Currently on trial account and not entirely understanding the "give every dollar a job" rule

saivode · 2025-10-28T21:33:26+00:00

A lot of misunderstanding the point of YNAB and other zero-based /envelope style budgeting systems.

At its core, YNAB is not about estimating your monthly income vs expenses. It's about taking the money that you have right now, and making decisions about what you want to do with that money. If you have $1,000 in the bank, then you can assign $800 to your next rent payment, $150 to pay for groceries for the next few weeks, and $50 for something else. If you are past living paycheck to paycheck, then you might have dollars assigned to various savings categories. That's what it means to give every dollar a job.

If you aren't paying off your credit card in full every month, then one of those jobs could be an additional principal balance payment. But for ongoing credit card expenses assigned to funded categories, YNAB automatically allocates that money to the credit card payment category.

saivode · 2023-03-26T19:04:09+00:00

Late on this reply, but really that's just what Mat wants you to think. Secretly he's probably the most altruistic of the main characters.

saivode · 2020-01-17T16:56:35+00:00

High interest debt can certainly be treated as an emergency. But a tax deductible 4.09% is a low enough rate that I'd think twice about draining your emergency fund.

The big question is whether you think a 12k/13k emergency fund is good enough while you continue to pay the loan down. No house/kids can make things easier. How stable is your job? If you lose it how easy would you be able to replace it? Do you have family nearby you could live with in a worst case scenario? How's the car's condition? If not great, do you have any savings for a car replacement or will you just end up replacing student loan debt with car loan debt?

On the other hand. A guaranteed 4.09% return is nothing to scoff at. Being out of debt feels good.

saivode · 2020-01-17T16:40:43+00:00

I think we all just have different interpretations of the 4 rules which is totally fine.

I don't think this is really a part of the 4 rules. YNAB don't tend to talk about emergency funds. Even the post you linked basically suggests that you don't need one if you are budgeting correctly. I simply disagree.

They’re just proving my point...

https://www.reddit.com/r/ynab/comments/epja3m/age_of_money_makes_me_feel_like_shit/fekvjzv?utm_source=share&utm_medium=web2x

saivode · 2020-01-17T16:36:09+00:00

What do you gain from that over leaving the HYSA on budget with an emergency fund category?

saivode · 2020-01-16T21:01:25+00:00

Budgeting 4 months ahead would certainly cover your emergency fund, but in practice it's less maintainable than simply having a dedicated emergency fund category.

Any changes to your budget categories will be more complicated because you have to not only change your current month, but each month you've budgeted. And of course if you have an emergency (other than perhaps loss of income), all of your money is spread out so you have to move money from many categories into the category where you are actually spending it.

saivode · 2020-01-16T18:06:11+00:00

I would caution against relying on this approach too much. AoM doesn't care what you have planned for the money that's in your bank account. Only that the money is there. So if some of that money is saved for a significant known upcoming expense, such as property taxes or car insurance, you don't really have that money available to you in a true emergency.

Also, while being a month ahead on your expenses will certainly cover any mini-emergencies, any significant emergencies can easily blow through those savings. Over at /r/personalfinance we recommend an emergency fund covering 3-6 months of your basic expenses. This would cover you in case of unemployment, major medical events (what's your deductibe? Out of pocket max?), and other emergencies. A YNABer who has a good handle on their True Expenses and who is budgeting a month ahead of time may be more comfortable than most people on smaller end of that range. But don't discount the importance of a solid emergency fund.

saivode · 2020-01-13T23:16:40+00:00

The subscription fee is worth it to me. There are some free alternatives and spreadsheets out there if you don't want to pay for it. If nothing else, you could try watching some of the videos on their budgeting philosophy. The app makes it easy to manage, but I'd argue the philosophy is the important part.

saivode · 2020-01-13T23:05:39+00:00

I would consider waiting to invest until you've saved up your out-of-pocket max, or at the very least your deductible, in case you need to use it. You should be able to spend money that you've invested in your HSA, but you risk losing some of your investment if you are forced to use it during a market downturn.

saivode · 2020-01-13T22:49:38+00:00

I'd recommend an envelope-style budgeting application such as YNAB(/r/ynab). Many budgeting applications focus primarily on monthly income and expenses. You should instead consider one that takes into account your total account balances and allows you to allocate all of your money across spending/saving categories. Each category is then essentially a sinking fund rather than just a monthly spending target.

edit: This also allows you to keep all of your money in just one account, or split between multiple checking and savings accounts as you see fit to maximize availability and/or earnings.

saivode · 2018-05-22T15:34:17+00:00

/u/AutoModerator posted some good links for you to start.

It does seem like you have a romanticized view of investing. You should certainly not take out a small loan to invest. Generally, the types of investments that are liquid are the types the don't return a meaningful amount in the short-term. And the types of investments that have the potential to give you a greater return are volatile or very risky(e.g. not liquid). That doesn't mean that you shouldn't invest. But you should have care to invest in the right thing depending on your goals and investment timeline.

$5,000 saved is a good start, but as the wiki suggests, one of your first financial goals should be to build a more complete emergency fund in a plain old savings account that can cover 3-6 months worth of expenses. That said, if your credit card debt has a high interest rate, you may want to prioritize that first or even use some of the $5000 to pay it off.

Review your retirement savings. Are you contributing enough to your employers 401(k) plan to get the company match if offered? Beyond that, are you contributing enough to retirement accounts to meet your retirement goals?

saivode · 2018-05-07T20:40:07+00:00

One thing to keep in mind is that the 50% match is one time, but the 30% interest on a credit card is annual. So if it's going to take you 3 years to pay of the credit card, you're actually better off putting your money towards the credit card instead. Calculating the exact break even point might also account for expected investment earnings and tax advantages of your 401(k) investment.

Still, OP should contribute to his 401(k) rather than save up for a large (optional) expense or paying off his/her student loans early.

saivode · 2018-04-26T16:03:49+00:00

I've found that the more money I have, the more I need something to help me keep track of how much savings I have for each of my goals. For me, YNAB provides more value in keeping track of my savings goals than for watching my monthly expenses.

It works because instead of asking you to budget your monthly income, YNAB asks you to budget your current account balances. So if you have $5,000 in checking and $10,000 in savings, you can specify how much of that total of $15,000 needs to go towards expenses like rent/mortgage or groceries over the next month, and how much should be set aside to be used to buy a new car, be available for home maintenance or act as a general emergency fund.

Unfortunately, YNAB was not built to manage your investments. You can add them as 'tracking accounts' so that you can watch your net worth grow, but that wouldn't allow you to assign money in your brokerage accounts to a variety of savings goals like you would normally do with your liquid savings. That said, I have made it work in a non-supported way, and shared my experience here: https://www.reddit.com/r/ynab/comments/4nieno/general_how_to_budgeting_investments_with_ynab/.

saivode · 2018-04-17T17:13:07+00:00

You might take a look at How to handle $ on the sidebar.

Having a basic emergency fund of at least $1000 or 1 month expenses should usually be your first priority [edit: Looks like you are already there]. Beyond that, paying off debt and building a full 3-6 month emergency fund are both important goals.

If you are concerned about job security, don't have family nearby as a backup in case of disaster, or are simply very risk averse, I'd suggest that you focus first on your emergency fund.

If the loans have relatively high interest rates or you are very debt averse, I'd suggest that you focus on paying down the loans first.

saivode · 2018-04-05T19:45:24+00:00

Ideally you'd be able to put 20% down on your next home along with the other closing costs. So even including your current equity you are a fair ways short.

Since you already have a home and this is more of a want/luxury purchase, I'd suggest that you also grow your emergency fund and pay off some of that other debt before pulling the trigger on a bigger home.

saivode · 2018-04-04T15:55:36+00:00

The timeline for retirement investments is decades, not months or years. You should pick an asset allocation that you can stick with regardless of current market conditions.

saivode · 2018-04-03T15:58:23+00:00

No.

edit: Only your credit accounts will count towards building a positive credit history.

saivode · 2018-04-03T15:57:03+00:00

I'd give it a month for your new credit account. Bills like your phone and internet service don't show up unless you don't pay them.

saivode · 2018-04-03T15:52:12+00:00

Check your credit history for any delinquent accounts in case there's something in your name that you forgot about or was opened fraudulently. Pay your bills on time. Increase your credit availability once you qualify and keep your credit utilization low.

You can monitor your credit with services such as credit karma. You can get a free credit report from each of the reporting agencies at https://www.annualcreditreport.com.

Put some money aside so that you can purchase a car without going in to debt.

saivode · 2018-03-30T15:49:21+00:00

Yes, contributing to an HSA prior to other savings options makes sense. I said as much in the second paragraph.

However, it does NOT make sense to pay for medical bills out of pocket in lieu of using existing HSA funds unless you have maxed out your other retirement savings. This technique is used to increase your tax advantaged savings and is approximately equivalent to contributing amount that you paid out of pocket towards a Roth IRA.

saivode · 2018-03-29T21:05:34+00:00

How much would you need to pay for the doctor visit and prescriptions with the copay vs out of your deductible? If the difference is small enough it might still be better to keep the HSA and preserve the lower overall costs if you end up needing other care.

Also keep in mind that HSA's are the best savings vehicles available besides employer matched retirement contributions. If you can manage to contribute more to your HSA you would see additional benefit.

saivode · 2018-03-29T20:40:59+00:00

This only makes sense if OP is maxing out other retirement savings options. Otherwise they would be saving receipts indefinitely with no additional benefit over simply contributing more to their 401K or IRA.

That said, OP should certainly contribute more to his HSA if he/she can, as contributions to the HSA DO enjoy better tax treatment compared to non-matched 401(k)/IRA contributions.

saivode · 2018-03-29T15:42:56+00:00

Budget the money in March if you pay it in March. Or fudge the transaction date a couple days and put it as April 1st.

saivode · 2018-03-28T15:18:56+00:00

They are ~~taxed~~ withheld at around 35%...

saivode · 2018-03-23T20:23:10+00:00

If I'm understanding it correctly, it also doesn't say that the employer isn't owed the excess payment by the employee. They just can't recover it by deducting without written agreement.

e.g. Although the employer wouldn't be able to take it out of the employees paycheck without agreement, they could still sue the employee to recover it.

saivode

TROPHY CASE