How to do your budget and plan capex purchases with YNAB
|October 31, 2013||Posted by Koanic under unity|
above is the vid, below are my raw notes for the presentation:
lotsa exciting stuff – unity project.
give you a taste of one completed portion
Didn’t do neanderhall reset last weekend, cuz another project took priority and absorbed the time:
working budget, paid off 1 mo cc debt
leftover from years ago, when too sick to work. written off, not accruing interest
so I’m taking care of essential leveling first
here’s how to do your budget:
principles: cyborganize, Ramit Sethi, YNAB, lean startup theory – pivoting
“You Need a Budget” = YNAB. the app. Google it for link
First, YNAB is tool. great program, great philosophy
sign up for email newsletter course
download free trial
BUT, DON’T follow their entire method
want you to plan everything in advance. screw that.
how to get started without pinching pennies and allocating every dollar?
start by just tracking.
use mobile app
misfiled mobile category tweak
inductively build your spending categories
get a sense of where your money’s going
tracking alone results in much more conscious spending. immediate win.
this is the cyborganize modification to ynab methodology – inductive, past data is certain. future plans are constantly changing. prioritize the latter over the former. process the inflow first. then develop an accurate intuitive sense of the near future, and maybe eventually the far future.
application: you can attempt to estimate spending for various categories. I played with that at first. but I wound up leaving most of the free balance up top
I could do this because i have very low expenses -
rice, shrimp water diet.
weekly dates with girlfriend off groupon.
rent ~ 1/6 income
no car – live in city
rest is optional capex – clothes, supplements, software, etc
I already had a decent buffer, over a month living expenses, and good emergency support network. so I didn’t need to worry about living
but I did have a problem: how much can I spend on optional capex?
had no idea of monthly spending.
was saving receipts, but too unwieldy. couldn’t get any sense. too much work to process. and all in fucking chinese. cryptic.
tracking in YNAB showed me actual living expenses quite low, rest was capex
so then next question was, what’s next critical capex purchase?
firstly, yNAB advises stupid way to save for capex
ynab system great for saving for “rainy days” – infrequent large expenses that can bust a monthly budget
did my taxes, set automatic monthly tax savings
but for optional capex, seems like it wants you to save gradually towards each capex item
that’s stupid. problem with capex is critical path changes, purchases no longer necessary
e.g. health problem solved, no longer need to do large wide-targeted supplement buys
if save towards all potential capex purchases at once, slows your iterational velocity wayyy down.
bad lean startup theory.
want to buy the next capex on critical path, advance as far as possible on that, before deciding what to buy again
going further down the iterational path results in more and better information about future needs
so the correct paradigm is to only do capex to solve PRE-EXISTING, SERIOUS and PERSISTENT pain points.
otherwise, you risk buying something you think you WILL need, only to find out you didn’t. and you’re out the money.
viewed from that paradigm, the obvious choice was to pay my written-off cc debt. enables credit card under own name again, wipes credit record clean, enables shipping consolidation with shipito, savings on shipping costs, multiple other financial tasks and objectives become easier, reduces risk/problems caused by gf breakup, since mainly relying on her cc, etc. multifaceted benefits, and an actual, realized sticking point for multiple objectives. ie, pursued those objective and had to stop / stalled out because of cc problem.
previously, health had been the primary sticking point, so capex had gone towards supplements etc. with that solved, this was the new priority.
so, paid that off, budget working, debt free, clean slate in one month, and credit card under own name.
last paradigm: bills automation, ramit sethi’s book “I will teach you to be rich”
automating rent payment, and cell phone bill. cuts down on errands, saves time.
going forward, implement his framework for side income is next step.