An interesting study about “soft information” and loan outcomes by gender of both lender and borrower.
I received an email this weekend asking a very common question about handling transfers in YNAB. The question is so common, I decided to post my response publicly. Perhaps others will find it helpful.
Q: What is the reason to not categorize transfers? We want to transfer money to savings accounts and track balances through YNAB…what are we missing?
A: It all comes down two things:
1) money is fungible; and
2) it’s the Category balances, not the Account balances, that determine the purpose or intention of each pile of money.
Fungible means that the electronic representation of $1 in an online savings account spends the same as and/or has equal value to a $1 paper check and the 4 quarters in the cup holder in your car. A dollar is a dollar is a dollar. Your account balances merely tell you how many dollars you have and where they are physically located.
Your categories are how you allocate and differentiate your intention for each dollar you have. Your intention for a dollar is not tied to the physical location of any particular dollar.
So, lets say you have $400 in checking and $400 in savings. All told, you have $800. In YNAB, you’ve already given a job to all 800 of those dollars. Now you physically transfer $200 to your savings account leaving you with $200 in checking and $600 in savings. But you still have a total of $800. You don’t have any additional nor any fewer dollars; nothing is happening in the Budget portion of YNAB.
A good way to picture transfers is to imagine you’ve got $100 in your wallet and you take $20 out and put it in your pants pocket. You still have $100 but the $20 in your pocket is convenient for paying for the movie tickets you’re about to buy.
A lot of clients come to me with a habit of “budgeting by account.” It’s an extremely common practice and one that banks and media tend to encourage. But it’s fundamentally at odds with the YNAB envelope budgeting system. Many have tried to synchronize a savings account balance with a savings category balance. This effort never fails to get messy but it can be one of the toughest habits to give up.
If you want to save, create a category for the purpose and allocate money into that category. And, do your best to let go of the habit of associating a bank balance with any sort of spending or saving intention.
I hope that helps,
P.S. One last suggestion: language is powerful; sometimes when clients struggle to let go of associating account with purpose, I recommend they literally change the name of their accounts in YNAB and not use the word “savings.”
According to this Wall Street Journal article, the big three credit reporting agencies (TransUnion, Experian, and Equifax) have agreed to no longer include tax liens and civil judgements on credit reports unless they meet more stringent identity-matching criteria.
I typically find these “10 Things…” -themed articles annoying, useless click-bait but I thought this one had some entertainment value and was rather low on the annoying scale: 7 Weirdest State Tax Laws.
With an equal mixture of excitement and anxiety (with a dash of dread), I’ve decided to go back to school. I’m 51. The nest is empty. My time is my own. I’ve finally decided what I want to be when I grow up. And the complex I’ve long felt about not having a college degree has never left me. So I’m going to do something about it. I’m going to finish my degree.
What does this mean in terms of my career as a money coach? Only good things, at least in the long run. In the short term, I’ll be cutting back drastically on the number of new clients I take on. I’ll still have time and energy for my existing clients though my availability for coaching sessions will be drastically reduced. In the long term (come on, 2 years isn’t all that long, right?), I’ll be an even better coach and trainer than I am today.
My concentrations of study will be Human Services (to develop my private coaching skill set) and Communications (to expand my abilities as a public speaker and workshop trainer). My expected graduation date is May ’18.
Because I believe in being frank and honest, I’ll admit I’ve never been a very good student. It’s been 26 years since I sat in a college classroom and my life is dramatically different now — I feel much more prepared, more focused, and more motivated — but, I’m still me.
Fifty-one years of living inside (or alongside) my brain has taught me that good intentions and determination alone will not lead to success. Over the years I’ve come to understand that I have some sort of undiagnosed learning disability. In fact, I wouldn’t be at all surprised to be diagnosed with comorbidity/multimorbidity/polymorbidity (if I actually sought a diagnosis, that is). I’ve had the privilege of raising and educating a twice-gifted, truly brilliant high-functioning Aspie. I’ve had the privilege of being spending 12 years as a homeschooling parent. In that time I’ve learned a great deal about learning styles and different types of intelligence. My children have taught me a great deal about myself. But all of that experience will not be sufficient. It’s going to take every ounce of effort, every IQ point, and every expression of support from my family to get me through the next four semesters successfully.
Because research is one of my main coping mechanisms, I’ve been researching. It’s clear to me that one of my challenges is Executive Functions. Or Executive Dysfunction. In my research I found this helpful list of the twelve executive-functioning skills and behaviors characteristic of executive dysfunction in adults and I clearly struggle with 8 of the 12: task initiation, planning, organization, time management, metacognition, sustained attention, goal-directed persistence, and working memory. Naturally, some of these skills and behaviors are more significant issues than others but I definitely struggle with all of them to some degree. Of the 4 skills/behaviors I don’t struggle with, flexibility is a skill I have acquired — due, in large part, to my efforts to help my Aspie deal with his significant struggles with flexibility as a child. Along the same lines, social awareness is a skill I have acquired to the degree to which I have acquired it though of all the definitions this one is the least accurate in terms of how I’d describe the manifestation of this particular dysfunction. Regulation of affect makes me go, hmmm… when critiquing myself I can see an element of this in my younger self but I think my family and friends would say no, not you. And response inhibition isn’t even close to being an issue for me.
Just putting some names and definitions to the things my mind does that makes learning in a classroom on a schedule such a challenge has been immensely helpful. Now I can research each of these issues separately. I can pick each apart and look for coping mechanisms and compensating tricks. Watching this fellow’s Prepped & Polished YouTube videos, for example.
The Executive Function info is new to me and I look forward to exploring the subject. But a bit of insight into my brain that is old news (albeit still very helpful) happened long, long ago in high school. For the first time that I’m aware of, an effort was made to find out why, since it appeared I possessed some degree of intelligence, I continually proved to be so unteachable. Why did I do so poorly in school? A battery of tests resulted in the conclusion that I think inductively. Apparently the vast majority of students/children/people, by default, learn deductively. And nearly every classroom and nearly every curriculum is designed to present material in a decidedly deductive manner. So while other students sit in class and over the course of a semester material is rolled out in a very systematic, deductive manner stacking facts onto other facts in a very orderly fashion until at the end of the semester you’ve got a nice, tidy deductive pile of info and a concluded class, I spend an entire semester completely lost, utterly unmoored, with all these random bits and facts coming at me and no context in which to process them. Until the very end of the semester, that is, when the entirety of the picture is revealed. Only then, when I can see the whole, can I begin to see how the parts fit together, and I can begin to make sense of all these random bits and bobs. By then, however, I’m supposed to be done — and I’ve only just gotten oriented and feel ready to start!
As I say, I’m equally excited and anxious. With a dash of dread mixed in. I invite everyone to follow along on my journey; I intend to blog about the process for my own sake as I’ve learned that getting my thoughts and emotions out of my head and heart and into words on paper (or the screen) is a necessary part of my processing process. I need to take my thoughts and emotions out and lay them on the table in order to see which ones are important, how they relate to each other, and what can/should be done with them. My clients will undoubtedly recognize how similar that is to the process of brainstorming one’s budget envelopes and anticipated future expenses. All of those regular and irregular expenses, the known unknowns and the unk unks, putting those all down on paper so one can see the whole picture and begin see how the pieces fit together.
Until next time. /ESH out/