Debt management (Getting to grips with debt with YNAB)
If there is anything more scary in life than debt, I don’t want to know what it is.
I’ve recently signed up to use YNAB, which is budgeting software, in an attempt to start getting to grips with debt, or rather getting a handle on what money goes where. It’s been a little over a week, and though I am still getting used to it, I think that it’s starting to stick.
I had considered getting debt advice, but although I feel like I need to get a handle on what I’m spending, I don’t think I need to overly worry.
Using YNAB means shifting my focus from looking at what I have in my bank account to what I have in my budget. These two figures are normally wildly different. Essentially, the former doesn’t include bills that I have to pay before my next pay packet whereas the latter does.
It’s also served as a reminder of how much credit card debt I have and why I should consider debt consolidation (if you’re wondering how does debt consolidation work - check it out here). In recent months, I have been trying to save money to get a deposit for a house which is slow-going in itself. That’s seen me drop any overpayments to my credit cards and putting them in a savings account instead - an action reflected only too well in the outstanding balance on my cards, but not seemingly so well in my accrued savings.
It’s difficult going from spending now and worrying later to checking what I have and deciding if it’s in my budget, and I predict that it will be this that I struggle most with.
In the past, the way I have handled this is to not spend at all if I don’t think I can afford it. It’s a simple method which would see me leaving a debit card at home or only travelling with cash. Being based on the road, and covering hundreds of miles every week, I can’t do this now as I rely on having a card handy if I need to buy fuel while I’m out. That said, I am slowly trying to amend my attitude as I know that in the long run it will be worth it.
The other benefit of looking at my budget is that it has given me a chance to review my ongoing Direct Debits. I’m sure we all have Direct Debits leaving our account that we haven’t looked at in years and that a quick review would save us money with.
Looking at what I’m paying out has seen me cut back my Sky bill, review my home insurance and make a saving there, and to also take a look at whether I really need to be paying £10 per month for an accident cover that I chose to take ten years ago. I haven’t decided what to do about the accident cover yet, though if you’d like a spoiler, I’m probably going to cancel it. I also have a critical illness cover which is about the same cost, but that’s staying.
My girlfriend has also decided to take up YNAB, having originally stumbled across it when looking for money management software, and I think she is struggling as much as I am in getting to grips with it.
If we can stick with it, it should make a real difference, and it should help us both to get out of debt, so we need to keep trying.
You Need A Budget discount code
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Read my report on my first week using YNAB.