In the Buffer Zone

Last month we reached a goal that at times and to many seemed unreachable - we stopped living paycheck to paycheck. We obtained our buffer. Our awesome budgeting software "You Need a Budget" commonly referred to as "YNAB" defines buffer as "Your YNAB Buffer is the equivalent of one month’s income which, once saved, will allow you to use paychecks received during the current month for the following month, removing you from the “Paycheck to Paycheck” cycle." It's part four of YNAB's four rule methodology. Rule four "Stop Living Paycheck to Paycheck" is "A money management methodology that removes you from the paycheck to paycheck cycle and allows you to live on last month’s income. Income earned in the current month is not budgeted or spent until the following month." To learn more about YNAB's methodology, check out the method page. Rule Four will explain how to use YNAB to stop living paycheck to paycheck.


Obtaining our buffer wasn't easy. It only took 26 months!  It took that long because of various reasons- I didn't understand how to use the software properly until I started taking the classes (YNAB has killer support). That put me on the right track after a few months. But my balances were off, until the error checking feature was introduced and that fixed my balances. Then I was unemployed for 5 months and spent all my emergency fund savings to pay my bills and feed my family. Finally, with a tax refund and three instead of two paychecks in March (thank you bi-weekly pay periods), I was able to finally get a buffer.

Two months in and it ain't all flowers and kittens. We've overspent our budget the past couple of months. But we're still living on last months income. The best part is we never look at our bank account balance anymore. We use our budget to determine if we can buy something. However we are constantly moving money around categories to balance the budget, something YNAB users affectionately call "whack a mole".

Few people like living on a budget. It's a struggle, but once you get in the "buffer zone" it's liberating. The monkey is off my back.

Forget Frugality

We've been living on one income since we decided to start a family. It's hard to do living in one of the most affluent metropolitan areas of the country, but we're making it paycheck by paycheck. We cut our expenses to the extreme by selling one of our cars, eliminating cable TV and by me working from home full time. We recently paid off the car we still own two years early. I have a work issued Blackberry that I also use as a my personal phone so we pay for only one mobile phone contract. We started budgeting by using the best budgeting software for the money-YNAB, which stands for You Need A Budget. I found out about YNAB from my favorite personal finance blog, Bargaineering. We don't go out to eat or buy anything without a coupon or discount. We subscribe to Groupon and all it's copycat competitors. But you can only do so much cutting back before there's nothing else to cut.
2011 will be the year to "Forget Frugality". I've been looking into ways to make additional income, both passive and active. Passive income requires money but not time. Active income requires time and money, but less of the latter. We don't have a heck of a lot of money to invest in dividend stocks to generate passive income, and I'm not going to dip into our savings to do so. It takes a lot of money to make a lot of passive income, but anything is better than nothing. I don't have the time for a part-time job and they usually aren't worth the trouble for the amount (or lack of) money you make or the time investment.
I stumbled upon the internet marketing website Prosperly.com while researching YNAB's founder and online entrepreneur Jesse Mechem (He and I have something in common. See if you can figure it out by reading his profile ;)). Prosperly is a website flipping blog. The founder, Adam White, is supposedly a successful online entrepreneur and will teach you the 'Prosperly Way'. He offers personal coaching to help you buy and flip your first website. I'm intrigued but nonetheless skeptical.
The YNAB community also introduced to me Ramit Sethi of blog and book I Will Teach You To Be Rich and the "Earn 1K on the Side" course. I participated in a two part webinar hosted by him. He's an in your face/personal guerilla marketing kind of guy that really talks up his Earn 1K course. His hard sell worked. He only opens the course for very short internals at a time so we talked about it and we decided to sign up. It's an expensive course, so I didn't take the decision lightly. I was again intrigued but skeptical. He offers a 3 month money back guarantee, so what did I have to lose? When I went to sign up and pay for the course the website crashed. How's that for a sign? I contacted customer service and they gave me another link to sign up, but I saw the writing on the wall. I Googled both Prosperly and Earn 1K to see if they were scams, but nothing negative came up in the search results. That doesn't mean they aren't scams, it just means that no one has posted anything negative about either program or that both guys are very good at suppressing the negative feedback or they are legitimate. Has anyone ever used either course? I'd love to hear feedback from people I know.

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