Week 1 of FIRE – Focus on Expenses

The Road to Financial Independence – Week 1

This week, my efforts are focused on getting a handle on our expenses. Simply identifying them and following a budget to try to reduce discretionary spending. I felt like this was a priority to achieve FIRE.

My friend recently introduced me to a tool she was using called YNAB – WORST name ever, but it stands for “You Need A Budget”. Which we do. HA! Anyway, I decided to sign up for a trial account at YNAB.com. So far, I’ve been using YNAB religiously for 2+ weeks, and it’s going very well. I feel I have much better awareness of where our money is going (and where it’s being wasted on lower priority things).

Side note: if online subscriptions aren’t really your thing, and you’d rather do your budget “old school” on paper or in a spreadsheet, you can still learn and follow YNAB principles by reading the book “You Need a Budget“, written by the creator Jesse Mecham.

A few lessons learned so far…

Lesson Learned #1

YNAB is based on the solid principle of budgeting and spending ONLY THE MONEY YOU HAVE. If you are anything like my family, you are spending beyond your means. This has been a hard pill for me to swallow. But also, one of my best realizations. I’m keen on getting free stuff so Hubs and I put EVERYTHING on the credit card to get cash back. Turns out we are spending ALL of that money before we make it. Essentially we are always a paycheck behind. I hope to change that by managing it YNAB-like.

Lesson Learned #2

The number one principle of YNAB is to give every dollar a job. An easy concept but I just was not at all organized in that area. My Excel spreadsheet budget just doesn’t know how to do this. YNAB is built in such a way that you are forced to job-ify your dollars, which really helps you understand where your money is going and where you want it to go. The ultimate goal is to have no dollars to budget every time you get paid.

Of course, this does not mean you are spending every dollar! That would not be very FIRE friendly. A percentage of these dollars are going to expenses, but I also have categories for new car savings, emergency savings, and retirement savings. Those dollars have very special jobs!

Lesson Learned #3

YNAB is more than just web-based budgeting software. There are tons of videos, articles, and live workshops to help you manage your personal finances that come with your subscription. During my free trial period I’m making the most of those (albeit I’m getting to it a bit late in the game). By the end of my trial, I will be jobbing my dollars like nobody’s business.

I’m still on the fence about shelling out the cash for the yearly subscription to YNAB, but YNAB claims that “On average, new budgeters save $600 by month two and more than $6,000 the first year! Pretty solid return on investment.” For REALS YNAB?? I am curious how they measure this exactly, or how I will. Anyway, it’s looking good that I might give it a shot for a year to see if it’s saving me the big bux. It can hopefully contribute to helping me achieve FIRE a little sooner with much more focus on reducing expenses.

YNAB charges $84 USD for an annual subscription, or $11.99 per month, with a free trial of 34 days to ensure you love it before you buy. A worthy spend if you ask me!  Watch for a follow up in the future on my YNAB experience and whether or not I took the plunge!

YNAB UPDATE 2021

I signed up for YNAB and I’ve been using it for over 2 years. It has saved me thousands I am sure, which has gotten me closer to FIRE. If that’s not a glowing endorsement, I don’t know what is! FYI, this is not a paid endorsement 🙂  If you’d like to try YNAB, please use my referral code by clicking here. That way, if you decide to sign up after 34 days, you will get a free extra month!

This post contains affiliate links.

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