topic Re: Zero based personal budgeting in Personal Finance

Zero based personal budgeting

Tonya-E — Wed, 16 Jun 2021 01:12:35 GMT

I wanted to see if there are folks out there currently using zero based budgeting. I want to start this on 7/01 and I am curious how it is working for others. My plan is to have a base amount of one month of expenses to represent my "zero balance starting point" and move forward that way. I'm thinking it can help me to maximize all funds by giving them a home/job to do.

Re: Zero based personal budgeting

Horseshoez — Wed, 16 Jun 2021 01:17:07 GMT

@Tonya-E wrote:
I wanted to see if there are folks out there currently using zero based budgeting. I want to start this on 7/01 and I am curious how it is working for others. My plan is to have a base amount of one month of expenses to represent my "zero balance starting point" and move forward that way. I'm thinking it can help me to maximize all funds by giving them a home/job to do.

Maybe you can educate us, or at least me, I have no clue what "Zero based budgeting" even means.

Re: Zero based personal budgeting

ToxikPH — Wed, 16 Jun 2021 01:26:26 GMT

Zero-based budgeting is the type that YNAB runs off of and I'm sure there are a good amount of people that use it within this group. I personally use it and as long as you follow it properly it can be hugely beneficial. Just be willing to accept that you might be spending more than you should on certain things and paying attention will change your priorities.

Re: Zero based personal budgeting

Horseshoez — Wed, 16 Jun 2021 01:34:29 GMT

@ToxikPH wrote:
Zero-based budgeting is the type that YNAB runs off of and I'm sure there are a good amount of people that use it within this group. I personally use it and as long as you follow it properly it can be hugely beneficial. Just be willing to accept that you might be spending more than you should on certain things and paying attention will change your priorities.

LOL, that went over my head as well, I had to look up YNAB; it is a definite non-starter for me. Why? I have neither time nor energy to muck about with a budget. Fortunately I live so very far below my means it isn't an issue.

Re: Zero based personal budgeting

Tonya-E — Wed, 16 Jun 2021 01:37:57 GMT

My husband I live well below our means as well. We have never lived in expenses above what either of us independently can carry alone as a safety net. However, I have student loan debt that I am aggressively paying off. I am thinking that this type of budget could help me to streamline that and shave off a few months.

Re: Zero based personal budgeting

Horseshoez — Wed, 16 Jun 2021 01:39:45 GMT

@Tonya-E wrote:
My husband I live well below our means as well. We have never lived in expenses above what either of us independently can carry alone as a safety net. However, I have student loan debt that I am aggressively paying off. I am thinking that this type of budget could help me to streamline that and shave off a few months.

That's awesome you're working to get that millstone from around your neck and I'll bet it'll feel great to no longer have that debt!

Re: Zero based personal budgeting

Tonya-E — Wed, 16 Jun 2021 01:40:57 GMT

@ToxikPH wrote:
Zero-based budgeting is the type that YNAB runs off of and I'm sure there are a good amount of people that use it within this group. I personally use it and as long as you follow it properly it can be hugely beneficial. Just be willing to accept that you might be spending more than you should on certain things and paying attention will change your priorities.

@ToxikPH I am sure I am over spending in some areas. I review any areas I can cut or reduce every quarter (like insurance and such), but I think this is just that little extra push. That's why this particular budget appeals to me. I'm just trying to streamline things a bit. I am definitely committed to giving it a shot. Thanks for your input.

Re: Zero based personal budgeting

Tonya-E — Wed, 16 Jun 2021 01:43:59 GMT

@Horseshoez wrote:
@Tonya-E wrote:
My husband I live well below our means as well. We have never lived in expenses above what either of us independently can carry alone as a safety net. However, I have student loan debt that I am aggressively paying off. I am thinking that this type of budget could help me to streamline that and shave off a few months.
That's awesome you're working to get that millstone from around your neck and I'll bet it'll feel great to no longer have that debt!

Yes! It's been tough but I have managed to get rid of about 16k since Sept. 2020. I have a huge amount to go but my plan is to have it done within 24 months! It will definitely feel wonderful. It should have been gone already, but like many others have experienced, it's VERY easy to put off. I'm committed though.

Re: Zero based personal budgeting

toothgrind3r — Wed, 16 Jun 2021 03:47:00 GMT

@Tonya-E wrote:

@ToxikPH I am sure I am over spending in some areas. I review any areas I can cut or reduce every quarter (like insurance and such), but I think this is just that little extra push. That's why this particular budget appeals to me. I'm just trying to streamline things a bit.

I've used YNAB for quite some time, and it made me realize that I am not disciplined enough to keep a budget...BUT it 100% changed my relationship with money for the better. It mad eme look at what I was doing, where I was throwing money away, it made me want to cut out as much as possible, if only for the fact that if I did so, I wouldn't NEED YNAB, and it worked.

Re: Zero based personal budgeting

Tonya-E — Wed, 16 Jun 2021 04:06:42 GMT

@toothgrind3r wrote:
@Tonya-E wrote:

@ToxikPH I am sure I am over spending in some areas. I review any areas I can cut or reduce every quarter (like insurance and such), but I think this is just that little extra push. That's why this particular budget appeals to me. I'm just trying to streamline things a bit.
I've used YNAB for quite some time, and it made me realize that I am not disciplined enough to keep a budget...BUT it 100% changed my relationship with money for the better. It mad eme look at what I was doing, where I was throwing money away, it made me want to cut out as much as possible, if only for the fact that if I did so, I wouldn't NEED YNAB, and it worked.

Nice! I have always thoroughly enjoyed budgeting. I keep both electronic budget software and a manual one on paper, lol ( I feel like writing it embeds it in my brain.) This particular style just looks like it is more laser focused, which I like. Don't think hubby will like it, but I will figure out a way to make it work for both of us.

It's good to get some experiences from others. It definitely convinces me this is something I want to at least try. Thank you so much for sharing your experience!

Re: Zero based personal budgeting

babygirl1256 — Wed, 16 Jun 2021 06:18:26 GMT

As a finance person, I built my own budget worksheet that's equivalent to zero-based budgeting methodology. It's very simple because I have a massive spreadsheet and can track finances easily -but- hubby wants no part of the calculations and/or tracking. I don't exceed the 5.5% allowable utilization per creditor and it has helped my credit score immensely!

NOTE: I redacted my scripture reference since I think it may be a violation (not sure) but just to be safe.

Re: Zero based personal budgeting

Tonya-E — Wed, 16 Jun 2021 06:36:46 GMT

@babygirl1256 wrote:
As a finance person, I built my own budget worksheet that's equivalent to zero-based budgeting methodology. It's very simple because I have a massive spreadsheet and can track finances easily -but- hubby wants no part of the calculations and/or tracking. I don't exceed the 5.5% allowable utilization per creditor and it has helped my credit score immensely!

NOTE: I redacted my scripture reference since I think it may be a violation (not sure) but just to be safe.

Love this❤️ I plan to create something similar! Thank you for the blueprint!

This is good stuff! BTW, my hubby is the same way, 😂. But it's fine because I like doing it anyway.

I've been working on this unofficially for about a year and a half. I have the student loan left to tackle, though we have a mortgage that is last on the list. I used every penny I could scrape up the last 18 months to clear both remaining car payments, all credit card debt and remaining debt. I did it backwards I guess though because I did emergency fund padding and some retirement investment catch ups before starting this. After 2020, I don't regret that at all because of the peace of mind it gave. This zero based budgeting could likely help me to fine tune areas of overspend that I can divert to my student loan. I really want to see this through as quickly as possible.

Re: Zero based personal budgeting

calyx — Wed, 16 Jun 2021 12:35:55 GMT

I use YNAB - it helped me get some post-divorce-budget-madness under control and made me confident in getting credit cards.

I live below my means (and I have friends way below their means who also use it), but I still like how it gives me digital 'envelopes' for projects. I don't mind spending money for the sub because they're always updating and support is amazing. It works for me - to each their own.

Re: Zero based personal budgeting

Tonya-E — Wed, 16 Jun 2021 13:06:09 GMT

@calyx wrote:
I use YNAB - it helped me get some post-divorce-budget-madness under control and made me confident in getting credit cards.

I live below my means (and I have friends way below their means who also use it), but I still like how it gives me digital 'envelopes' for projects. I don't mind spending money for the sub because they're always updating and support is amazing. It works for me - to each their own.

I've heard about YNAB sofware. I checked it out and I like a lot of the features. I just don't want to add a monthly fee. I may give it a try just to see if it is something useful for me. I think they have a free trial period.

Re: Zero based personal budgeting

calyx — Wed, 16 Jun 2021 13:47:34 GMT

@Tonya-E wrote:
@calyx wrote:
I use YNAB - it helped me get some post-divorce-budget-madness under control and made me confident in getting credit cards.

I live below my means (and I have friends way below their means who also use it), but I still like how it gives me digital 'envelopes' for projects. I don't mind spending money for the sub because they're always updating and support is amazing. It works for me - to each their own.
I've heard about YNAB sofware. I checked it out and I like a lot of the features. I just don't want to add a monthly fee. I may give it a try just to see if it is something useful for me. I think they have a free trial period.

@Tonya-E They give a standard 30d trial, but if you check around, you can usually find 3 or 4 month trials. In my case, I'm paid monthly so I asked them if I could extend my trial to 3 months so that I could actually budget out a couple of paychecks and they totally did, no question.

There are also people who have created spreadsheets that mimic ynab pretty closely for those who don't need or want all of the options. I'm also beta testing their app updates, and they're definitely getting better (I mostly use the web version since the app is so limited).

Re: Zero based personal budgeting

Tonya-E — Wed, 16 Jun 2021 13:51:26 GMT

Awesome suggestion @calyx. I will check around in the next week or so to see what's out there. Thank you!

Re: Zero based personal budgeting

Kidcat — Thu, 17 Jun 2021 00:56:29 GMT

@ToxikPH wrote:
Zero-based budgeting is the type that YNAB runs off of and I'm sure there are a good amount of people that use it within this group. I personally use it and as long as you follow it properly it can be hugely beneficial. Just be willing to accept that you might be spending more than you should on certain things and paying attention will change your priorities.

I'm a fan of YNAB. If it works for your it's a game changer. But I know some people have difficulty getting started with zero based budgeting because you are not projecting.

Re: Zero based personal budgeting

Kidcat — Thu, 17 Jun 2021 01:01:40 GMT

@Tonya-E wrote:
@babygirl1256 wrote:
As a finance person, I built my own budget worksheet that's equivalent to zero-based budgeting methodology. It's very simple because I have a massive spreadsheet and can track finances easily -but- hubby wants no part of the calculations and/or tracking. I don't exceed the 5.5% allowable utilization per creditor and it has helped my credit score immensely!

NOTE: I redacted my scripture reference since I think it may be a violation (not sure) but just to be safe.
Love this❤️ I plan to create something similar! Thank you for the blueprint!
This is good stuff! BTW, my hubby is the same way, 😂. But it's fine because I like doing it anyway.

I've been working on this unofficially for about a year and a half. I have the student loan left to tackle, though we have a mortgage that is last on the list. I used every penny I could scrape up the last 18 months to clear both remaining car payments, all credit card debt and remaining debt. I did it backwards I guess though because I did emergency fund padding and some retirement investment catch ups before starting this. After 2020, I don't regret that at all because of the peace of mind it gave. This zero based budgeting could likely help me to fine tune areas of overspend that I can divert to my student loan. I really want to see this through as quickly as possible.

Great thing about YNAB and their philosophy is that they also say you should build a month buffer and address retirement before aggressively tackling debt. It can be counter intuitive, but I know from personal experience having a one month buffer can keep you from going BACK into debt after paying it off. Good luck in your search

Re: Zero based personal budgeting

Tonya-E — Thu, 17 Jun 2021 01:41:05 GMT

@Kidcat Thank you. I fought that for a while in determining what we should do. Some experts advise not to save while paying off debt while others say save first. I went ahead and did an 7 month EF, and an additional month in the account to start my zero based budget in. I figured that none of the remaining debt is high interest so it won't be as counterproductive. It left me a little short of my payment goals for the student loan year 1. But, I am hoping that will keep us from going backwards. I will likely use multiple budget sources as I always have. But I am definitely researching YNAB (assuming I can get a decent free trial) and I am going to revamp my spreadsheet to use that as well.

Re: Zero based personal budgeting

calyx — Thu, 17 Jun 2021 15:36:06 GMT

@Kidcat wrote:
@ToxikPH wrote:
Zero-based budgeting is the type that YNAB runs off of and I'm sure there are a good amount of people that use it within this group. I personally use it and as long as you follow it properly it can be hugely beneficial. Just be willing to accept that you might be spending more than you should on certain things and paying attention will change your priorities.
I'm a fan of YNAB. If it works for your it's a game changer. But I know some people have difficulty getting started with zero based budgeting because you are not projecting.

^ This.
Some people REALLY like forecasting (budgeting money that doesn't exist yet), and you can't do that with YNAB. If that's something important to you, it won't work.

There's also a bit of a steep learning curve for some people in YNAB. They have a lot of great tutorials (Nick's are the best), that I recommend before actually using the software so that you can maximize your free trial.

If you do decide to go with YNAB, their subreddit is also a good place for information (and referrals/extra info on longer trial periods).