Why You Need A Budget w/ Jesse Mecham of YNAB

If you've never heard of the app You Need a Budget, Jesse founded it and it has a cult following, unlike any financial tech app or anything in personal finance that I've seen. I can't tell you since we've started this podcast, how many people have asked me, have you heard about winab Uh? You're gonna have wineap on the show. You

should get wineap to sponsor you. Okay, you're obsessed with If you're passionate about financial independence or Dave Ramsey, you will understand that there is a subsect of people that are equally excited about wine App. So if you're unfamiliar, you're about to get familiar. In this episode, you'll be using the acronym by the time we're done, exactly, and because why wouldn't you, Why wouln't you use an acronym for everything? It makes it so much shorter to talk.

It's great. Uh First, our sponsors Frugal Friends work Book. Whether you're new to budgeting or trying to reach a big financial goal and you need something to motivate you, you will definitely enjoy the Frugal Friends work Book, created by yours Truly. It's a digital workbook with six week long challenges that will help you save money, simplify your life,

improve money conversations, and so much more. It is over sixty pages and can be completed on your own, but it is created to be gone through in pairs or a small group, so that's why every purchase comes with two downloads. It's like a buy one, get one free. We love those bogo so you can share it or split the cost. Head on over to Frugal Friends podcast dot com slash workbook to learn more and use the code taco bell that's right t A C O B E L L all one word to get ten dollars

off the regular price. Yes, and today's episode should be probably brought to you by acronyms, but it's actually brought to you by budgeting with spreadsheets. Trying to calculate stuff but don't have a calculate or phone. Uh, spreadsheets are here for you. Record all the stuff. Have multiple sheets in one dock, like one for every month. Um, and go crazy with those sums. Girl, Like, just put all of those sums. That's the only one I can think about right now. But you could do so many math

things in there, so many math things. Budgeting with spreadsheets. Be a lady in the streets, but a freak in the spreadsheets. I saw that on the shirt once. That felt risky as our first idea I talked about that. That was that was the idea to Jill, I budget with spreadsheets. We'll see what Jesse has to say about that. I don't use spreadsheets, but I also don't use wine apps, so I'm very interested to see, uh what Jesse has

to say. Our last episode on budgeting was on minimalist budgeting, which is what kind of both of us do, and that was episode thirty six. UM. So if you're looking for a minimalist budgeting style, you can listen to that episode. UM. And then we are going to be talking about the four rules for Successful budgeting. And even if you're not a wide and app user, I think you're going to get a lot out of uh these rules. They can be taken with any budgeting app or method and it's

gonna be fun do it. Jesse, Welcome to the show. Thanks for having me. I'm excited. Yeah, we're so thrilled to talk with you and here just all of your wisdom and insight about budgeting. As we said when we weren't recording yet, you have quite a cult following, and I cannot tell you. We're about two years into this Frugal Friends podcasts, and I have had so many people when I tell them about my podcast immediately jump to

have you heard wine? Excellent? Okay, so I have, So I've heard of it, and so now I'm so thrilled to have you on. We are really excited about getting into what you call the four Rules for Successful Budgeting. I think that we can't talk enough about budgeting. When we think we've moved beyond it, We've got to come

back and revisit it. So we want to hear from you how you approach it, what your ideas are on this and just kind of give us a general layout with what budgeting looks like how to do it successfully. So your first one is give every dollar a job. Can you tell us a little bit more about that. Yeah, the first the first rule is well, the other three rules that will get to are all kind of derivatives of that rule. So this is the rule if there

were just one. Um. And essentially what we're trying to do is just introduce the idea of trade offs for people right away out of the gate. It's something that people are less familiar with doing once they come an adult. So kids are really good at trade offs. They're really good at saying like, I don't have money for this, so I can't buy it, but I do want this, so I won't buy that other thing. But adults we

tend to just kind of think we can buy everything. Um, we don't confront the idea of if I do this, I maybe can't do that. And so a zero based budget, which is exactly what rule one is. It's just the idea of you know, only money you have on hand, how much do you want to give toward rent, towards you know, bills, towards a vacation, whatever it may be. But you want to make sure that you recognize that there's a finite amount of money and that you're just prioritizing.

We we want to be proactive with what our money should do and not reactive and kind of lamenting about what it did. Um, that's that's pretty fruitless. So that's that's the idea is introducing trade offs and with that that scarcity, we actually want you to feel like money has run out, because it really has, and we want you to get you to the idea of your priorities kind of being fleshed out in an environment where the

money is finite. So part of rule one is just giving every dollar job, just straight up on a piece of paper. You don't have to use fancy software. Just here all the jobs I want my minute to do. And then here's how much money I have on hand right now, Not here's how much I'll earn, not only in a couple of days, not even in tomorrow I'm

gonna be paid, but money on hand only. And then when new money comes in, you just repeat that step again and you you know, you start giving that money jobs, but don't fall into the trap of projecting what the money will be because then you're not dealing with finite resources anymore. You can you can forecast yourself right out of a scarcity situation. So um, that's kind of rule one. You know, we've talked about it for about fifteen years,

but that's it in too minutes. It's funny that you say like scarcity, like physical scarcity, because I feel like we think like scarcity mindset causes us to want to spend everything because we think that, you know, we won't have enough or we won't get more. And so that's how people start living in this paycheck to paycheck cycle. Is this scarcity mindset. But then when you kind of flip it and you're like causing physical scarcity, then it

can cause the opposite effect. Yeah, yeah, and they're not it's not to be confused with like fixed and growth mindsets or like what doctors what came up with a while back. We're we're talking about addressing finite resources. So a lot of people that are living pycheck to pycheck, they they're used to not having money, but in a weird kind of counterproductive way where when they do have money, they want to use it. So they so they because it's going to run out anyway, and so we might

as well kind of make hay while the sunshines. And that's that's the issue that we're addressing. We want people to say, Okay, I have this money, what do I want it to do? The end? If it means that you are you spend it all that day because you have a pressing bill and it's the only thing you can possibly afford them, that is what you do. But we we take thousands and thousands, thousands of people that have on average about three hundred dollars and they're checking

account when they start. And we're not talking about people that are living below the poverty line around. I'm talking about people that make good money that carry around three in the checking account on average. It goes really high when they're paycheck lands and then it just precipitously drops and it's because there they have this pile of bills that's just waiting for money, and then as soon as that money comes in, the bills just suck it all the way. And so we try and start to flip

that around. Instead of being reactive, we're proactive. The amazing thing is someone with just three d dollars and they're checking account. If you tell them, okay, only deal with that three hundred dollars, what do you want your money to do? They'll immediately say, well, i'm getting I'm actually gonna get paid in five days. So and you're like, no, don't do that. Well, in five days, we'll do it, but we're not talking about that today. So what do

you want your money to do? That? Three and again again without fail, they'll try and bring up the paycheck that's coming because they're so used to thinking about when money does come then this problem will go away. So we ran them back in again, and then we just say, okay, thank you for telling me again for the the third time about your future. We really want you just to focus on the three in dollars. And so you get them there and it's just it's just the mind just habitually

goes there for them. It's they're not like not able to, it's just they're in this kind of ingrained process. So you get them there with that three hundred bucks, you see, what does it need to do? They'll say, well, my guests tank is a little low, um fridge is a little empty, and there's this one bill that's actually kind of late already, I really need to pay it or I'll start getting late fees. You say a boom boom boom, Okay, we're done. It's amazing how many people with that still

only three in their checking account. Well, then say, wow, that feels really good for once they're actually taking troll and they're dictating like a good dictator. They're dictating what their money would do instead of just kind of waiting for something to explode on them where they're in panic mode. And so it's all about just orienting forward and dealing with that finite pile of cash when the new check

comes in, same exercise. Yes, we've talked about this concept before of being the CEO of your personal finances, and this kind of falls in line with that of you are given your dollar bills a job and you need to delegate that and in a lot of ways that does put power and control, rightfully so back into our hands rather than being victim to whatever might be happening

with my finances. Yeah, people are familiar with that. I mean, if you're if you ever tried to lose weight or you know, dialing your fitness or finance, not finances but food a little bit it's the same thing. Everyone knows if you plan your meals, you do better if you try and be a little more productive during the day. Everyone knows that if you plan your day. It's it's that same principle that we all over the place. I mean, heck, plan your career. Like people that really rise in their career,

they have a plan, they have an idea. They aren't just waiting to see what happens with their boss or waiting to see with some job opening that comes up. There proactively strategizing and figuring out, Okay, this is what I'm going to do this, and there's this, and I should be on this project because it's big. They're planning and we're doing. We want to do the same thing

with our money. We spend all of this time and effort and energy to make money, and then, for some reason, once all that effort is converted into dollars, we suddenly just like, oh well whatever, I'm just bad with money. It's it's horrible, oh gosh, louder for the people in the back, yes, oh my gosh, a plan and a strategy for all that time and effort, and like most people don't even like their jobs anyway, so you're gonna do all this stuff and then the fruits of your

labor come in and then you're not whatever. Yeah, it's like, let me get this straight. You went to school to get an education to get this job. You went into debt to get an education to get that job. You work around people that maybe you don't like. If you work at wine and you lack our people, but you

work around people that you don't like. Um, you're doing a job that maybe isn't that fulfilling all of that pain and suffering, and then when it's converted into money, you're like, oh whatever, I mean, it's just bizarre, Like, oh, I have so much debt and job. I don't like I have to treat myself at TJ Max. Yeah, I do like that treat yourself thing from Parks and Wreck. I can't get enough for that. I say that a lot.

You know, it happens one day. I mean, if you plan for it, have a treat yourself category and you just fill that up absolutely the budgeting that the job is to do that, and then it's perfectly okay. We actually tried really really hard, really hard not to try and tell people what their money should do. We just say decide and we just repeat that over and over. Just decide, well, I wanted this, should I do that?

I think I spent too much on these shoes or this golf club or name you're a tool, whatever, name your thing. Like we have so many stereotips like oh my gosh, they wasted money. It's like it doesn't matter as long as you're being intentional about what you love.

I mean, go for it. I'll never step into a hobby lobby and buy anything, but it doesn't or target for target actually is a really popular one because in our Facebook group it's you mentioned target and people are like, oh, yeah, you know like throw pillows like you mentioned throw pillows and people are like, yeah, you have to throw pillow situation.

But even then you have to just be like, hey, if you're doing some kind of retail therapy, like name the category retail therapy, like call it out and be like, yeah, therapy, I do therapy with shopping. Okay, at least you're calling it out and you know, not not hiding from it, but just be intentional with it. It's it works. Be aware of what you're doing with your spending. That's that's first.

And then you budget, and if you don't like what you're doing with your spending, then you can refine your budget to be how you want it to be. I mean, just the other day, I was sitting there eating an ice cream from like a Ben and Jerry's, and Julie's like, what are you doing. I'm like, I'm just eating my feelings. She's like, yeah, okay, I mean, it's basically what it is. You know, I had a long day work, I'm stressed.

I'm just gonna eat my feelings. At least at least you're calling it what it is, you know, let's not pretend yes, yeah, oh my gosh, I ate a spoonful of cookie dough last night, you know, in case we're confessing it is, well, I think that's the latter part of the podcast, confessions not there yet. Okay, okay, thanks Jesse keeping us. Then let's let's move on speaking about expenses. The second rule is to embrace your true expenses. What's

all about about? So if rule one is to take a finite pile of money and give every dollar a job, kind of like we're in the present moment only and we're just dealing with like current fires. Even rule two is to look ahead to less frequent expenses that are coming up and break those up into manageable monthly amounts. So we talked about embracing your true expenses kind of means like, get real about the idea that all of your expenses aren't these nice, little tidy paycheck cycle timed

things that land. So if you have, um, I don't know, Christmas coming up, like Christmas does land every year like same day, like it's never changed, and people are like, oh my gosh, I just really stuck up on me. Well use that as an example. So we're at the time of this recording a couple of months out right.

If you said you wanted to spend six dollars on Christmas, and we have October November December to get there, I would say, well, you need to set aside two hundred dollars for this month, two for the next, two for the next. You're just making little sinking funds for all kinds of large, less frequent expenses that normally surprise you. A lot of people make good money, make plenty of money, and they look at only their monthly bills that come in nice, tidy little envelopes and they say I don't

know why I'm not getting ahead. I clearly make more than my monthly bills. But then they don't think about the car tires they're going to blow out in four months, the h v A CU that will die three days after the warranty expires, the roof will need repairs, the dishwasher doesn't work that well, like it just goes on and on. Like. There's this in accounting they call it depreciation, where you know, the asset value declines over time. And

that is how life works. That is how cars work, that's how houses work, that's how so many things work. Things just wear out. And so all we're saying is we recognize that car tires do not last forever, and so we're gonna set aside a little bit of money for the car. If you drive a two thousand two Honda Civic, I can tell you it's like a hundred bucks a month. That'll keep you pretty steady, right, And you're just paying those bills as you go every month.

Now you're not actually paying them because those piles of

money are building up over time. But the really cool thing about this is then you have a person that's going back to rule one and they're saying, I'm gonna give every dollar a job, and now they're debating like should I go to sushi or should I go to Little Caesar's in light of the fact that their car tire will blow out and they don't know when it will go, but they do know that they don't last forever, so they're like, should I go to Sushi or Little Caesar's.

I'm also paying for car tires for the future, and then they may be elect to go to Little Caesar's or it might be better just not to go anywhere. You know it might be, but it is gross. I mean, like I don't want to say anthing bad about it, but you could eat the box and you'd be like,

am I the pizzle? So that's that's the call, right that you're they're they're saying like it's kind of like future version of Jen walks back and it's like, hey, current Jen, like just so you know, like I'm gonna be on the side of the road and I'm gonna have to call a tow truck and you better not leave me high and dry, and Jen's like, Okay, I'll have the Little Caesar's. That's cool, Like that's the negotiation that you're doing with yourself. You know, if you're sharing finances,

you're doing it with each other. There's like four people at the table. If you're with your partner, it's like current you guys, and then future you guys, and future you guys are like, we're going to go on an anniversary trip, and you're like, you are, Yes, we are, and you better fund that thing because we don't want to go there. We don't want to put it on

a card. We don't want to live chintzy. We want to live high for a couple of days, and we want to do it without having to worry about our money. And so the current versions of you are like, Okay, yeah, that sounds pretty good. So we'll we'll make a few adjustments here. You know, that's the future future jan is um out of the road. But I think, though, Jesse, you're identifying what can cause so many people to feel like they cannot get ahead in their budget or in

their finances. You know, we we might even know how to create a budget, but it only includes my my food, my shelter, and my bills, and not thinking about those other unexpected expenses that that are what can keep us at a certain level and not able to move beyond. So whether or not we do make a decent amount of money, and I would say this is especially an issue for those who don't make a lot of money. And we've we've got a lot of listeners like that.

I've been there at various points in life. So I think even having our sites on this when we don't bring in a lot of cash every month is a really helpful muscle to begin building of Okay, I know that there's going to be some sort of emergency situation where future me is really mad at the current me

for not thinking about this. UM and being able to be more intentional and planful for those things can help us cross that barrier from UM saying being stuck really where we don't want to be absolutely and most people, UM, most people they've run out of real money and they have an emergency and they have to go to a card and and put it on a bill. And it's always like when the when the month is normal, I'll be able to pay that bill off when things kind

of normalize, when things settle down. I mean here I am talking about that in and it's like what a joke, But the the idea of things kind of settling down and normalizing. There is no such thing as a normal month. You could go back to your credit card statement that you may be paying full and you're super responsible about

it or whatever. Or you go to your bank account and you just can scan down the column really old school like and just look for a digit to pop out that makes the number a little bigger and find those and be like, was that normal? And without fail, every month you'll be like, oh, yeah, we had that so and so's birthday. I had to grab him a gift that I had forgotten about her. Oh it was this.

Every month is abnormal, and people just slowly tack on the debt because they have that little emergency, that little one time thing. It's very rarely a massive medical emergency or something where you're like, this, this is clear. It's it's these death by a thousand cuts. What's really cool about it is people will make the right smart financial decision when they're presented with those trade offs to go back to a one. It's like do you want to be ready for car repair or do you want to

I'll say blow it? Or do you want to blow it? This or that impulse thing nobody says I'm gonna blow it. Once presented correctly with that information in context, people are smart with their money when they're given that decision at the right time, with the right context and the right implications tagged along with it. Yeah, I love I love that. And I know if I used to get really overwhelmed with the idea of multiple sinking funds, like for saving

for multiple things. So if somebody listening is like me, this is what I did to kind of help me wrap my brain around it. I needed to go with just one single sinking fund in a separate account. So I have like three checking accounts. I have the regular one I spend out of, I have my emergency fund, and then I have my sinking fund account. And it's like I have a list of things that I'm going

to need in the future. So like we know our a c and our water heater is going to blow in the next few years, um, And we just replaced some windows that were really like bringing down raising our electricity costs. So we just we calculated the cost of each of those and saved that amount um for each in the sinking fund. And so when it came time, we chose you know, we chose to do the windows, you know, before the other things broken, so we just

took that money out of one account. But like say my tires blow and I didn't pay for those, I'd already have that money in the sinking fund. I can still just take out of there and then just fund it with that cost later. I still have the money. It's it's like allocated, and it just makes more sense for me because it's not like I don't feel like I'm taking from the water heater fund to pay for the tires. I'm just taking for the future protection fund as it would be um And so I don't feel

as like overwhelmed by having a lot of different sinking funds. Yeah, I mean that. We I mean people use spreadsheets to track that. In our software. We that's the software is built to basically have all of your money in one account and you never look at the account balance. It's not even a thing for you. So you just are looking at your h v A C category and you can be more or less granular, depending on how much

you care about these things. So I don't, you know, I don't think you should save up for the next tube of toothpaste. But but there are like large material things where you can say, okay, this makes sense. So in your instance, if you had all these different sinking funds and why not, it would look like a long list of categories, each with a goal amount attached, like I'm gonna fund it sixty seven dollars and twenty eight

cents every month. Well, you just set up that up one time, and then you're kind of just clicking and on autopilot. If you do ever have to move money around, which happens, that's our third rule, to roll with the punches when new information comes up. Then you're you're just still planning. You're just still going back to rule one and you're saying, you know what, the car tire went out a little quicker than we thought, so we're gonna move from here. We'll catch up, you know, we'll be fine.

And so it is kind of this overall future per action fund. I don't like the idea of just a savings fund like no labels, because it tends to be a little bit of a revolving door. So people like I gotta save. I just actually heard on a podcast I've gotta save, so I'm gonna save, and they're feeling really good, and then they raid the savings account six

weeks later, and then they're feeling really bad. And and so you want to put a job to that money to make sure that you're clear what it is for that way, when you do go in and grab it, you don't feel guilty because you did need to buy a new computer or whatever. But you can also be clear like all right here, here's why, like we have we have some intention attached to this, and you can keep it all on one account like you do. You can keep it. I mean, heck, we keep everything in

one checking account. It's just like it's the most boring. I mean every time you go to the bank. Well, I mean not that we go to the bank very often, but they would be so alarmed by the size of our account bounce. It's because because we're saving for a car in there, we're saving for house repairs, we're saving for Christmas. And after a while, thousands and thousands of dollars start to pile up and the person at the banks like, what are you what are you doing? And

you're like, what are you doing? That's so don't give me that dirty look. I No, I don't want or overdraft protection so this is why I do everything online. But that I like the idea of assigning that those savings accounts real jobs, so that there's some there's some specificity there. What's weird is most wine abbers start to not need that third thing you mentioned, that emergency fund that kind of just general just in case they find that they use it. Not that I advised against it,

but like a three month deal is probably fine. They find that they've started to anticipate what used to be emergencies, like a car tybal announced not an emergency because they're not infinitely useful, so it's just part of living, you know. Like someone said I had to go to the doctor. That was an emergency. It's like, well, no, you're alive, so come on, you know that we knew that was coming. But then there are the catastrophic, massive you know, this

meets our insurance deductible type emergencies. Yeah, that's that's come into play. I totally agree with you. A lot of people are saying things that are emergencies, but it's like you could have anticipated that for at least a few months ago, and like, oh my gosh, like other baby came and you're like I don't know. I'm no O B G U I N. But I think I know forty weeks is usually standard. Yeah, you have to have noticed something's happening down there. Yeah, yeah, we know. It

was months was never a thing for us. It was weeks. It was like and I was I wasn't allowed to be like, hey, Julie, aren't you like week twenty two. She's like, no, I'm week twenty one and three days. And I'm like, sorry, I was not allowed to round up. I'm not allowed to round up on that. And I'm not allowed to run up on the baby's age. So if Brooks are new one, if he's you know, like five months and twenty five days, I can't be like, oh, he's six months old. She's like, no, he's not, he's

five months old. It's so important. They're those mom want to age them too quick. Yeah, their development milestones are so diverse. Yeah, she's like, no, he's not. He's devel helping. Just fine. People think, what a good example of you rolling with the punch. I'm bringing us back. Don't worry. It's like, I didn't know so many things about all these things. So I'm learning. I'm learning to number three on on your rules is to roll with the punches?

Can you can you tell us about that who's punching you? Yeah, if you're alive. If you're alive, you know, like we we're getting a little bit of sport. I don't know how sports oriented your group is, but I think everyone can understand this. Like you if you were to watch, um, let's do let's do basketball, you have like the coach reviews game film, becomes a master at that opponent, does all of this legwork. The team is like like they're

pretending to be the other opponent. They're mimicking it, they're scrimmaging, they're doing all this prep work, and that's like your budget. You're thinking about it. You're like, okay, what will you hear? What's here? And it's just perfectly laid plan. As soon as the game starts. If if they're a good coach, then they're like, oh, well, let's change that a little bit. We thought they would use this guy. I don't even know, you know, we thought they do. You're deep in it.

Now keep going it's or chess. Let's to chess. It's probably that's probably more speed. So they're like they make a play like everyone goes in with the plan and then you see how your opponent reaction. You're like, all right, I'll do it a little different that. That's budgeting. So for some reason people they'll set their budget and then they're like, oh, also, I've started budgeting and I predict the future. Like that's kind of what they've decided is

their thing, and they're like they're clairvoyant. There's a really horrible movie with with Sandra Bullock called Premonition. I think, horrible movie, but it's his idea. She look like see the future and then okay, now you've got it. Or even worse, Nicolas Cage with another horrible movie called Next Horrible good let's talk about all. I recommend that one because it is so bad it's actually enjoyable. But the idea that you could see into the future and then

you have this firm plan. Nobody can do that, and so you have a beginning budget or that's never gotten there. They're head wrapped around any of this and suddenly their conditioned for for saying like, good job you is so astronomically high. This level of perfection is so high it blows my mind. And so what I'm trying to say is Okay, you'll set your plan for the next three days, and then as soon as something new pops up, we're

just going to change the plan. And so all rule three is and I can't even believe we have to make it a rule, but the rule is change your plan as needed. Okay. Like, if you're going on vacation soon. If you're so lucky, right and you've planned to go to some sunny place and then it rains, does that mean you you say, now, vacations don't work. I mean that was like, but that's what people do with budgeting. They're like, oh, budgeting doesn't work. I knew this wouldn't work,

you know. I listened to that one dumb guy on that one podcast, and he was wrong. And it's unfortunate because what we're really trying to do is say, hey, you made a plan, just adjust as you go. Budgeting is not a thing. It is a process. So rule three is just going back to rule one and saying, hey, given the new information you have, you want to maybe give every dollar a job slightly differently than you did before, and you're still winning. Like, this is you being successful,

This is you doing it perfectly. If you need me to say that, recognizing that the future is not static, how often would you say or how much of a pulse would you recommend somebody have on their butt daily when they're first starting daily. Yeah, as as your skill level is low, meaning you don't have this habit, you haven't done like the whole atomic habits James Cleared thing or whatever, and so you're like, Okay, I have no skill or low skill here. That means you need a

high frequency of interaction with the budget. The other side of it is if you don't make a lot where you don't have a lot of that wiggle room, some people can like they just make more money so things just don't affect them as much. If you are one of those people that make a lot less, that also means you should be in the budget more because there's

there's just less wiggle room, less room for air. The other one is if you're on a highly volatile income, you should be looking at it more often because there's more room for her there. So those three things, this is brand new to you. Being it daily, make it like a part of your coffee thing, right, Sip your coffee, swipe through your budget, stare at it. See what happens that works if you're tight, If money is tight, look

at it more often. And if money is really volatile, you know, like your I don't know your commission based something or other, look at it more often. Yeah, I'm unemployed. The last rule that you have is aige your money. And I feel like this is the most unique and interesting role and I would love to hear the story behind it. So it's not a good story. I mean,

it's not interesting, That's what I mean to say. So I when Julie and I were first married, we were we were students, were super young and super poor, and we're watching the money really closely, and I built this little spreadsheet that eventually became the wine app software and all that. But at the time it was just she and I just doing our thing, and we were on hourly pay working as students, and our hours would fluctuate, and I didn't like going back to rule one and

knowing how much we had to budget. I didn't like not knowing because my hours could be twenty five or thirty five and hers would be varied. And so I just had this idea. I took some money from our wedding money that we had actually been given. I took some money from there. I said, let's live off of this money and then we'll work for a month and we'll have money in our hands now for the next month.

And Julia, because we were in our honeymoon phase, she was just like cool, like and I could do anything wrong at that point. She's like, yeah, that's fine. You are brilliant and good looking and that is a good idea. So so that's that's where we landed on. So it was really just for me. I was a little bit of a money hack to be like, I don't want to be waiting to see what I will earn in order to be able to budget. I just want to know what I already have and budget money I had

earned a while ago. And so that turned into about thirty days. And then as we taught people, people are like this, instead of having a pile of bills waiting for money to arrive, it was flipped around. They had this pile of money, and then when a bill would come, people are like, this is awesome, I'll just pay it. And then you start putting stuff on auto pay and

it's and then you've gotten out of that game. There's like there's a total game that everyone plays, this huge game with all kinds of rules and orchestrations where timing their bills to their paychecks and doing this like song and dance and like sticky notes in places and and just like what about this? And then you're sharing money with a partner, it's like, well did you spend that there? Oh that was for this bill. This is weird song

and dance and it adds no value. I mean, if you think about the value of paying your electricity bill, it's just that the electricity stays on. But anything extra beyond the them and of the bill is just wasted effort. And so you think about all the effort people put into that song and dance. So we get rid of all of that, and then when a bill comes, it's just paid. And then suddenly people are like, my finances The best thing they ever say is they'll write in

and they'll say, my finances are super boring. Nothing exciting ever happens, Like everything just kind of seems pretty ho hum, and you're like you've arrived, Like you have arrived. Yeah, life is still like coming at you with all kinds of things, but your money kind of like normalizes it and you're not living right on the edge. So when we talk about aging your money, we're really saying if you earned a dollar yesterday, that's like a baby dollar.

And you don't send babies out into the world. You know, you protect them, you keep them closed for a little while. When they're ready, you let them go, and when they're too old, you like you kick them out right get out. But at first you don't do that. And that's what we want with our dollars. We want to have them

like hang out for a while three sixty days. The cool thing about this is you get to a point where you're staring at let's say the beginning of November, and you're like, I have all of the money I would need for November, including funding those sinking funds from

Rule two. Like you're fully flushed out. And then you're like, okay, yeah, that's all here, and then you work in November, you earn that money, it refills, and then you're staring at December and you're like, we're ready to roll, and we have money for Christmas unless you finish Christmas shopping like in October, which makes you kind of weird, but people do that, so that the idea of living ahead instead of behind that paycheck to paycheck stress cycle is so bad.

We were talking about sleeping I think before we recorded. Maybe I mean like it literally steals sleep from you. It literally strange relationships where some benign comment from a spouse or partner about money suddenly becomes this big deal only because you're artificially stressed, not because it actually is a big deal. There's so much there that you can get away from if you just live thirty to sixty days. The dollar you're spending you learned thirty days ago, forty

days ago. It's it's wonderful now. To get there, just follow the first three rules. It will happen over time. There's no magic there, there's you just follow them. It takes people on average about six months to get there, um with not doing anything extraordinary beyond just being really intentional and cutting expenses where they realized they didn't like them,

and uh, just work in the system. I like the example that you gave of how you did this when you were young, married, uh, still respected and and because I think that we can often talk about budgeting and how you can have all these different funds and savings and it's just this thing, and we can get it to work out so well. And then we have people who are not making a lot of money, and and this can feel really overwhelming or maybe even depleting to

be like, that's not my reality. But to hear your example of how you did this even when you weren't making a lot, even when you were hourly part time. I mean, of course it had something to do with gifts that have been received, But there are other ways of going about that. I mean, input side hustle, uh, living, living in an environment well below what what you're bringing in, whether that means needing to move so that you're living expenses are last, right, there's some ways of getting creative.

But I think that I just want to highlight what you mentioned there that this is possible even if you're not making six figures, and some of these concepts and the framework of it we can put into place regardless of where we may find ourselves currently in our current financial circumstances. Of course, the goal is always how can we bring in more so that we're not stuck in that.

Every one of these rules I came up with at my poorest and I say poor, meaning financially, so I had I had all kinds of of family structure and support that I'm I'm bloudy forever grateful for that. You can't even price tag at all. Um. But we we lived in an apartment that costs three d fifty dollars a month and were and so that was eight years. That was that was a long time ago. Yeah, I I age well actually, but it was. Yeah, it was early two thousand and it was a junkie I mean

it was a horrible apartment. So we could have spent more. I mean, we could have lived somewhere else. It was more expensive. But um, we had respiratory issues while we lived there, Like I think there was stuff in the walls. It was. It was. It was bad. But we lived there for a year. We didn't have cell phones, we didn't um, we didn't own a car for the first little while. We didn't own a computer for the first

little while. I would use computers on campus. I mean we were simple students in the sense that we had like one objective, like we got to get through school. Um, and you know, we were making Julie was making eleven bucks an hour. I was can ten fifty or something. She was full time at the end, working in social work where you don't they don't pay you. So she's full time making eleven dollars an hour, and we we were like, okay, we can make this work. We actually

saved money um and that, but we lived cheap. Little Caesar's was a big deal back then, you know, and maybe that's why. Yeah, so like once a month we're like, oh sweet, we get that five dollar hot and ready, and it was awesome. It's so those rules, they aren't just like pick and choose because your situation is tied. I would say, no, no, no, those rules came about and were used to great effect in my situation that

was the tightest. Now I make more money, thankfully, I feed way more people, not you know, not necessarily thankfully, a lot more bills, all of that, all of that is so much more expensive, but the rules still are working. It's just it's about being super were intentional and like we went back all that effort you put into earning money at eleven bucks an hour that Julie was working toward, We're going to waste that when you know she's having

to go to this place. She doesn't really like to make a pittance when we're supposed to waste it then, I don't think so. No way, quite the opposite, right, So it it works at every income level. Yeah, well said man. You know what else works? And we never get tired of every income level. The bill of the week. That's right. It's time for the best minute of your entire week. Maybe a baby was born and his name

is William. Maybe you paid off your mortgage, maybe your car died and you're happy to not have to pay that bill anymore. That's built buffalo bills, Bill Clinton. This is the bill of the week, Jesse. Every week we have a listener or guests submit their bill of the week for us to share. Um, it is your turn. Do you have a bill for us? I was going to use watching the trailer of the sequel of Bill and Ted's, I was like, that could that could work? But I only watched the trailer and I thought that's

about enough of that. But my my favorite bill that has just started becoming my favorite, my electricity bill. So I got it a week two weeks ago. It was sixteen dollars and forty two cents and that's not too shabby. Nore hot ready Yeah, three pizzas. Everything is in pizzas at our house, as far as current as it should be. Yeah. Yeah, So it was the first, my first bill that I received after I had paid a whole lot of money

for a fancy solar system. So it was and it was not for financial reasons like oh this makes sense. I just really liked the idea of the solar and like so many other parts of it appealed to me. Besides the long payback period, So I didn't finance it or anything. I saved up for it. I got all those panels on. Then I became obsessed with our power consumption at that point, so I can tell you, like our base house rates point six kill lots an hour, Like it just does that if the ovens on, I

know that if like it's gotten better. But Julie was like, is this going to be a thing now forever where you're on your phone and being like what what is it? What are you? What are you doing over there? Is there? Oh you're baking bread? I apologize and that is that's totally okay. Yeah, so it was. It was super funny. But yeah, that's my favorite bill. It's been fun to see like this magic and I'm not like even a big environmentalist right, like, but it was it did feel

like magic. It was like, oh my gosh, the sun. You know, who would have thought this is what you can look forward to when your budget becomes boring you get super into electricity consumption. Yeah wow, Jesse, thank you. If your life has become all about your energy consumption and you want to tell us about it, please visit Frugal Friends podcast dot com slash bill and leave us your bill. Or maybe your life is about something else

like water consumption or or air whatever. We'll play your bill, yeah, some sort of bill. Yeah, now it's time for likening round. We tried to yell so much. I want to plug. I want to plug the counselor thing because I went to a councilor for like five years. Um. It was awesome. Yes,

And like people are like, there's a stigma. I think it's going away, but man I I started going to see her and suddenly it was like my back pain went away, weird, and I just I was so nice and I was just like unload on someone who's just kind of like cool, cool, cool cool. Did you know this? And you're like, no, I didn't you know it was, that's how they do it, highly recommended. It's for it's I think it makes you. I don't know if if you're like this, like I don't know, go hard like

money hungry, performances everything. Even then you're like, you should go see a therapist, like they will bring you your like, they will up your game wherever you're out, like you'll see you'll see it increased. And you don't mean to extend it. No, you're good. I'm a counselor. So enough

about it. Thanks Jesse for sharing. Yeah, it's always good to just continue to chip away at the stigma that can surround seeking help and knowing that there there is help out there that can be affordable and can help us. But were whole people. I mean, I know that we really focus in on finances, but it does affect us physically and really nationally and emotionally and financially. So yeah, I can't say enough good things about caring for our

whole person. Perfect, absolutely all right. So in this lightning round, we are going to get into our latest budgeting flubs and how we recovered from them. So Jesse, as our guest, will allow you to go first, because your school probably be the shortest I was. I was hoping I could go last to kind of get a read of the room a little bit, to figure out what kind of

a flub we're looking for. So that's why you're going first. Yeah, I've I've taken over the Costco run for the family because like, the baby came, so he's kind of a priority, and um so I'm like, I'll do the Costco run. So Tuesday's my day and I this is embarrassing, but I didn't know how much we had spent when when I walked out and then came home and Julie was like, what was the She goes, man, you got a lot?

And I was like, now to be clear, like I do her list, like she we have a sync up note, you know, on her phone, and I'm like update the note. She gets it all updated, and then it's just like this lone and it's it's nerve wracking because she might say something like chicken and I'm like organic, boneless, skinless, organic tender lines, Like what are we doing here? You know, so we're working on we're working on like full communication,

Like how how is this? You know? She's like, oh, I really wanted this kind and she's a phenomenal cook, which means her standard of like what she wants is is up there. So I'm already nervous. And then she's like, well, how much was it? And I had I couldn't even tell her. I'm like, I did not notice the cost. It's one of those zone out moments. I was like, I was, but was I was I there like like I was like, here's your card. I'm like okay, and

I didn't even like it's that was that? That was yesterday. So I'm giving you a reason, like there's some recency bias there, But I was re bothered by the fact that, like I just dropped and I'm telling you, like our family size, we have seven kids with two like some teenagers in there that eat like three people's worth each, and so we're not talking about like, oh, he spent

ninety dollars and didn't realize it. I only wish I can't get out of there for less than two No, no, no, no, no one can get out of Costco under just going to get some milk. It's like, now you won't you can get with like a flat screen TV on one shoulder and then like milk on the other side and socks and under here, like do you guys have throat pillows here? Because no, but we do have swing sets. Yeah, And there were like Christmas full full boer Christmas going on,

like I mean full on. I'm like, oh, okay, Well, if we didn't have a reminder already through our budget and funding it monthly everybody, we would have it if we went to Costco. Yeah anyway, Yeah, I didn't even realize it. So I'm embarrassed by that. I don't know if you'll listen to the cash here little bit more closely now that is your total comes to so that you can be aware of the spending just a little earlier, a little. I mean, you're supposed to put it on

your phone. We have the app you're supposed to put it on your phone recorded in the moment it knows you're at Costco, and it's like, hey, cool, Costco normally groceries, right like it does all this fancy stuff. I was totally spaced out. I think. Yeah, anyway, that was a well Jesse, you're gonna look great next to me. Uh, I was your your number one rule was resonating with me a lot. And when you were talking about children aren't good at this, children are good and recognizing if

you can't have this, then you can have this. Um. Yeah, So I just bought a house. Well not just me, my husband and I we together collectively bought a house. And I have had in my mind. I just haven't really thought about it a ton. I mean, we did set a lot of money, as I mean, first of all, I mean, just buying a house is expensive beyond down payment, but then also set some more money aside, knowing that

we want to do some renovations. But I didn't fully think through how much each renovation that I want to do is going to cost, and the timing of it. And I'm just kind of having my head like I want to do it all. I want to do it all right now, and that's just not the reality I'm learning when you own a house. We used to live in a camper and I kind of could have it all. It's like, yeah, everything costs ten dollars done, the whole

thing's renovated. Um. And so I am slowly coming to grips with the fact that I got new ceiling fans and I will probably not be able to have a kitchen for a couple of years. This kitchen is a dumpster fire by the way it is functional. So how I'm how I'm coping slash recovering with that is really an adjustment in my perspective of Okay, I'm not going to take out a loan for these round of vations. We do want to cash flow them, so I recognize that that's like a little bit next level, but it's

where we're at as frugal friends over here. So I am learning what I can do to make it a little bit more livable at where we're at right now for very minimal cost until we can get to the point of actually paying for these bigger renovations out of pocket. So luckily it has not thrown me into debt, but it is one of those kind of wake up calls of oh, I can't do it all at once, and if I do this one thing, then that takes this

other thing out of the mix. So we might just have to get many splits instead of a new kitchen next and you know, I'll paint the walls and be happy with it. Yeah. No, no debt on kitchen renouts, no way. Yeah, no time can tell you it needs to be set on fire. So we threw out a lot of it already. A lot of it is in the dumpster. The rest of it is on fire. Yeah, it's so ugly, it wouldn't light on fire if you tried. All right, Well that's all we have today. Gen's perfect.

I'm fine. Um No. So Travis has been off of work for the last couple of weeks. Um. He's works in the airline industry as a mechanic, and so they gave him a voluntary leave several times this year. He's in literally his third month off this year. And uh, he's taking half pay. And I am in my slow season in my business. So I have, like, my income is natural ebbs and flows, and I'm in a natural like I don't know what the ebb and with the flow is, but I'm in the lower one. But you're ebbing.

I I didn't change our budget to reflect that. I kept it as it was. And then I realized, oh, that's not our income. You gotta roll with that, right and which we have the money that it's like not affecting us this month, um, but next month it will. Um. So I didn't I didn't cut my expenses in half or you know, cut them like I should have. I just totally went straight over my head. Then how are you recovering? Yeah, what's the first that's going to go

on the expenses? Um? I probably Kai Probably he's probably okay, he's expensive. It's the new type of soy, Yeah, I think so. I mean we haven't made November's budget yet, but um, I think we're just gonna probably not eat out. Um probably just you know, living on bare bones stuff just for one month. I'm gonna sugar detox right now, so I can't think about that. I can't think about November right now. My mind is here detox and not eating out. It's probably a good combo here to do it, right.

I'm not eating out right now anyway, So it's not that bad. When we asked people how they paid off dead or how they got ahead, and we never prescribed like you shouldn't eat out, We never say that. But everyone, without fail, without exception, they will say they cut eating out to free up money. So it usually it is the first one. Yeah, it's not maybe the largest sum of money, but it's it can save you a whole

lot more than just cutting out buying coffee. Um, it can eat up a good chunk of that monthly budget, not large, but we call it squishy. It's a squishy category. Like there's some rooms I like that and it makes it kind of makes me feel weird are eating out. It's like, why do you just call it squishy category? And see how appetizing that squishy squish and the follow up spells will turn the lights off for a whole month. Yeah, that go survendor. Jesse, thanks so much for coming on

the show to talk with us about budgets. Where can people find more about you? What's up next for why now? What do you want to say? People can find us that you need a budget dot com so we're there always the best thing to do. If I were to recommend one thing, uh for people, it would be to take one of our twenty minute workshops. They're they're fast, they're live, you can ask questions, they're not recorded there, there's a real teacher there. You can test them and say, like,

say this random word. They'll say it like it's live. We've we've had that happen and um, they just they succinctly tell you, like okay, Jesse's four rules that you heard on this in kind of a really long winded way. They'll tell it to you very succinctly, and then they'll show you in the software how that's implemented. And so it's kind of like theory and then practice in twenty minutes,

and it is just well worth the time. It's a little bit of a different way to think about money, and so we want to get that learning happening fast. But do do the workshop if they're free. You know, you don't have to sign up or do anything like that. You just go in and jump on and they run. I think we run about a hundred fifty a week, so like there's one that'll hit your schedule, you know. All right, that's great, sweet, Well, thanks so much for coming on Jesse, and we will hope to see you

sometime when people are seeing each other again. But this was this was quite nice. Just this remote video thing is as good as it can get. Didn't have to smell each other's coffee brows, so true. Okay, well thanks for having me. I appreciate it. Thanks Jesse. Well that was fun. Yes, Jesse is so cool. Yeah, I mean I kind of get it now a little bit more. While there's such a cult following, Yes, it's funny to think of cult followings in personal finance. That seems like

it shouldn't happen, but now a lot of them. Yeah, it's how deep into the spreadsheets you can get? How deep can you get into the spreadsheets? I mean you you said it yourself. There's so many tabs on so many sheets that you can do so to be Yeah, I'm gonna stop because it's going to go to a dark place. Yep. Thanks so much everyone for listening. We want to thank you for your kinder views on iTunes and Stitcher like this one comes from McKeen to informative

and make me giggle. It happens to be five stars because what why not when it's informative and makes you giggle? Great podcast which has me think differently about my spending habits and be more thoughtful in my spending. The girls are great fun to listen to and I've definitely saved money from their tips, tricks and wisdom. Thanks John and Jill. Thank you for your kind words. You're welcome and thank you. Yes, we also want to thank our friends who share these

episodes on social media. It's super helpful for spreading the word um and so when you share our latest episode on Facebook or Instagram, UM, and tag us in it. Then we will see it and we will submit you into our monthly drawing. Uh. We give away a copy of the Frugal Friends workbook for every five tags and reviews we get every month. M So keep leaving us reviews on iTunes or Stitcher and send us a screenshot of that review to Frugal Friends podcast at email dot com.

And of course it's still tag us on social absolutely and we will see you next week. Bye bye. Frugal Friends is produced, edited and mixed by Eric Seria. Welcome to the after show, Jesse. Are we asking? Are we asking the questions in the afternoon, We're gonna ask the questions. Thanks for sticking around, Jesse. When of our listeners are still pros. It's just a great way to like pad

the episode with more. So, we have a few questions from our uh frugal Friends community on Facebook, which I'm sure ten percent of the people that don't actually know we have a podcast. UM, I know that for a fact. It's so funny people will talk about the podcast and then without fail, there's always some because like what's the podcast? You're literally in a group for this pot. The banner is our logo. I think really it's indicative of how good our name is that people just want, Yeah, I

want prugal friends. This sounds good. I'm okay with that. It's like a bunch of old people that are like, I'm gonna friend this group. They don't even know what they're doing. They're just clicking things, if that's what it is, and we know they're not listening right now, so you can say that, all right, A few questions, Um, somebody wants to know besides your own book, do you have any other book recommendations? Oh? What? What genre? Like? What can they narrow it down for me? I guess maybe

personal finance? But then if you have some another one that sticks out, maybe personal finance. If you were to give one to a kid like you're you were like my kids old enough, they should learn something. But they won't listen to me and read my book. Maybe, and maybe it's a bothers you that they won't read your own book. But wealthy, the wealthy barber is good for like a fourteen year old, eighteen year old. Richest man in Babylon is the wealthy barber barber but made to

you know older style fable. Um. I like that one a lot. And then Vicky Robbins Your Money or Your Life is a really good deal on the whole, and you know life and money conversion that we kind of hit on a little bit in the show. Uh. That one's mind shifter that I like quite a bit. Really good business book though, The Hard Thing About Hard Things by Ben Horowitz really good? Why that one? What's your

favorite thing about that? There's a lot of hr stuff like people management in there that is just like just makes sense, Like you hear it, You think, why didn't I just think of that naturally because it's so obviously the right idea, especially the second half of the book. The first half is his story and the second half is where he just like pounds you with with just knowledge bombs. I really like that. Um, anything by new seem to leb he's like a philosopher. His book Anti Fragile.

I really really like that one. Yeah, so I have a lot. I have a whole cal Newport's Deep Work so good, Like it's so good. And then he has a more consumer facing like Digital Minimalism that I like, But Deep Work is is the better book. I love that one. Um, what do you think is the hardest debt to pay off? Hardest debt to pay off? The last one? Is that a trick question? One? The first one. I feel like it's the first. Maybe getting over the

hump of that. Um. It's hard sometimes to justify paying off a really low rate student loan, for instance, because it's just so cheap. The money is just so cheap. Um, So that one, you might be it might be harder to justify, like sending the money off to do that. Um. For some people paying off their mortgage, they like to think they're getting really fancy and think, oh, but if I just invest the difference, I'll make money. But no one actually invest the difference. They just say that they

would theoretically do that. UM. So you can kind of talk yourself out of that one. But yeah, I would say either first or last. I like that first two. Yes, UM, here's a good one. Why should someone pay for a budgeting app when they could use a free one like mint Mint. I've been citing movies like pretty low grade quality movies. So I'll do another one. Minority Report with Tom Cruise, where they have these the future sears and they stop crime before it happens. That's like wineap wineap

like stops the crime from happening because you're proactive. Mint is like any standard cookie cutter Blueprint C S I episode that always starts with a dead body and then the rest of the episode is everyone be like, how did the guy die? How did they what happened? Oh? Interesting? And you're like, well, could we stop the deaths? Maybe? So Mint? Every every month your finances, you have a dead body and INT tells you the body is there awkward in your living room, and then you blame your

spouse for it. You're like, what it was you? Everybody knows that. It's like whoa? And then what do they do when they seem it? In like the fancy charts, they'll be like, oh man, you shouldn't have been down so much. Well, okay, water under the bridge, but what are you doing now? So also, if you like being the product where your data is where you are sold, that's also one other. But it is not free and this is like a totally separate thing from budgeting. Facebook

isn't free. Mint isn't free. Nothing is free, And so you pay us eighty four dollars a year and we will never ever ever ever sell your data and we have all kinds of locks and keys around it. Internally, we like that is the most It's like sacred. So you're paying eighty four dollars a year to a company to know that that is the only way they make money, and there's some peace of mind there. So also it works way better than Mint, Like you really want to

corpse every month? I don't think so. Yeah, I don't love Mint as a budgeting out. It's good for like overall view. You can see, you know, like, oh this is pretty. It's good to make you feel like you're doing something. Yeah. Yeah, thirty minutes it takes to connects all your accounts to Mint and see a nice graph makes you feel like you're doing something good. We're going after behavior change, like we really want people to change what they're doing. Is it takes a little letter? Yeah,

I understand it. More be more involved? Yeah, okay, last question? What's something fun? People should know about you? But they don't already talked about the solar panels? I mean, geez, what else is there? I said something fun? Oh, well played, well played? Um yeah, and I was gonna say seven kids, but you just retort the same way like I said, yeah, but I like read sheets. M hmm, it's I have

a rooster. Yes, okay, we got you. His name is Ronaldo. Um, I have to use a special mike because he'll crow and then he'll be picked up on so I have to use like one that's really you know. But I bought eight hens from the feed store, and then I realized four months later, like one of the hens was on steroids. And then I realized a month after that that hen was a dude. And his name is Ronaldo, and so I actually bought seven hens. Kind of dude.

And he's awesome. He's super chill. Um, he doesn't attack anyone. Faye, my four year old, she loves him. He's almost as tall as she is, like they get big, and he's so pretty has he's pretty green feathers in the back. And he's super chill. He backs up whenever I come in. He does. He's he's not aggressive it all, at least so far. Um. He always lets all the ladies go to the food first, and he's just kind of looking around like he's a gentleman, you know. So that's been

any of them, not that we've discovered. They just started laying eggs because we did the whole COVID chicken run that happened like it was a real thing. I don't know if y'all tried to buy plants and chickens everything, like all these like boutique sour dough you know firms are like, what is going on? We you know, can you only imagine? So he we did that for the you know, part of our COVID celebration, and um, it's been super fun. But they just started laying eggs like

a month or two ago, and fun magic. It's just absolute magic. So it is fun that that will do and cut