YNAB: Automate all the bills!

One of the major benefits of  You Need A Budget (YNAB) is that it removed the worry from me of automating all of my bill payments. Now every bill is either automatically scheduled via my Credit Union’s bill pay, automatically billed to a credit card, or an Electronic Funds Transfer (EFT) via ACH out of my checking account. How do I do that and ensure my peace of mind that I won’t overdraft our bank account?

It starts with the YNAB principle of giving every dollar a job. By doing that, you ensure you don’t spend what you don’t have. This is probably the toughest thing to get used to in YNAB. When I first started, I was living on credit card float, playing games with when paychecks arrived and when I actually sent out payments. Through lots of careful budgeting that first month, I was able to keep my available balance to budget at $0.00, never crossing into negative territory without a corresponding adjustment to bring it back to $0.00.

Once I was able to successfully get through a first month using YNAB and paid off my pre-YNAB credit card debt, suddenly everything clicked. Every time I used my credit card, I made sure my budget allowed for that without crossing into negative territory. All this time I was also growing a buffer so that I could budget for next month’s expenses. Practically every day, I would reconcile my transactions with YNAB, so at any moment I knew exactly what had cleared and what hadn’t.

My checking balances were growing, but that is because I was giving every dollar  job and not spending money I actually didn’t have. At the end of month two, when my next credit card payment was due (or really, any payment), I could simply send that payment in the day after. Because every dollar I needed for that payment was already in my checking account and already pre-assigned to every transaction on this bill, it was a simple administrative task of sending that payment in. How liberating!

Now, in month three of YNAB, I have decided to automate all of this. Our two main credit cards are set on AutoPay. 15 days after the billing statement is generated, a payment is automatically withdrawn from my checking account for that balance. This gives me plenty of time to review the bill just in case any oddities show up that missed my reconcile procedure. This allows me to shift my focus to building our full buffer and seeing what dollars I can spare for more retirement savings.