A zero-based budget: my long lost friend

A few weeks ago, I decided I should read Dave Ramsey’s Total Money Makeover. I was tired of money slipping through the cracks, and didn’t want to continue along the same way, so I’ve read through about eight chapters so far.

Before we could consider step number one (build a $1,000 emergency fund), we needed to create a budget. Having money for bills and food is not enough, and there needs to be a plan.

While the templates provided in the book would work fine, I’d prefer spreadsheets to automate calculations. (I don’t like my hand writing as much.) I spent some time trying to create my own spreadsheets from scratch in Google Docs, but got frustrated after awhile because I didn’t know what the balance column stood for — it seemed like something really important.

I remembered seeing YNAB (which stands for “You Need A Budget”) somewhere before, and I felt compelled to revisit the software — anything to make budgeting less painful!

We spent a few hours watching the videos, then we excitedly purchased a license for our laptops and installed the YNAB app on our iPhones. (I later found out I could’ve saved $4.99 by using my Apple ID to install two copies. Oops. See “Buy the app for multiple installs”.)

The YNAB method consists of four rules:

  1. Give every dollar a job
  2. Save for a rainy day
  3. Roll with the punches
  4. Live on last month’s income

Finally! Zero–based budgeting explained very well, and an awesome way to implement saving money without actually needing multiple accounts.

The second rule will involve us building the $1,000 emergency fund before moving onto attacking debt. We’ll focus on one thing at a time (as Dave Ramsey suggests).

When were setting amounts for our various categories (expenditures), the value of creating a budget finally made sense. Rather than relying on the dollar amount in our checking accounts and mentally calculating the numbers, we can see exactly where our money needed to go. While we had our calendars for bill reminders, having a budget means it’s one less thing to think about.

Since we don’t have a buffer to live on last month’s income (yet!), we’ll be entering our paychecks as we receive them and budgeting those dollars, rather than forecasting what we’ll get for future paychecks. (Amy receives a paycheck weekly, while I receive a paycheck twice a month.) This will mean that we’ll set our budget more often, directing us to use the money we actually have. Wow, that’s an awesome concept that should be taught to everyone.

I’ve considered using envelopes and putting cash into our separate categories, but it’s convenient to pay with my debit card, so YNAB really helps keep our numbers accurate. My wife feels the same way.

Oh, I forgot to revisit the balance column. When you don’t spend some (or all) of the money you’ve assigned to a category, it rolls over to next month. We don’t necessarily need to have two separate accounts as long as the money is allocated to the category or categories in our budget, so that’s how we’ll be saving for things in the future without creating a separate savings account, which has a turnaround of two days per transfer. (My checking account is with Wells Fargo, while my savings account is with ING Direct.)

If you’re intrigued, here’s the summary of what we’ve done so far:

  • Read The Total Money Makeover: A Proven Plan for Financial Fitness by Dave Ramsey. One of my coworkers also suggested The Millionaire Next Door: The Surprising Secrets of America’s Wealthy by Thomas J. Stanley and William D. Danko. I haven’t read the second one yet.
  • Go through the YNAB website, watch as many of the videos and read all their support pages.
  • Once you’re convinced, buy YNAB 4 for your computer (and smartphone, if you want to add transactions on–the–fly), set up a zero-based budget, and track your money.

Our first goal: the $1,000 emergency fund. Here we go!

With Amy’s permission, I’m putting this out there in case you might be in a similar situation. If you decide you want to give this a shot right now, leave a comment and, if you’d like, link to your blog post about your story. I’d love to hear about it!

Photographing the LAUSD Teacher Protest

LAUSD Teachers Protest (1/29/2009)

Downtown Los Angeles — When I heard from LAist that there would be a huge protest in Downtown LA, I decided to photograph the event. (Chris Lin joined my photojournalism endeavors, too.)

We joined the growing crowd at the LAUSD headquarters before streets were starting to get blocked off. Around 3:30pm, it got packed out. Finally, the bullhorn-equipped leaders led the crowd from the back of a flatbed truck, surrounded by huge speakers powered by a generator.

A sea of red moved down 4th street. Chanting, signs and music blared as the crowd moved toward Pershing Square. (I also saw a fellow Flickr photographer, Luke Gattuso.)

As we got closer, we saw that a huge crowd already formed. A stage was set, a row of news vans were parked, helicopters were hovering, and police/safety officials were everywhere.

Leslie Miller from ABC7 Eyewitness News was at the entrance of Pershing Square. I think they were having camera issues, plus one person was harassing her a bit.

I made my way through the crowd, trying to capture a few more photos before we took off. There were some stands mocking Governor Arnold Schwarzenegger with pamphlets and forms to fill out. A lot of people were seated on steps and benches, looking tired and fed up.

We didn’t stay for too long at Pershing Square. I simply wanted to capture the massive crowd.

I hope something positive came from this.

View my photos from this event at Flickr

Update 1/30/2009 — If you were taking photos at this protest and you’re on Flickr, you can share them in the UTLA Flickr group. Otherwise, e-mail your best ones directly to UTLA. (via UTLA.net)