News and details of this breach are just beginning to come out but it’s going to be a doozy. The things to understand here are 1) “customers” are anyone and everyone who has a credit card, ever had a loan of any type, etc and thus has a credit rating — you’re likely a “customer” even if you’ve never had any direct interaction with Equifax or have ever even heard of them; and 2) the quantity and quality of the details the hackers know about the victims of this breach are deep and personal — our social security numbers, previous addresses, entire credit history — all the information you are often asked to provide in order to prove you are you.
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.