch this video to learn how.

Step #2 : Set up scheduled transactions.

The fixed expenses are probably the bills you dread most right now. Just when you get some breathing room, another one shows up to bite! But there’s some good news: these bills are predictable. We can spot them coming and get our budget ready to fight back.

Here’s how: set up scheduled transactions for each bill. YNAB will enter these transactions into the register on the scheduled date and reset the scheduled transaction to the next occurrence.

Set up scheduled transactions so that you know when your bills are due.
Set up scheduled transactions so that you know when your bills are due.

Because I added those scheduled transactions, if I look back on the budget I can see those orange alerts reminding me of the bills that are coming.

The calendar icon next to the amount indicates a scheduled transaction. The clock icon in the Groceries category represents a weekly spending target.
The calendar icon next to the amount indicates a scheduled transaction. The clock icon in the Groceries category represents a weekly spending target.

You can also drag your categories into the order they fall in the month. That way, when money arrives, you can budget your way down the screen.

Here’s how to set up a recurring scheduled transaction.

Step #3 : Add a target to each remaining Category.

Targets can help alert you about how much you need to fund other categories. I’ve added a weekly target to groceries, because I want to be reminded that I need to budget that amount for groceries.

Targets can help keep you on track with how much you can spend or need to save.
Targets can help keep you on track with how much you can spend or need to save.

To create spending and savings targets, just click on the category, select “Create Target” and decide how much money you need and by when. You can choose to create three types of targets: 

  • Needed for Spending: Fund up to a certain amount, with the ability to spend from it along the way. This option is good for categories like groceries, holidays, or vacations. 
  • Savings Balance: Build up your savings by contributing money towards a certain amount over time. This option is perfect for starting an emergency fund or saving for a downpayment for a house or car.
  • Monthly Savings Builder: Set aside a predetermined amount every month until you disable the target. This option is ideal for getting into the habit of saving. 

Now as you do this, you may find that for some of your categories, you have no idea how much to budget. Don’t worry about that. Just guess. Most people guess when they get started; you’re starting a budget, not chiseling commandments into stone. You can always make changes later.

So go ahead—turn those guesses into targets.

Learn more about how to set up targets in your budget.

If you select all the categories that have a target or scheduled transaction attached, you’ll see a total on the right-hand side in “Underfunded”:

Underfunded provides the total of how much money you need to meet your obligations.
Underfunded provides the total of how much money you need to meet your obligations.

That’s what you need to bring in to cover all those categories. If you know you’ll bring in less than that, start making adjustments to the targets where you can. 

If you bring in more than that, you can start working on the optional categories.

Step #4 : Budget the dollars you have.

This is where it gets stressful when you’re figuring out how to budget when you’re broke.

Although it can feel overwhelming to make decisions when you don’t have enough money to cover everything, you need to make a very clear plan for the dollars you do have.

If you only have $148, it’s absolutely critical that you manage that money really well. Here’s the question you need to answer:

What does this money—this $148—need to do before I’m paid again?

Answer the question, and then assign those dollars where they’re needed most in the budget.

When you realize your money is a finite resource and you name one job—and only one job—for each dollar, the money starts to feel a little bit scarce. Don’t panic! Scarcity is actually a good thing—it gives you clarity.

You’ll start noticing as you give every dollar a job that there really is a limited number of them at any given time. That’s definitely a bummer, but it’s also the reason you need to be intentional about prioritizing what the money you have right now is going to do for you. Doing that helps build awareness and can prevent you from making costly mistakes. 

Every time you spend a dollar, you’re making a choice. There’s power in that. Be the boss of your money.

Step #5: Track your spending.

Now that we’re organized and aware of what we have, and we’ve given every dollar a job, we need to stay completely on top of spending. That’s where things can go off the rails if you lose this awareness. We need laser focus.

Before you spend, check the category to see what’s in there. Don’t look at your checking account balance—that doesn’t tell you anything about what these dollars are for. You need the budget for that.

Let’s say you absolutely need $35 for gas. There’s no way around it. You check your Transportation category and, yikes, there’s no money there. The first step would be to check your other categories to see if you could “borrow” the $35 from one of those. We call that WAM-ing here at YNAB, because we love acronyms and because sometimes budgeting is like one big game of Whack-a-Mole where you have to quickly slam down unexpected expenses that pop up. 

But sometimes the reality is that you absolutely need $35 for gas and you absolutely don’t have $35 for gas. Maybe you end up overdrafting your account and spending money you don’t have yet as you work your way through this. 

It’s easy to feel frustrated, or even ashamed, about overdrafts, but it’s more important to face the reality of the situation. So, you’ll still record this spending in your budget—after all, it did happen. 

You’ll be overspent in your gas category. And that’s true, even if seeing those numbers in red hurts a little bit. You also may have to add an overdraft fee to your “Interest and Fees” category (and, ouch, those hurt). However, you want to record what happened so that you have accurate information.

When you get paid next, first budget to cover that overspending. It’s worth mentioning that if you’re in this situation, you should strive to spend as little as possible—only spend what’s absolutely necessary. Those little cheap treats you buy impulsively to cheer yourself up are only a temporary cure. Let that money add up to something more significant. 

Repeat steps #4 and #5.

Let time go by. This might be the hardest part, but these steps will bring progress. Money will come in, you’ll give each dollar a job, and you’ll check your budget (not your accounts) to make your spending decisions. You’ll start to feel less like you’re floundering and more like you’re in charge of your spending.

And believe it or not, you’ll start to like budgeting. Or at least not dread it. You’ll see it as a tool for feeling in control, organized, and capable. You’ll be able to buy those little treats when you want to because you’ll know you can afford them. Your feelings of guilt or anxiety about spending will gradually subside. It’s worth it.

Hang in there—being broke is a stressful time. But you’re here, looking for another way, and you’re rewriting your story right now. Keep it up and you won’t be budgeting while you’re broke for long.

(Because you won’t be broke!) 

If you want extra support, check out our free live Q&A sessions where a YNAB teacher can help with everything from setting up a credit card in YNAB to breaking the paycheck to paycheck cycle.

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See My Budget: I’m Living Full-Time in an RV https://www.youneedabudget.com/see-my-budget-im-living-full-time-in-an-rv/ Fri, 01 Oct 2021 11:00:00 +0000 https://www.youneedabudget.com/?p=100075 Want to dive into full-time RV living but wondering the details of the financials? See how a full-time RVer traveling the country is making the most of her monthly inflows without sacrificing her financial goals. About Name: The Wanderer Age: 38 Location: Traveling the country’s national parks in an RV  Job: Instructional Designer & Business …

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Want to dive into full-time RV living but wondering the details of the financials? See how a full-time RVer traveling the country is making the most of her monthly inflows without sacrificing her financial goals.

About

  • Name: The Wanderer
  • Age: 38
  • Location: Traveling the country’s national parks in an RV 
  • Job: Instructional Designer & Business Owner
  • Living situation: Single and living solo in an RV for the past 18 months

Income: $89,000+/year (variable depending on business)

  • Day job: $66,000/year
  • Veterans disability pay: $14,000/year
  • Business income: $9,000+/year. This is changing rapidly. The business is ramping up but in flux getting off the ground. I’m guessing I’ll net $50K this year.

Savings: $53,000

  • I got the payout from the house as part of the divorce. When I left 18 months ago, I had $400 in a checking account and that’s it.
  • Before the payout two months ago, I usually kept about $5K in my account.

Debt: $62,500

  • Trailer: $31,500 (at 4.3% interest)
  • Truck: $31,000 (at 3.6% interest)

I debated paying off my loans when the house payment came in, but after talking to a wise friend, they said it might be nice to keep my options open with that cash. So, I see it as FU money—it’s a year’s worth of expenses. My side hustle is doing well and this might allow me to go full time.

Average Monthly Inflow: $5,000+/month

  • Day job: $3,163
  • Veterans benefit: $1,146
  • Business profit: $500-$4,000

My Budget

I’ve been a YNABer since March 23, 2020: the day I moved out. I’ve got a lot of categories, but I like having them all split out so I can see how costs are broken down.

Budget

Catego­ry Target Amount Notes
Fixed Expenses
NYT $5
Google storage $5
Insurance for storage unit $9
Truck loan $556
Crashplan $10 Software computer backup
Pandora $9
Computer ink $3 Subscription service
Google Fi $70 Erratic. $48-$80 paid by usage
RV loan $357
Verizon internet hotspot $54 Having multiple internet providers is important so I have coverage to work from wherever
Storage unit $142
AT&T internet hotspot $25 I sold my soul and it was worth it for this rate.
Spot $12 Emergency beacon so I can go hiking alone and I won't die alone.
RV Insurance $125 You have to have special insurance if you're a full-time RVer.
Truck insurance $95
Food & Intoxicants
Groceries $250
Dining out $50
Booze and Weed $40 I buy in bulk in Colorado – definitely the best value.
General Expenses
Campsite fees $1,000 I keep it at $30/night average cost between BLM land, friends, and public and private campsites.
RV maintenance $100
Houseware $100
Diesel $600 Ranges from $50-$800 depending on how far I drive.
Truck maintenance $100
Haircut $30 I clip and cut my own hair and then spend $200 every six months at a salon to get professional bleach and color.
Clothing $100
Postage $10 I have a mailbox in Florida to manage mail while I travel.
Hardware $42 Phones, computers, replacements
Games/Books/Movies $5 I've got $38 saved. Maybe I’ll get a cookbook!
Vinyl $40 New category. It used to be credit card interest. I transferred that into buying records.
Outdoors Gear & Supplies $50 Saved $250 so far.
Outdoors Services & Tickets $10 State park fees
Event tickets $0 Concert tickets (if I bother filling it up with money at all)
Souvenirs of Life $50 Things I get myself when I travel the national parks.
Gifts $50
Weird Shit $100 Stuff I forgot to budget for
Savings
Emergency Fund $110 Bank automatically skims off the top every few days to help build savings. House money payout is in this category too.
Retirement/Roth IRA $500 Saving up to max out my Roth IRA.
Annual Costs (RV)
Tax Prep fees $13 My life got complicated enough, I got a tax accountant this year.
Alaska Air Card Fee $7
Mail forwarding $16 I pay $200/year to have my mail forwarded to me.
AAA $10 And may I never need them.
Marcell $8 Trailer Monitoring app – temperature. Helpful when I had my cat.
YNAB $7
Best friend’s wedding $200 Have $600 saved, but I’m going to spend it soon!
Amazon $10
Taxes and Registration $60
Divorce
Divorce Expenses $1,000 I hope this goes away soon. But this is for my lawyer.
Side Hustle Business
Income taxes (40%) $0 I keep track in the notes how much I need to add, but it varies wildly. I've got $3500 so far.
Adobe $29
Total Needed $6,174

Expenses Specific to Full-Time RV Living

There are a bunch of things in my budget specific to full-time RV living:

  • Special insurance. When you’re living full-time in an RV, you pay for more expensive insurance compared to a person who takes their RV out three times a year.
  • A mailbox forwarding service. I use a mailbox in Florida as an address for packages and mail, and they forward me my stuff wherever I’m at. 
  • Three internet subscriptions. I have to be connected to do my job, and not all providers have equal coverage. That means I pay for a Verizon hotspot, an ATT hotspot, and I can hotspot off of FI. 
  • I use an app that shows a Wifi coverage map that I use frequently.
  • It’s often worth it to stay in a nearby town for the wifi instead of always camping inside a park. Parks usually don’t have good enough reception for work. Sometimes, they have none. For the record, Death Valley has no service. At all. Plan accordingly.

My Story

In late March 2020, when the world was shutting down, I finally called it quits on my marriage. Best decision I will make in my life. There were a lot of issues in our relationship, but the worst to me was his total disconnect and denial about spending within our limits. In five years, we spent $115k more than we brought in—burning through my $75k in pre-marriage savings and accruing $40k in credit card debts.

I moved out with less than $400 in the bank, almost $20k on credit cards (we split the $40k credit card debt equally), and assumed the responsibility for the loan on our one-year-old RV. He kept the house, the car, and the majority of our stuff. I just wanted out.

My plan was to move into the RV and travel the US seeing National Parks. In addition to the debt I already had, I had to buy $37k worth of a big diesel truck to make those dreams happen. I also needed to build an emergency fund. 

I work for an educational non-profit making $66k/year and I get $1,100 a month in Veterans Disability Pay. That’s less than $4,800 a month in take-home pay. I wasn’t even making it paycheck to paycheck. 

RV life isn’t cheap if you are on the move, so I cut my expenses down to the bare bones to make ends meet and started hustling hard:

  • I worked full-time at my day job. 
  • Hustled stuff on eBay. 
  • Found a camp host gig for seven months in central California where I took care of a campground in exchange for a free site. 
  • Started a consulting business with a couple trusted friends that began work in October but didn’t start leaking out tiny profits until this April. 
  • I scrabbled tooth and nail for months to get my stimmies and tax refunds from the IRS who automatically flags anyone who changes their legal name (this problem is only an issue for women). 
  • There were unclaimed funds found from my dead grandmother being held by the state of Alaska. 
  • A lawyer was hired to get my ex-husband to finally pay me for my own house! 
  • I did everything I could to make money and pay down my debts.

With all that hustling and scrimping: 

  • I paid off $28,000 in just over a year. 
  • I’ve built up two months worth of expenses in my checking account 
  • I’ve built up another month of expenses in my emergency fund. 
r/ynab - Net worth shifted over $87k in 16 months
This is my net worth chart shown in YNAB (orange shows debt, blue shows growing assets)

Between my hustling and the house settlement, it’s all about $87,000 total between paying off debt and cash saved since the divorce. That’s not counting my retirement funds, where I unintentionally managed to max out my 403b last year. Combined with a truly bumper year on the stock market for me, those accounts have increased about $80,000 as well in this time period.

I traveled to 26 National Parks (some multiple times), visited every member of my family across the West during a pandemic, lost 60 pounds, and generally just crushed it. I can’t give YNAB credit for the weight loss or the National Parks, but I can say it’s been the central tool in almost every decision I’ve made, kept me on course, allowed me to achieve so much more than I could have imagined in such a short time.

Thanks, YNAB, you’ve earned your $84.

Start your own free trial of YNAB, no credit card required.

My Financial Goals

Before my next birthday, I want to:

  1. Clear $100K from a single income source.
  2. Quit my day job.
  3. Reach the $250,000 in retirement accounts (I’m at $215K).

I follow a lot of FIRE stuff but I don’t think I actually want to quit and never work again because I like what I’m doing with my side business. I want to see it succeed. 

Do I want to work my business 40 hours a week? No—I want to travel, quit my day job, and have the ability to generate income to support my lifestyle. 

I don’t have goals to buy a house, I’ve been doing the RV thing for 15 months. I can see myself doing this for another three or four years. Maybe somewhere along the way I’ll meet someone who’s worth stopping for. Or, I’ll say OK cool, maybe not. And I’ll live overseas and travel Europe. Either way, it’ll work out.

I would rate my current financial situation: 5/5

A Financial Counselor Reacts

I’m Rachel, a writer and an Accredited Financial Counselor® here at YNAB. I had the pleasure of talking to The Wanderer for this YNAB Snapshot. 

First, I just cannot even put into words how impressive this turnaround has been. And in such a short amount of time! If I could just have an ounce of the wanderer’s grit…whew what could we even accomplish?!

I really liked hearing the thought process behind The Wanderer’s financial decisions. She really thinks through all angles and makes the choice that’s best for her situation: take the cash inflow and the outstanding debt, for example. Advice from other financial gurus might be to go headfirst, or four-legged-graceful-creature intense to knock out that debt. BUT, she’s choosing to keep it and keep her options open. 

I really liked that, and I love that she’s making a bet on herself. The interest rates on the truck and RV are reasonable (sub 5%), and it’s also not unlike having a mortgage payment, as her RV/truck setup is her primary residence. Sure, it probably won’t appreciate like a house (though who knows…car prices are crazy this year), but thinking of the expense as an accepted sunk cost: I can get behind that.

For The Wanderer, I really had to dig to find something, I really like her budget setup, I like her approach to saving and maxing out those retirement accounts.

My two thoughts:
1. Not saying one is better or worse, but with that $50,000 in cash, have you considered a high-yield account? While it’s not much interest (likely about $200-$300/year on that amount), it’s also not nothing if you leave it for a few years. 

What matters more: earning an extra $200-$300 this year, or having a simplified bank account setup?

The Wanderer:Yeah, I’ve definitely thought that through. The rates are so piddly, I don’t know that it’s worth it to add another bank account. If interest rates improved? Eh, maybe. Now? Probably not.”

2. Is there any further way we could simplify your financial life? You’ve got three credit cards you just paid off (HUZZAH!!). What’s your plan there for keeping them open or closing them? If you get to a point where you don’t really need to take out a big loan in the next few years, consider closing two of the three and just leaving one open. By the way, what is your credit score?

The Wanderer: “820.”

Ok, then! It doesn’t get much better. Absolutely nothing to worry about there. Credit scores take a bit of a hit when you close down a line (or three) of credit, but honestly—the more you use YNAB, the more you realize credit scores aren’t as important as you might’ve believed. Buying a house or a business loan would be the exception: you want to keep that perfect score for a large loan like that. Each fraction of a point adds up there! 

The Wanderer: “Yeah, the Alaska card annoys me with its yearly fee. But having them all is doing great things for my credit score, and I make occasional purchases on them. More likely, I’ll keep them open.”

And with that, this money snapshot reaches its end. Who knows what The Wanderer will do next—rafting down the Grand Canyon? Driving Porsches on a test track? We’re not sure—but her Wish List is full so it’s just a matter of time before those things become a reality too.

Want to gain total control of your money? Get started with your own budget and make your full-time RV living dreams come true!

The post See My Budget: I’m Living Full-Time in an RV appeared first on You Need A Budget.

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Small Business Budget: See a Real Example https://www.youneedabudget.com/small-business-budget-see-a-real-example/ Wed, 22 Sep 2021 11:00:00 +0000 https://www.youneedabudget.com/?p=99988 Working on your small business budget but not sure where to start? Sometimes it’s helpful just to see a real-life example to help you create your budget. This post will show you: A real-life example of a successful small business with all the numbers  A budget template that can help manage tax time headaches Fixed …

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Working on your small business budget but not sure where to start? Sometimes it’s helpful just to see a real-life example to help you create your budget. This post will show you:

  • A real-life example of a successful small business with all the numbers 
  • A budget template that can help manage tax time headaches
  • Fixed costs and variable expenses you’ll want to consider

Without further ado, see how Izzy—a designer and small business owner—runs her company’s finances using a YNAB budget for a calm and stress-free financial setup.

About

  • Name: Izzy K.
  • Age: 33 years old
  • Location: Maine 
  • Job: Customer Support / designer and small business owner 
  • Living situation: I live with my partner and our dog.

About the Business

  • What we sell: a line of fine jewelry and custom wedding bands
  • Business age: 5 years old
  • Distribution:  website, wholesale to stores, and custom work
  • Business setup: Single member LLC I do almost every aspect of the business myself – from production to shipping—but I do hire contractors (often talented friends!) on a project-by-project basis for photoshoots and web design projects.

Typical Business Revenue and Profit

  • Pre-covid revenue: $50,000-$90,000/year 
  • 2020 revenue: roughly $64,000
  • Profit from business: about $30,000/year in 2020

The pandemic cut down on wholesale orders, paused in-person craft shows and events, and delayed many weddings so my business slowed down a lot last year. 

Cash on Hand

  • Buffer fund: $1,000
  • Business true expenses: On top of that, I set aside funds monthly for things like my software subscriptions, raw materials, unexpected costs, and saving up for products or services that are billed infrequently or non-monthly.

The cash I have on hand varies a lot throughout the year. Jewelry, like many product-based handmade businesses, is a very seasonal business. The holidays make up a large part of my annual revenue. 

Debt: $0

  • I received the Paycheck Protection Program (PPP) loan and Economic Impact Disaster Loan (EIDL) assistance but they’ve both been forgiven so I don’t have any debt at the moment.

While I’m very thankful they’ve both been forgiven, applying was very stressful—the guidance kept changing! 

With the money from the assistance, I invested in a website redesign from a small design firm. Even before the pandemic I was trying to do fewer in-person markets, so this was a way of investing in building towards more online sales and supporting another small, creative business whose work I’ve admired. 

Average Monthly Inflow: $3K-$20K

Because fine jewelry is so seasonal, my inflows vary quite a bit. In my busiest months (November/December), I could bring in $20,000—while in one of my slower months (like March), it might only be $3,000. 

My Small Business Budget

Budget

Catego­ry Target Amount Notes
Draw + Contractor Pay
Owner's Draw $2,000 I pay myself a set monthly owners draw.
Contractor Pay / Line 11 $300 I put money here on a project by project basis.
Credit Card Payments
Capital One Card $0 I opened two credit cards with the lure of the business sign-up bonus. I'll probably phase out the Chase card.
Chase Card $0
Monthly Expenses
Shopify – line 8 $29 Website ecommerce platform.
Klaviyo – Line 8 – marketing $30 Email newsletter platform
Shipstation – Line 27 – software $10 This service gives me the ability to print and ship USPS and UPS packages from home.
Domains and Emails – Line 8 $10 Billed yearly, I save this much each month.
Planoly – Line 27 $6 Schedules and posts on Instagram automatically.
Adobe – Line 27 $30 I use Indesign, Photoshop, and Bridge the most.
MileIQ – Line 27 $6 This is a phone app that tracks business mileage. Swipe one direction for personal drives, swipe the other direction for business drives.
COGS – Part II
Materials – COGS line 38 $1,084 I budget for materials and supplies as needed. Metal prices vary quite a bit and I end up moving money around frequently.
Supplies – COGS Line 38 $38
Packaging – COGS Line 38 $94
Shipping – Line 27 $0
Quarterly Expenses
Quarterly Taxes $330 I calculate taxes needed based on sales, or based on the year before.
Sales & Use Tax – Line 23 $79 I collect sales tax for people in Maine (I'm small enough I don't have to collect nation wide) or when I travel to in-person events in different states. Whenever I get an order/purchase where sales tax needs to be charged I set that money aside in this category.
Variable Expenses
Flexible Funds $71 This is my cushion fund. I drop in leftover money from other categories here.
Marketing – Line 8 $0 Paid ads
Print Materials – Line 8 $50
Tools and Equipment – line 22 $60
Supplies – Line 22 $0
Office Expenses – Line 18 $0
Customer Returns – Line 2 $0
Shows/Travel
Vendor Fees – Line 10 $0
Display – Line 8 $0
Travel – Line 24A $500 Have an upcoming show in the fall.
Deductible Meals – Line 24 B $0
Infrequent Variable Expenses
Continuing Education – Line 27 $0
Commissions and Fees – Line 10 $0
Annual Expenses
Taxes and Licenses – Line 23 $7 LLC registration. Forms that happen once a year
Saving
Profit – 5% – March June September December $16 5% of sales goes in here. Have $543. Quarterly pay myself a distribution.
Buffer Fund $0 Capped off at $1,000
PPP Loan Repayment $0 Ready didn't need it.
Total Needed $4,750

About My Budget

My small business budget is set up in YNAB and it’s worked really well to measure my financial health and help with short and long-term planning.

I keep my owner’s draw category at the top of my budget to keep the number in front of me. I found early on in my business I was so excited about the idea of “business expenses” that it was easy to fritter money away. It’s all a tradeoff—every time I buy something, it could mean you can’t pay yourself as much, and I’m reminded of that tradeoff every time I open my budget. 

I file taxes as a sole proprietor (Schedule C for taxes). To make it easier for tax purposes, I set up my budget to include the corresponding line number of the Schedule C form. Accounting software like Quickbooks and Xero do these things behind the scenes, but I do it actively in YNAB. 

There’s an accounting firm called Sunlight Tax that specializes in accounting for creative small businesses that also provides a lot of education—I took a workshop with them and learned so much about better organizing my bookkeeping and how to create a business budget. The owner, Hannah Cole, was actually on the YNAB podcast talking about how artists and creatives can simplify their taxes

How I Manage Money with My Small Business

To manage money in my business, I use:

  • A business checking account
  • A checking account with Square
  • A high-yield savings account with Square
  • Two credit cards that I pay off in full each month
  • YNAB to budget and keep everything organized

I used Quickbooks Online in previous years as my small business budget—mostly because I thought it was what “real” businesses used and because it was what the accountant I was working with at the time recommended. But I found YNAB was even more helpful in decision making and planning. In YNAB I can see my runway based on the money I had in my accounts—literally the period of time I have until the money in my accounts will run out and what it will cover. 

Seeing my income and expenses in this light empowered me to invest in the website redesign project because I could see exactly what would happen in my budget if I moved money to a “website” category. I like that YNAB lets you take care of what you need to for tax compliance but also serves as a decision-making tool when you’re budgeting for your business.

Learn how to set up a business budget in YNAB.

A few times a week, I’ll pop into my budget to import and categorize transactions. Friday is my big day to do money things:

  • I reconcile my budget to my bank account to make sure they match
  • I move money around to cover any overspending (a key principle in zero-based budgeting)
  • Any other more irregular things (like paying sales tax or paying out invoices) I also do on Friday. 

I set up Square, Shopify, and Stripe to deposit once a week on Thursdays, so the money is there on Friday to allocate. 

With my business budget, I’m always a month ahead with expenses: when money comes in, I budget out a month before I fill up my owner’s draw category and start filling in other more “optional” categories. For example, when I flip into October, I’ll go into November’s set expenses and fill those up. 

For taxes, I’ve worked with an accountant before but this past year I did my own taxes because I’m very interested in them (thanks to Sunlight Tax!). I think generally it does make sense to work with an accountant and I really liked the one I worked with previously. 

Every quarter (September, January, April, June), I sit down and figure out my profit. Based on that number, I submit my estimated taxes. When it comes to April’s annual taxes, the self-employment tax I owe has already been submitted and I’m usually pretty close to the right amount.

How I Got into Running My Own Small Business

I was an English major and I’ve always been creative. I never set out to start my own jewelry line, but after working for a number of other design studios I decided to take the leap.

As a creative, I think I’d always been told I wouldn’t like the numbers side of running a business. I’d absorbed the narrative that creative people don’t like money. That’s not true and not helpful.

I went through a community-based entrepreneurship training during the first year of running my business that went over basic business financial topics like running a breakeven or cash flow analysis. It turned out I actually love the numbers side of the business—it’s so interesting. 

The business is now five years old, and the creativity never stops when I leave my studio. To me running a business feels like a holistic creative practice—figuring out logistics like shipping and packaging, determining how to learn the new skills I need, structuring my budget and constantly re-evaluating how to best use the resources I have available—it’s all deeply creative.

My Financial Goals

When it comes to business performance, I want to shift to more online-centered sales so I don’t have to travel as much as I had before the pandemic. I’d like to break $100,000 in revenue and make the business more profitable as time goes on too. Early on, I was spending money on accumulating equipment and tools, so much of the money I was making was going straight back into growing the business.

Personally, we’re saving for a down payment and I’d love to build a tiny house or freestanding studio in the backyard for my business. 

In the big picture, running my own business gets myself and my partner closer to our goal of financial independence, and having control over our time. 

I would rate my current business financial situation as a 3.5/5. I’m working towards building more revenue and streamlining the business to make it more profitable but I also feel truly proud of how far the business has come.

But I would rate my current peace around finances: 5/5. I feel clarity around what I want to do with my business resources and after having been in business for a few years not too many variable costs truly surprise me anymore.

You’ve been perusing small business budgeting templates, are you ready to turn one into the real thing? Learn more about using YNAB to manage your small business budget.

Learn More

Want to keep going? The budget nerds talk to Laura on how she uses YNAB and the Profit First method to manage their small business. The Profit First method transforms businesses from cash-eating monsters to money making machines, and YNAB helps you execute your plan.

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Budgeting with ADHD https://www.youneedabudget.com/budgeting-with-adhd/ Wed, 15 Sep 2021 11:00:00 +0000 https://www.youneedabudget.com/?p=99826 Sometimes it seems as though adulthood is one very long obstacle course. It’s all either smooth sailing and easy wins or lessons that require special training and repeated attempts to overcome.  That analogy is particularly true for people with adult ADHD/ADD. You may know exactly what needs to be done to get through each day, …

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Sometimes it seems as though adulthood is one very long obstacle course. It’s all either smooth sailing and easy wins or lessons that require special training and repeated attempts to overcome. 

That analogy is particularly true for people with adult ADHD/ADD. You may know exactly what needs to be done to get through each day, but the actions required to complete the tasks might not come naturally without implementing some life hacks to help make it happen. 

Benefits of Budgeting with ADHD

Creating a budget is more than just sitting down with your expenses and making a spreadsheet; it involves setting up a system, changing your mindset, and incorporating some accountability in order to make it all stick. 

Sounds boring, right? 

Yeah, oddly enough, budgeting apps don’t get near the same hype as video games or the newest HBO original series. But, let me ask you this…did Game of Thrones help you avoid overdraft fees? Did Grand Theft Auto help you break the paycheck to paycheck cycle? (Legally?) 

Think of setting up your budget like training to complete an obstacle course. Sure, the push ups and sprinting and falling off of ledges isn’t a ton of fun, but winning American Ninja Warrior? That would be super fun. You’re going to be the Intergalactic Budgeting Ninja Warrior. Or something. 

For adults with ADHD/ADD, budgeting is more than money management, it’s a system put into place to give your brain a break from remembering (and/or avoiding) the jumble of due dates, bills, balances, and the informal, and often inaccurate, mental math necessary to justify (or regret) yet another impulse purchase. 

Think of your budget like a little butler who follows you around carrying the load that the uncertainty of disorganized finances can bring. That guy is your friend! Is it annoying when he tells you that you shouldn’t get takeout tonight? Absolutely, but you’ll thank him when you don’t have to call your landlord to explain that you spent your rent money on tacos. Again. Mmmm, tacos. 

The Best Budgeting App for ADHD

The best budgeting app is whichever one that you’ll actually use, but the YNAB app and proven method has some benefits that may be particularly helpful in serving as a detour for the roadblocks that are most likely to pop up as the result of ADHD/ADD symptoms. 

The Four Rules: 

If you find yourself feeling easily disorganized, YNAB’s Four Rules simplify the philosophy and methodology of budgeting in a way that changes how you think about money. Incorporating YNAB’s Four Rules into your daily life creates a set of guidelines about how to prioritize your spending, to expect the unexpected, to allow yourself some flexibility (and forgiveness), and to stop living paycheck to paycheck. 

YNAB’s Four Rules of Budgeting Are: 

  1. Give Every Dollar a Job: Every time you get some money, ask  yourself, “What does this money need to do before I get more money?” Then go through your budget and assign a dollar amount to each category, in order of upcoming due dates or urgency. When you Give Every Dollar a Job, you’re creating an intentional plan for your money that provides ongoing guidance and feedback on your spending. 
  1. Embrace True Expenses: Although life often seems wildly unpredictable, there are some things that we know will happen eventually. Birthdays, holidays, insurance premiums, annual subscriptions, your car registration, and buying new tires all tend to pop up every once in a while and overburden our budget, but what if you set aside manageable chunks of money each month to cover those variable expenses? Life would be so much easier, that’s what. 
  1. Roll With the Punches: You don’t become an Intergalactic Budgeting Ninja Warrior overnight. Every once in a while, that comically oversized padded wheel is going to knock you off of that ledge you’ve climbed to. That’s okay! You’ll just need to cover your overspending by moving already assigned money from one category to another. Life happens and if your budget isn’t flexible, you’re less likely to stick to it. No one needs something else that makes them feel bad. 
  1. Age Your Money: Eventually, you’re going to have a better understanding of your money through budgeting, and spending less and saving more will become easier over time. When you can pay next month’s bills with this month’s money, you’ve broken free from the paycheck to paycheck cycle, and, oh man, is that a relief. 

ADHD-Friendly Budgeting Features

YNAB was designed to integrate budgeting into your daily life without becoming a tedious or overwhelming chore. Here are a few of the features that will help keep you on track: 

Direct Import: If you choose to link your bank account to your budget, all of your transactions will import automatically. No more losing receipts, forgetting how much you spent, or trying to do on-the-spot subtraction under pressure to see if you can afford something. You simply look at your budget, and it will tell you if you have money available to spend in the category you’re considering. 

Accessibility: Let’s be honest with ourselves—after a long day of work, chores, and life in general, sometimes it can be hard to talk yourself into firing up the laptop to engage in a relaxing budgeting session. YNAB’s mobile app makes it easy to check your available funds at a glance and on the go, and makes it possible to enter, approve, or match transactions when you’re looking for a midday distraction. Conversely, with the web app, you can take a budgeting break from your work day on your laptop. Your budget is basically everywhere you go. 

YNAB's mobile app makes it easy to stay organized.
YNAB’s mobile app makes it easy to stay organized.

Customizable categories: Budgeting isn’t one-size-fits-all and your method for organizing your expenses doesn’t need to be either. Although YNAB starts you off with a basic template that makes sense to us, maybe you think about your budget categories differently. Regroup, reorder, rename, add emojis for a quick visual reminder, create an entire category group dedicated to your favorite snack items in order of preference…do whatever you want. It’s your budget. Make it as fun as budgeting can be. 

Flexibility: Some budgeting apps and advisors are awfully judgy about how you spend your money. YNAB knows that a lot of people are going to skip budgeting altogether if it introduces yet another source of guilt, shame, or feelings of inadequacy in your daily life. Remember Rule Three? (Psst…it’s to Roll With the Punches.) We’re not here to tell you how to spend your money, we’re here to help you manage it. Budget for what you want, move money around, forgive yourself if you fall off the financial wagon, plant a wish farm, and be kind to yourself while you learn. 

Budgeting doesn't mean depriving yourself. Start a wish farm!
Budgeting doesn’t mean depriving yourself. Start a wish farm!

Auto-Assign: Need some help prioritizing your expenses? Or not into spending too much time making decisions about your dollars? Auto-Assign will offer suggestions based on due dates and prior spending habits with the push of a button. 

Auto-Assign can do some of your budgeting work for you.
Auto-Assign can do some of your budgeting work for you.

Credit Card Management: When you add your credit cards to YNAB, your budget encourages you to categorize your credit card spending and then shuffles money from its “Available” spot directly to your credit card payment category. Bought toilet paper at Costco on your Visa card? Categorize it as a household good, specify that you used your Visa, and your little YNAB budget butler says, “Oh, hey, we’re not going into debt for toilet paper, so let me take that amount out of your ‘household goods available funds’ envelope and stash it in your ‘Visa payment available funds’ envelope. No more feeling bad when the credit card statement shows up and there’s not enough money to cover it. 

Spending and savings targets: There are bills that are due at the same time every month for about the same amount, expenses that pop up just irregularly enough to make them forgettable, and savings goals that we hope to reach eventually. It’s a lot to keep track of. Setting targets in your budget can help you remember how much to set aside, how much you’ve already assigned to that category, and provide a colorful visual reminder of your progress. 

Set targets to help you stay on track with spending and saving.
Set targets to help you stay on track with spending and saving.

Scheduled Transactions: Setting up automatic payments for your bills is a real lifesaver if you’re not good with due dates, but can be a frightening prospect when you’re not confident that the money will actually be there. Go ahead and do it, set a budget target, and add a scheduled transaction for the future. You won’t have to think about it again until YNAB asks you to match it to your bank transaction, and by then it’s a done deal. No more late payments. 

Built-In Support and Accountability

Budgeting can be a challenge for anyone, but budgeting with ADHD presents a special set of obstacles. Creating a budget in YNAB gives you one source of truth—you can check your budget instead of your bank account so that you can easily visualize your finances and see if you really have money to spend or not. 

The act of giving your dollars jobs each time you get new money, approving transactions as they pop up, and reconciling your budget helps keep you connected and engaged to your current financial state without overwhelming you with a ton of random tasks or irrelevant information. 

Last, but definitely not least, YNAB changes the way you think about money. You can learn about personal finance, about budgeting, and about YNAB in whatever way works best for you. Enjoy podcasts? Perfect! Are you a video viewer? We’ve got those! Do you remember best by reading blog posts or help docs? Lots of options there. Need weekly tips and tricks delivered to your inbox? We’re on it. Looking for a community to bounce ideas off of, Q&A sessions, or one-on-one support? We’ve got you! 

Ready to get started? Sign up for a free 34-day trial today—and don’t worry, there’s no credit card (or commitment) required.  

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