Since I stopped posting, we started a small business, borrowed about $5000 on our credit cards, and then we crashed and burned. We were months away from paying it all back and went and did something we thought would push us through early, instead, we sunk right down into the mud I had worked so diligently to get us out of.
As our credit cards slowly rose up, I thought, I have to take my own advice, dig deep into my own foundation. I looked at my credit card APR and thought there has to be a better way. Then I found one, Lending Club.
Lending Club is a peer-to-peer lending club that I started investing in several months ago. You loan people a percentage of their loan, (I stick to $25 notes) and they pay you back plus interest. Lending Club makes its money back in fees, which is usually about a penny per transaction. I literally started with $25.00 a month. I make anywhere from 9-13% interest on the note and reinvest the payments. There are tons of articles about Lending Club so do your homework on it.
Anyway, I decided I would apply for a loan with lending club. I paid off my credit cards, I have a fixed payment, and my APR went down 2/3 of what I was paying the credit card companies. I have a date on when my loan will be paid off and I don’t have to worry about surprise charges or fees. It is an automatic withdrawal from my checking account, (which I was always terrified to do with credit card companies and have heard outrageous horror stories.) Another plus, my credit score went up almost 100 points! I’m not kidding, and so did my husbands.
Once I was set up, Lending Club sent me this little email offering me a percentage off a purchase of YNAB software, and I am so grateful.
YNAB is simply this, you need a budget. I told my stepdaughter to go to youneedabudget.com and she thought I was being smart, but I was totally serious. YNAB has four steps and is very promising if I stick to it. Rule one: give every dollar a job, in other words, budget down to the last dime. Rule two: save for a rainy day, these are those expenses you know you have to do like car tags, Christmas, and vet bills but aren’t every day, Rule three: roll with the punches, things happen and you may have to change things around in your budget and that’s OK, Rule four: live on last month’s income, create a buffer of one month’s income so that you are no longer living paycheck to paycheck.
Seems ambitious right? Saving a whole month’s paycheck? Start with ten dollars, eventually as you see it grow, you will find ways to fill it. Most people who use YNAB have this buffer in 6-9 months.
I have been using YNAB only about a month now, however, I have everything categorized and I track every expense as soon as I spend them. I was (guilty moment here) spending 10% of my monthly paycheck at restaurants… and not very good ones either. When I saw that, I knew things had to change. I’m getting very familiar with the ole peanut butter and jelly sandwich, and it’s OK, because I have goals that I can climb toward. I cut my grocery budget from $250 every two weeks to $88 every week, saving $74 a month. Just this week, eating from home, I’ve saved $55 in five days!!! If I take what I’m saving at the grocery store and what I’ve saved taking my lunch, I’ve saved $75 this week. Do you realize that’s $300 a month? I can take that $300 and put it toward my buffer, or I can start saving for things I want or need.
We are buying a new house, so I need a washer and dryer and a grill. That $300 I can split between those two categories, but I also want to put a little toward my buffer, so I will put $20 of this in my buffer, because I want to stop living paycheck to paycheck, and YNAB is helping me do that!
You get the drift, when you see what you are spending in black and white and you realize what you can have if you cut and save and delegate your funds, you can save your life!