Trying to Money Like An Adult

I’m not good with money.

True: I own a house and lease a car, and I’ve got a savings account for my daughter’s education, so I’m not as bad with our money as millions of other people around the globe.

But still, like most Americans, we basically live paycheck to paycheck, and my family is a single unexpected disaster away from not being able to make ends meet (luckily, my wife and I both have very supportive parents, so if we needed the help, I’m confident they would offer it — but still, that’s not what you want as an adult, right?).

It’s kind of silly because my wife and I are both employed full-time as experienced teachers, and I have a second job working as a relatively well-paid adjunct at a local college.  According to the Pew Research Center, we are firmly in the middle income-tier in Vermont.

Most of our income goes to paying down our debt in the form of student loans (20%) and credit cards (19%). The mortgage eats up another 13% each month. The rest goes to a car payment, plus regular obligations like heat, electricity, water, groceries, subscriptions, etc. (and way too much of it goes to dining out).

I’m trying to get a handle on all of this. The main driver is the need to make repairs on the house. We got water damage in our bedroom ceilings a couple of years back; the slate steps on our front porch are falling in on themselves; and the slate roof needs some repair. The kitchen needs work too, but that’s a major overhaul that is years down the road.

The secondary reason is because I want to make sure the family can weather whatever unexpected disaster ends up happening to us (where “disaster” is defined by the need to drop more than $400 on an unexpected service or item).

To help us accomplish our goals, I’ve started using two different tools.

The first is YNAB, which stands for You Need A Budget. Prior to YNAB, I used Mint, but the budgeting tools on Mint didn’t help as much. Mint’s budgeting tools revealed where we spent our money, but it didn’t provide any tools to help us change our spending habits.

YNAB, on the other hand, requires us to be more active with our budgeting. I wouldn’t say I’ve mastered the process, but I’m definitely more engaged with it, which is a start. The rules powering YNAB are simple:

  1. Give every dollar a job.
  2. Embrace your true expenses.
  3. Roll with the punches.
  4. Age your money.

I’m still trying to figure out the best way to comply with Rule #1, but the important part is that I’m actively working on it.

The second tool I’m using is called Qapital. Qapital is basically a savings account, but it uses customizable rules to trigger my bank to transfer money into our Qapital account.

One of the rules we use rounds up every transaction we make using our debit cards to the nearest $2 and transfers the difference into our savings account. Another rule transfers $1 for every article I read using the Pocket app (i.e., I pay myself to finish reading long articles). Yet another one transfers $25 for every post I write here on my blog (i.e., I’m paying myself to blog).

But we don’t just save money every time we do something. I can also save money when we don’t do something. For example, I usually spend around $30 a week on my lunches. I absolutely DO NOT want to be doing this, and yet, come lunch time, I still find myself slipping next door to the school to get a slice of pizza. So, to help motivate me not to do this, I set up a rule so that if I spend less than $15 a week at the pizza place, the difference gets transferred into my savings.

I’m still not killing it when it comes to managing our money, but with YNAB and Qapital, I feel like we’re making a lot more progress than we ever have before.

The real test will come this summer. Will we have enough money to do repairs on the house? Will a successful use of Rule #4 on YNAB mean that the money we spend each day was actually generated more than 30 days prior? I don’t know for sure, but I’m working to make it so.