Business, Life

You Need a Budget (and so do I)

About a year ago I was at Smashburger with my friend Kirby. After ordering, Kirby pulled out his iPhone and entered something into it. Intrigued, I asked him what he was doing. “YNABing lunch,” he said.

“What’s YNAB?” I asked. That simple question led to me using a tool that’s had a huge impact on my life, my finances, and even my marriage.

You Need A Budget (YNAB) is unlike any other budgeting/financial tool I’ve used (and I’ve tried a bunch). From the time I started my first business in high school, I was an avid user of Quicken and Quickbooks. When Mint came out, I jettisoned Quicken and moved my financial life online. Finding myself deep in debt 10 years ago, I read Dave Ramsey’s Financial Peace, the precursor to The Total Money Makeover, which led to a decade of attempts to use the cash envelope system. But regardless of the tools, nothing helped Amy and I get on the same page about our finances and modify our behavior to actually live consistently on less than I make, until YNAB. Now, a year into the YNAB journey, we’re finally discovering the financial peace that Ramsey promised us a decade ago.

Amy and I loved the idea of Dave Ramsey’s envelope system; we even facilitated a Financial Peace University group. But because it’s built on carrying cash around in envelopes, we found it really challenging to implement in everyday life. As an example, Amy might call me at work and ask me to pick up something at the store. Chances are I would not have the “Groceries” envelope with me (it was inevitably in her purse). So I would use my “Mad Money” cash to buy milk. Then when I got home I’d try to reimburse myself out of the “Groceries” envelope, but I wouldn’t have the right change. Or even worse were the times that I had no money with me so I’d buy the $4 item on my debit card. Then what was I supposed to do? Take $4 out of the envelope and go deposit it in the bank?

I find it incredibly inconvenient in this day and age to use cash for everything. However, pulling cash out of an envelope did modify our behavior. Seeing the cash go away really helped bring clarity to our spending decisions, but we never managed to go more than a few weeks (or maybe a month or two) before we fell off the bandwagon. Another downside of the cash envelope and paper budget system was we continually felt like failures. Every month we screwed something up, and we never managed to get ahead. Clearly, The Total Money Makeover has worked for many thousands of people. We just weren’t disciplined enough to implement it properly, so it didn’t work for us.

Back to Smashburger. Kirby went on and on about how great YNAB was and how he and his wife Steph had gotten out of debt using the system. He explained how with YNAB it didn’t matter what payment method you used, how they met every few weeks for a “budget meeting,” and how they were able to “whack a mole” (more on that later) if they needed to overspend in a category. That afternoon I visited the YNAB website and we started our YNAB journey.

The YNAB system is built on four rules: Give Every Dollar a Job, Save for a Rainy Day, Role with the Punches, and Live on Last Month’s Income.

Rule One: Give Every Dollar a Job

In the past when I wanted to buy something I’d make the decision based on my bank balance. If I’d just received a paycheck and seemingly had plenty of money, I’d feel wealthy and be much more liberal with my spending. If it was a few days until my next check and we were running out of money, I’d hold back because the bank balance said “no.” With YNAB we act very differently. Give Every Dollar a Job is the process of assigning all income to budget categories. True YNABers don’t assign any money to categories until it’s actually in the bank. However, since I know exactly how much I get paid each month, I do break this rule and budget the entire month’s income at the beginning of the month. However, I can definitely see that waiting until money is in the bank before budgeting it would be the best way for someone with an unpredictable income to stay out of trouble.

Amy and I have our YNAB budget broken up into several primary categories:

  • Giving (this has two subcategories: Monthly Giving and Giving Fund)
  • Everyday Expenses (this has subcategories that we spend out of like Groceries, Fuel, Kids’ Allowance and Entertainment)
  • Monthly Bills (this has subcategories that we don’t have as much control over like Mortgage, Utilities, and Insurance)
  • Rainy Day Funds (more on this in Rule #2 below, but it has subcategories like Car Repairs, Home Repairs, Birthdays and Christmas)
  • Savings Goals (Vacation and Car Replacement)
  • Pre YNAB Debt (this is where all the credit cards we’re still paying off are)

Budget categories work similarly to the cash envelope system when it comes to modifying behavior. Say a friend invites me to a movie. Rather than looking at my bank balance to make that decision, now I look on my phone to see how much money we have left this month in the Entertainment category. My bank balance doesn’t matter (it’s actually pretty high most of the time thanks to rule #2, but that money isn’t available to watch movies with).

Rule Two: Save for a Rainy Day

This may be my favorite of the rules because it takes the surprises (the bad kind) out of our finances. It used to be that when I needed to put new tires on a car I had to suddenly come up with an extra $600. Now we just budget a certain amount every month for car maintenance (a subcategory in the Rainy Day Funds section of our budget). And when I buy new wipers or get an oil change or need a new transmission, it comes out of this fund. The money’s already there.

The same thing is true for quarterly tax payments or homeowners association dues. I used to get surprised every time my car registration was due (I know, it happens every year, right). Now I just take the annual amount due, divide it by 12 and budget that on a monthly basis in its own Rainy Day Fund, and the funds are there when we need them.

In Dave Ramsey’s system you have an emergency fund for unplanned crises. With YNAB, you plan for things that others consider emergencies.

Rule Three: Roll with the Punches

I like to think of our budget as a living, breathing document. Rather than assuming that we can predict the future and know exactly how we’ll spend money next month, we do our best to plan, but adjust as needed.

When I went over budget in The Total Money Makeover system, I felt like a failure. With YNAB if you go over in a category, it’s not a big deal, as long as you pull that money from another category in your budget. They call this rolling with the punches, or Whack A Mole (because you get rid of red areas in your budget by whacking the money out of another area of the budget). It’s made living in a budget achievable for us.

Rule Four: Live on Last Month’s Income

Rather than having a big emergency fund, the YNAB system encourages you to get to the place where you’re living on last month’s income. When you enter income into YNAB, it lets you choose to apply it to this month’s or next month’s budget. Over time, as you implement the system and build up your “Buffer” category in your Rainy Day Funds, you’ll get to where you can apply more and more of this month’s income to next month. The goal is to have this month’s budget entirely funded by last month’s income. You have all the money you need for a month at the beginning of the month. Once you’re there, you don’t ever have to think about your bank balance (with the Rainy Day Funds in place, it’ll actually be really high).

One question I am asked by almost everyone I tell about YNAB is, “Does YNAB auto-import transactions from my bank?” My answer is that even if it did do it well (even Mint has trouble with this), you wouldn’t want it to. The magic of the cash envelope system (for all its weaknesses) is that it does help you modify behavior because you see the cash going away (uh oh, I’ve only got $3 left in the Starbucks envelope and there’s still a week left in the month). I’ve found that the YNAB categories have the same magical effect because every time you manually enter a transaction on your phone you see exactly how much money you have left in that category.

Auto-importing would make YNAB like Mint, and the problem with Mint is it’s like using a weight loss app that automatically keeps track of everything you eat and sends you a report at the end of the month telling you exactly why you haven’t lost any weight. To lose weight you need to make decisions about what to eat today, not wait until the end of the month to find out how many calories you’ve consumed. Mint is great at telling you what’s happened with your finances. But in my experience it doesn’t do a good job of changing how you spend your money. There’s power in connecting the action to the consequence in real time (more on that in a future post).

The YNAB app does use geolocation to learn where you spend money. When you pull out your smartphone at Starbucks and enter the $5 latte into the app, it knows where you are and which category you use to track caffeine in your budget. It’s as simple as clicking Add a Transaction, entering the amount, and confirming it got the other stuff right. Then you hit Save and it shows the updated balance for that category.

YNAB isn’t perfect. It should be completely cloud based, but at the moment its central nervous system is a piece of software that runs on your Mac or PC. You use the desktop software to plan your budget and then it syncs to the YNAB app on your smartphone via Dropbox. Rumor has it that they’re working on a fully web-based version . . . I’ll be the first to sign up.

The Duct Tape Test: Will it stick?

A year into using YNAB we’ve paid off more than $20,000 in debt, we are no longer living paycheck to paycheck, and the money to put snow tires on Amy’s van this week came out of our “Car Maintenance” category rather than our emergency fund (or worse, a credit card). This is where what Tim Ferriss calls the Duct Tape Test comes in. Will you actually keep doing this? It turns out that the best financial plan is the one you’ll actually follow. YNAB has been that for us, and we’ve finally found financial peace, too.

Ready to give YNAB a try? Use this link and you’ll get a 34-day free trial and save $6. I’ll get $6 too, which will go straight into my “Spending” category :).

Faith, Leadership, Life

Less stuff. More joy.

I like stuff. A lot.

In fact I’ve spent most of my life trying to accumulate more of it.

I’ve got hobbies that require stuff. Kayaks (different ones for different situations), paddles, spray skirts, helmets, glove like things, bikes, climbing gear, camping gear, hunting gear, climbing gear, camping gear. Hell, I’ve got a shed full of gear of different kinds. But the truth is I only use a fraction of it on a yearly basis. The same is true for the stuff in my garage, and the stuff in my kitchen, and certainly the stuff in my closet, and my junk drawer. It turns out that I don’t use 80% of the stuff I own.

But, having stuff is the point right? Stuff brings happiness. Doesn’t it?

I remember as a young boy lusting after some new toy. If I could just have a set of walkie talkies then I’d be happy. As a man the objects of my affection just became more expensive . . . if I could just have an iPad, that new watch with GPS, the list goes on and on.

But stuff has baggage. If you’re not patient, and I wasn’t, stuff brings with it debt. I’ve realized that for most of my adult life a large part of our monthly budget has been used to make payments to credit cards that were used to buy stuff. Tens of thousands of dollars of stuff, most of which I don’t even remember buying. Sure, some of the debt we’ve accumulated over the decades was emergencies like groceries and house payments, but if I didn’t have so much stuff I could probably have afforded to pay cash for those necessities.

I’ve been addicted to stuff. I’ve got my self worth from stuff. I’ve thought of success as having stuff. But it’s all a farce.

Too much stuff just gets in the way. It’s clutter. It’s a distraction. And it certainly doesn’t bring happiness.

I’m sick and tired of being ruled by stuff. A wise man once wrote, “where you’re treasure is, there will your heart be also.” Whatever you treasure, is what your heart desires. I don’t want to treasure stuff above people. I don’t want to treasure stuff above experiences. I’m sick and tired of being ruled by stuff and having my budget ruled by my payments for it.

It turns out that the less stuff I have the less distracted I am. I gave away half my clothes. My closet looks cleaner. I feel relaxed there now. And I can find the clothes I actually want. I’ve sold a bunch of my gear and now I can actually find what I need when I need it. We cleared bags and bags of stuff out of our kids rooms and the same is true. Less mess, more joy.

The same thing is true of my calendar. When I look at my calendar and it’s not full I’m able to relax. When I have back to back appointments I feel the tension of busyness.

I want to find a way for our family to live simply. To not be ruled by stuff and the desire for more. To love each other and the experiences that we have together.

I think we’re just beginning this journey. The journey to contentment. A long time ago a guy named Timothy said, “True godliness with contentment is itself great wealth.” It seems to me that godliness with contentment is the opposite of the American Way. We’re ungodly and never content. I want to be content. I want to be satisfied with what I have for today. It’s not that I don’t want to achieve or have goals. But I don’t want to have them at the expense of living in the present. I want to be present with my wife, kids, friends and coworkers. I want to be engaged with them in their worlds and invite them into mine. I want our family to share adventure together. To share passions. To love life together rather than always be longing for something we don’t have yet.

I want less stuff and more joy.

[HT Joshua Becker]

Adventure, Leadership, Life

The trouble with New Year’s resolutions

First let me say I’m a huge fan of goal setting, for that matter I often make New Year’s resolutions. I do think goals work better when they have a deadline for achievement rather than a start date (but that’s another post for another day).

The trouble with New Year’s resolutions is that they make us think we’re the masters of our own universe. That we’re the point of the story. When we think we’re in charge we end up shrinking the story we’re living in down to be us sized.

Most of you know (or if you’ve been reading a while, have suspected) that I’m a follower of Jesus. And for those of us that follow Jesus we have a choice to make every day. And that’s which story we’re going to live in. Are we going to live in our own small story, where we’re the main character and it’s all about us. Or are we going to live in the larger story, where He is the hero and we have a vital role to play. If we believe that we’re characters (albeit important ones) in a much larger story then everything changes. It helps put a lot of things in proper perspective.

At the begginning of The Hobbit, Gandolph shows up and makes Bilbo an offer,¬†”I am looking for someone to share in an adventure that I am arranging.” But Bilbo, like us, is used to his own comfortable life, “We are plain quiet folk and have no use for adventures. Nasty disturbing uncomfortable things! Make you late for dinner! I can‚Äôt think what anybody sees in them.” But being a polite fellow he invites Gandolph for tea the next day…and most of us know the rest of the story.

There’s an invitation that God has for you this coming year. ¬†An invitation into a larger story, an adventure of epic proportions.

So, here’s a question for you to ponder as we head into 2013. Which story are you going to live in?

Happy New Year friends.

P.S. Something I pray every day¬†on a regular basis that helps put all of this in perspective is The Daily Prayer that John Eldredge put together. There’s a free pdf and mp3 of it here. Thanks to @gpackiam and @johneldredge for inspiring this post.


Health, Leadership, Life

How I accidentally became a morning person

I’m not naturally a morning person.¬†Left to my own devices I’d get out of bed five minutes before I need to leave the house.

I remember as a child my dad having to come into my room multiple times each morning to wake me up for school. As I became a “responsible adult” I got the place where I even set my alarm for 18 minutes before I HAD to get out of bed so I could hit the snooze button twice and then get up. I dreaded the sound of the alarm clock. Perhaps in part because I often dreaded the day.

The only time I found it easy to get up early was when I had something I really wanted to do the next morning. Need to get up at 5am to go snowboarding? No problem, I’d wake ten minutes before my alarm went off.

Three years ago I got sick and tired of being out of shape and a few of my annoyingly fit friends encouraged me to do a triathlon. I signed up for the Boulder IronMan when it was still a year away. I started training with a coach and it quickly became evident it was going be difficult to fit a couple of hours of training each day into my already full schedule. So, I decided to get up early in the morning to work out before my family got up and I accidentally became a morning person. ¬† Now, I’ll wake up early even on the weekends when I don’t particularly want to.

Since then my friend Michael Hyatt has written a lot about the benefits of being an early riser. Mike’s got his list, but here are five things I’ve discovered I have by getting up earlier:

  1. Time to think and pray
  2. Time alone (I’ve got four kids and I try to get up at least an hour before the first one gets up)
  3. Time for breakfast (this is supposed to be the most important meal of the day and I used to grab something unhealthy on my way out the door)
  4. Time for exercise
  5. Time to read and write (see above about having four kids)

We all have things we’d like more time for.¬†My friend Andy Traub has written an excellent little book called Early to Rise¬†that will take you on a thirty day journey to becoming an early riser. Even though I was already an early riser I’ve been working my way through the 30 Day Challenge and loving it. Each day he offers a short essay of encouragement and an early riser action tip. This morning’s tip, ship something, hence my first blog post in a very long time.

The book doesn’t come out until next month, but Andy’s offering a few free early copies at¬† (click on the Free Book button on the right).

Most of the people who discover I get up so early say something to the effect of, “I wish I could do that”. Well, the truth is you can, and Early to Rise will help. Thanks Andy.

What time do you get up?  What do you do with the first two hours of your day?

Business, Life

Air Warrior Series: How I pack my REI Tech Beast 22

My buddy Chris Brogan recently did a fun video post showing how he packs his spiffy Eagle Creek Tarmac 22 (Chris’s affiliate link). I’ll be honest, I want his bag.

But, since I don’t have it, I thought I’d steal his concept and share how I pack my REI Tech Beast 22 (not an affiliate link, but only because they don’t have one). It’s pretty awesome too.

(If you can’t see this video in your RSS reader or email, click here.)

Entertaining side note: Throughout this video I refer to the fact that I’m packing for a one day trip. Ironically, I was wrong. It was actually a three day trip, and I got stuck in Chicago overnight on the way home. Let’s just say that extra pair of underwear came in really handy.

UPDATE: I just noticed that the REI Tech Beast 22 is on sale through memorial day for $124.99

tweetmeme_source = ‘jondale’;
tweetmeme_service = ‘’;
tweetmeme_url = ‘’;

Business, Life

Air Warrior Series: How I pack my Saddleback Leather briefcase

My good friends, Michael Hyatt and Chris Brogan have both done posts recently sharing which bags they use when travelling. I travel a lot so I thought there might be someone out there who would find it helpful if I shared which laptop bag I carry and how I pack it. I’ve tried several really nice bags over the years and I’ve settled on the Slim Saddleback Leather (client) briefcase. I absolutely love it for several reasons I discuss in the video.


(If you can’t see this video in your RSS reader or email, click here.)

tweetmeme_source = ‘jondale’;
tweetmeme_service = ‘’;
tweetmeme_url = ‘’;

Business, Life

Ten Reasons I’ll replace my kindle with an Apple iPad (or whatever they call it)

Don’t get me wrong, I love my kindle.  But there are some things that really frustrate me and leave me salivating for whatever it is that Apple is about to come with.  Here are the ten reasons I think Apple’s new device will be a kindle killer:

  1. Sharing and interaction.  I like reading blogs on my kindle, but I don’t because I can’t easily share what I’m reading.  One of the main reasons I read blogs is to find great content to share with others.  There’s no easy way to do this on my kindle.  So I often wait and use my laptop for my daily reading.  I’m confident Apple’s device will make it easy for me to tweet a link to something I want to share.
  2. Email.  A device the size of the kindle and I can’t do email.
  3. Touch screen.  Every time I hand my kindle to someone to look at they try to use the screen like an iPhone screen.
  4. Color.  Pictures anyone?
  5. Multimedia.  My kindle is 3 times the size of my iPhone and I can’t watch a movie on it.
  6. The kindle is functional (sort of), Apple’s device will be sexy.
  7. The app store.  A device just for reading books?  That would be like having an iPhone and only using it for making phone calls.
  8. Enhanced content.  I think this is going to be a game changer.  Embed video in a book.  Finally.
  9. Social interaction.  While Amazon has completely ignored Seth’s suggestions. I’m guessing Apple will embrace them without even reading them.
  10. You.  Apple’s customers will be passionate evangelists.
Business, Life

Outsourcing Life (or at least the stuff you hate to do)

Ever since reading Tim FerrisThe 4-Hour Work Week I’ve been intrigued by the idea of outsourcing projects to an overseas virtual assistant. However, like most people I was skeptical that it could be as easy and hassle free as Tim makes it sound.

I’ve been waiting for the perfect project to send to the other side of the world to test the concept.  A couple of weeks ago, just the right project was sitting on my to do list.  I had an hour long phone interview that I needed a transcription of.  This seemed like the perfect test for an overseas assistant so I started by contacting AskSunday, the folks that Tim endorses.  Unfortunately, they require you to sign up for one of their plans and wouldn’t just tackle a single project for me. 

After a little research on Google I found a company in India called Patodia Inc.  On their home page they say their "ultimate objective is ‘Client Satisfaction’ therefore, if
any client is dissatisfied with the work, Patodia Inc returns the
payment or doesn‚Äôt charge the client for the work done."  It seemed like I didn’t have much to lose, so I decided to give overseas outsourcing a try.

The owner Prakash Patodia was easy to reach.  He gave me a very reasonable quote via email, happily had a sample prepared for me and his team completed the final project to my satisfaction in less than 48 hours…at a fraction of the cost of what an American company would have charged for the same work.

The possibilities for utilizing this affordable workforce are limitless. In a recent post Seth Godin gave several examples of how a business could utilize oversees assistance to provide a better customer experience.

If you’ve got things you know would enhance your customer’s experience that you don’t enjoy doing or you would do if you "just had the time"…why not give Prakash a call…chances are he can help you.

Business, Life

Why the New Apple TV could change EVERYTHING!

I just finished watching Steve Jobs’ Macworld 2008 Keynote.  In the address Steve announces the launch of movie rentals on the Apple TV.  I believe that Apple is about to do the same thing to TV with the Apple TV that they’ve done to radio with the iPod.

Apple_tvWhat excites most people about the new Apple TV (and why I think people will go out and buy one) is the addition of movie rentals.  Now, from the comfort of your living room, you can rent HD movies with 5.1 Digital Surround, watch HD TV shows on your own schedule (who needs a TiVo?), browse YouTube Videos…and of course listen to anything in your iTunes library. All of this for less than the cost of either a BluRay or HD DVD Player.  The Apple TV costs only $229 for the basic model that stores 50 hours of video (they also offer a $329 version that will store 200 hours).

So why does this change everything?  The feature that most people are overlooking but I believe is the most disruptive is the Apple TV’s video podcast access…in the living room…on the TV…in High Definition. What used to be the realm of 2 inch iPod screens is now going to be available in HD on your TV. This allows podcast producers around the world to compete directly with Broadcast/Cable/Satellite TV all at no cost to the end user.  For only the cost of a HD digital video camera and some basic video editing software anyone will be able create their own on demand HDTV channel and offer it to millions of people across the globe…right there next to the big boys. 

In the past high production costs and limited distribution channels meant well funded studios were
the only ones who could produce and distribute content…drastically reduced
production costs combined with global distribution over the internet have the potential to shift the power of content production to the masses…and that changes everything…just ask NBC.