Summary
Does the skill of budgeting feel like something that has eluded you? Do you put it down on paper and it looks so good, but then at the end of the month your actual spending looks nothing like your plan? When it comes down to it, it is hard to say no to things we want, especially if we don’t have enough confidence in our ability to stick to our budget in the first place. Having a realistic budget and sticking to it is possibly the most important first step to building wealth and executing our plans for building wealth. Today I speak with Erik Donohoo about budgeting and specifically using the ” You Need a Budget” or “YNAB” app for budgeting. This is just one powerful tool we both love for budgeting but is of course not the only way to go. The important thing is to come up with a budget and sticking to it, and not beating yourself up when you don’t. Feeling like a failure and not pivoting when we make financial mistakes doesn’t get us closer to where we want to be either. I hope you enjoy!
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Transcription
Phil Salter 0:00
Welcome to no better time. I’m Phil Salter, and me today with Eric Donna who, who is someone I’ve known for several years. Hello, Eric, thanks for joining me. Hello. And you’re someone that I’ve mentioned in previous episodes. I haven’t gotten a lot into budgeting specifically, I’ve kind of glanced over it. But I mentioned how I use a but an app called you need to budget or why NAB, I don’t know if that’s really what they call it. But that’s what we call it, and how there was a period of time, I don’t know, maybe two or three years ago that you had brought it up to me. And also my brother had brought it up to me around the same time, you’re two people that I have a lot of respect for in your opinions. And I was like, maybe I should look into this thing. So that’s kind of one of the things I want to talk with you about today. But even before that, I’m kind of curious. Something I’ve always want to ask people, what it’ll always remember to is to ask kind of what would you say your relationship was to money as a child growing up? Did you make money? Did you have an allowance? Did you save money?
Erik Donohoo 1:08
I honestly don’t remember, if I ever had an allowance or not.
I don’t remember having an allowance. But I started working. By the time I was probably 11. I had a paper route. And we would drive our four wheeler at six in the morning around the neighborhood because we did the neighborhood that we lived in basically. And we would fold them all up in the morning, throw them in like a big storage plastic bin. That was bungee cord into the back of the four wheeler and we my brother would go around throwing them out. But after a year or so some neighbor we was complaining about the sound of our four wheeler every morning. So
Phil Salter 1:48
early in the morning. Yeah.
Erik Donohoo 1:51
So the paper out came to an end, my parents weren’t willing to get up and drive us around. So that was the only way they were willing to let us
Phil Salter 1:57
have a paper out. Because you have all brothers. You’d like for brothers. For younger brothers. Yeah, for everybody. You’re the oldest who instigated doing the paper I was it you? Did your parents say this would be a good thing, or do you remember that?
Erik Donohoo 2:10
I don’t remember. If I asked my mom, she probably no, it was probably them. The only
Phil Salter 2:17
so paper routes, I remember my family having a paper route at one point. And we take turns going with my dad really early in the morning. And I remember specifically going into paper route when my dad told me how babies were made. So I have this memory of like paper routes and being like, You’re joking, right? And like, but he wouldn’t joke about this. So but that’s great. So did you instead Yeah, thanks. Um, so having a paper as the first time you remember making money do remember kind of what you did with that money? Did you say hey, I gotta go spend this money to, you know, like, man, I don’t know what I did. I have no, I probably bought Pokemon cards. Yeah, well, so when you can say like, maybe that’s the earliest you remember. But kind of let’s say fast forward. Did you have a job while you’re in high school? Did you just we just,
Erik Donohoo 3:04
I mean, I since that paper out, I’ve always had a job. So do the paper out. And then when I was 14, I think I became a part our substitute cleaner at the at the elementary school that I went to as a younger kid. So I was vacuuming and cleaning school after after school, they had kids do that job.
Phil Salter 3:25
Like a pay you.
Erik Donohoo 3:26
Yeah, it was a paid job. So I was paid. I wasn’t a full time one. So I wasn’t doing it every day. But I was. I was there probably once a week or so just filling in. And then after that I got a job as a part time, Salt Lake County Library System shelter.
Phil Salter 3:49
So I would take him books back to them, where they would
Erik Donohoo 3:52
literally just take books that were returned to sort of on a cart and roll them around and put them back on the shelves. And I would do that for four hours at a time at random libraries all throughout Salt Lake County, because I was solid county library systems kind of all connected, and I was I would just fill in at libraries where somebody had time off or was sick or something, but was the age. That was I think starting it like that might have been 16 cuz I’m pretty sure I was driving myself was
Phil Salter 4:22
more of like, more traditional, like working age at that point. But yeah, you have a history. Like you said, you’ve always had a job. You’re someone with a really high work ethic. Yeah, you worked really hard, but you work really smart and you’re about not just wasting time, right? So I’m sure we even when you did that at the library, your your way even back then where you’re like, hey, how can I be most efficient with this?
Erik Donohoo 4:43
I just remember being disturbed with the graphicness of the erotic female novels, covers. They had to put away. women would read I just couldn’t believe that. I just felt bad for people that were getting there. kicks off of that stuff made you feel good for them and they found their passion. We all want to find our passion, right? I found their vicarious passion that they would live through the generic, tall, long haired, muscular man and frail, thin. You know, take me daddy woman in every book
Phil Salter 5:22
LBO types, right. And like some of them literally were Fabio drunk. Right? I think he really was a bottle for those. So then you did you did you ever were you much of a saver? I’m wondering because I just think because for me, like, I never was a saver growing up. I always spent money as I got it.
Erik Donohoo 5:41
I I was kind of like the, my group of friends. I was the chauffeur. So I do most of the driving, and I’d pay for most of the gas. And I mean, my parents didn’t pay for any my stuff. I think they did pay for my car insurance. But like I had to pay for everything else that I did. So I don’t I don’t I didn’t have a big chunk of savings. But by the time I was done with high school, like I should have, I should have, but I always found things to spend my money on, I like to use it instead of lose it.
Phil Salter 6:11
Yeah.
Erik Donohoo 6:12
So I wasn’t really budget minded or, or thinking about any of that at that age.
Phil Salter 6:16
So then what happened because I gira, I would call you a fair, quite successful person, you know, it’s all it’s all relative. But you’re definitely someone who’s done well and has worked hard and gain skills. And over the years, you’ve found yourself making more and more money, I’m sure like a lot of us do as time passes. At what point did you start to realize I need to start budgeting? Or did you know, when did that kind of start coming into play?
Erik Donohoo 6:47
I mean, when I got sick of living paycheck to paycheck,
Phil Salter 6:51
did you find that making more money and not poor, but I’m still kind of living paycheck to paycheck did that well, it got
Erik Donohoo 6:58
it got harder when we had our first baby Charlie, and I had to get a full time job with benefits to help pay for, for babies. And so we did that. And then shortly thereafter, we bought our first house that we’re that I’m in right now. We had a condo before that we owned, but we we tried to keep that and then rent this out, or rent the condo out while staying here. And that just made finances really tight. Because the you know, that was back in. Oh, we bought it in 2000, it was 2014 we started to rent that. And the amount of money I was getting out of rent was basically just barely enough to cover the mortgage. And so I was always feeling like I had to, you know, save some of my own money to put aside for the things that would inevitably happen in the condo. Plus, the MTC didn’t really pay that great. And when you add that up to all the new bills for a new baby and then taking care of the condo, and then a new mortgage on house,
Phil Salter 7:57
it was feeling a liability to you than an asset, right? Yeah.
Erik Donohoo 8:01
And it was just tight, my money was tight, we, you know, had I’m sure we had a credit card balance at that point. And we were making minimum payments on it. At one point we’d had we had our credit cards completely paid off, and then somewhere between getting them paid off when we first got married and getting into this house and having a baby we’d built up some balance again. So it was it was time to do something about it. And I it was ultimately Aaron Gibson, who showed told me about why now working at go react. And I don’t know it just resonated with me and and made sense. And the rest is history as they say.
Phil Salter 8:39
We want more of the history lesson, right? Like, I want to because you you kind of cared about this app and what is it you feel like really helped you and obviously, I wish I was sponsored by wine app, but it’s just something I’ve applied there twice. Oh, have you good for you?
Erik Donohoo 8:56
Yeah, they’re fully remote company, but they are based in Utah.
Phil Salter 8:59
And there’s other people I know that are all about it. Like Jonathan who we work with who’s actually also been on the podcast is really geeked out over it and how to really
Erik Donohoo 9:08
yeah, I think he heard about it from me and Aaron as well.
Phil Salter 9:10
Yeah. But like what is it that you found it like maybe not specifically to say hey, this is the app but like what about this app that helped made it so that budgeting became more successful for you that something that was there
Erik Donohoo 9:23
it’s it’s it’s the four rules that white have their philosophy and their four rules that kind of resonated with me you know, the concept of giving every dollar a job and you know before this probably like most people I was using is it meant Yes. Have you ever heard they were called but meant is meant isn’t so much a budget as it is a here’s where you spent your money. You know, you can connect your credit cards and it’ll show you everything and it’ll show you categories and you can set up like little budget categories, saying I want to spend this much here and this much here but you’re not budgeting your own money. You’re just basically saying I’m guessing that I want to spend this much which is not budgeting the I read an article about why not well At one point, they said, meant is like a crime scene investigator, whereas why NAB is more like Minority Report and working with the precogs. Because MIT was just, you know, your budget is a dead body, and you’re looking at what happened to your money and trying to figure out where it went and what you did with it. Whereas wine AB you’re planning and you’re thinking into the future and trying to prevent a dead budget body from occurring, by knowing these are the expenses I’m going to have, and planning for them and preparing for them.
Phil Salter 10:34
Yeah, it’s kind of it’s more proactive, right? And not that there’s not value in looking back, which you can do with obviously, with wine app, as well say, what did I spend my money on? And where did it really go? But like, Yeah, right, you get your money here, paycheck, and then you start to have this available money to then start putting in categories, which I kind of think of is like individual little accounts, you know, there was a time when I used to have multiple accounts at different banks. And I was like, Oh, I want to take this money, put it over here that I’ll use only for, for gas. And if I hopefully I don’t, you know, use it all up every month. And then I realized I don’t need all these accounts. In fact, I got sick of always looking at my account to see Can I buy groceries this week, you know, how much is left in there. Instead using why now, but you just see how much is left in that grocery category. And as you start to fill in these other categories, and I want you to maybe dive into like, okay, all my category, I got paid. Everything’s been funded for this month like, and you can put goals and their friends and say, hey, I want to put 100 bucks a week towards groceries, for instance. So then once that’s in there, you know you have enough. What’s the next step? Once you say, hey, I’ve covered my expenses for this month, and there’s still money to be budgeted.
Erik Donohoo 11:48
You’re all that’s where you that’s where the power of a budget really comes in. A lot of people think about budgeting as being restrictive, it’s, it’s, they don’t want to budget, they don’t want to know what the balance of their checking account is. Because they don’t want to have to not do the things they want to do. But that’s such a that’s the exact opposite thing that a real budget really does. A real budget helps you to do the things that you want to do, because you get real about what expenses and bills that you have. And you decide what are the things you really care about and put the money there. And you’re forced to have to compromise in areas that well, if I really care about this, then I can’t also care about that. Like if I really want to have you know, 100 bucks a month to play golf, then I can’t go eat out and spend $250 a month on eating out I just can’t do that anymore. So to be more disciplined with eating out, you have to choose what is the based on them. I mean, everybody’s got a set amount of money that they have available to them. But regardless of how much money you have, you can live within your means. And as you get more money, hopefully you don’t change your lifestyle too much. And you can just start building up actual wealth. Yeah, yeah, for me, I try to get, I try to get a few months of all my expenses budgeted out in advance. So when I finish a month, I start moving forward to the next month and in the next month. And why now until I’ve got, you know, I want to always have at least four months of everything budgeted out? And why not? And then after that, you know, any extra money you have, I don’t feel like I need to go any farther in the future. So I’ll start pie in the sky like Well, what do I want to do with this extra money? Do I put more towards retirement? Do we increase our vacation budget do? What do we do? So you work it out as a family of what what do we really want to do? What do we care about, we want to do some house upgrades, you know, and you start having extra money to put towards those things.
Phil Salter 13:26
And I think it’s one thing that’s really important it comes to budgeting is realizing that everyone has to make choices and has to have priorities. And there’s people, you really, no matter how much money you make, you can always just end up spending it all if you don’t have a plan. And if you don’t have priorities, I remember I was reading I’m reading a book right now called like the simple power path to wealth or something. And there was an example of a guy who just got his $800,000 bonus check for the year. That’s just his bonus check. And he was complaining to this person is author about how she’s not enough is always expensive. It’s like okay, that’s a certain kind of lifestyle he’s established that requires a lot of capital to maintain. He’s got a lot of debt payments that that a lot of debt. And yeah, exactly. You know what I mean, but it’s just certain lifestyle. So I used to think like, we my wife would have conversations like, Oh, we’ve we’re making more money we used to but then we’re still like having to make these choices. And that’s not a failure. It’s like, no, that’s just part of life. And they’re always gonna have to do he can’t say yes to everything all the time. Like, who has that, like an unlimited amount of money? Very few people, you know what I mean? And the people have a lot of money that truly are wealthy, it’s because they’ve remained discipline, nine times out of 10, if not more, you know what I mean? Or they’re a trust fund kid. He exactly is that if you haven’t just had money land on your lap, like it’s because of discipline, because you can, like I said, the more money you make, the more you can find a way to spend so
Erik Donohoo 14:51
the true key is to be happy with what you have and not always be wanting more like yes, we have a lifestyle that you’re satisfied with and as you make more money actually build wealth. That you can stop worrying about making money and stop worrying about having to provide and like literally just spend your time doing what it is that you want to do, because you’ve already resolved the money situation.
Phil Salter 15:09
Yeah, it is funny how sometimes we, we sacrifice the things that we really want for like the things that we kind of want right now. You know what I mean? Like a cheeseburger looks so good. Yeah. And so it’s, it’s not it’s really amazing though. Like, once you start to like, take control and make choices and plan. Like you could do so much more. Like all of a sudden, I feel like, Oh, we can actually go on vacations. When before I feel I could never find a way to afford it. You
Unknown Speaker 15:33
know what I mean? Like, yeah, I’m really do more, and pay with it all in cash, and you don’t feel any guilt spending it. It makes it.
Phil Salter 15:43
And I mean, honestly, I’m still working on it. Like, I’m still we’re not perfect. And that’s the great thing about this is, no one’s perfect. You’re gonna overspend on certain budget items. You know,
Erik Donohoo 15:53
that’s one of the philosophies of why now is rolling with the punches, you know, you go over and groceries, all it means is you have to pull money out of some other category. And, and balance things out. So, you know, something happened, some things come up, life happens, you don’t have to beat yourself up over it, you just roll with the punches, move some money, and you move on.
Phil Salter 16:10
Yeah, that’s the thing. If you get too obsessed with like, not like being perfect. When you do mess up, it’s not easy to say forget it. And just like that, it just becomes worse. You know, that just like, as
Erik Donohoo 16:19
long as your mess up isn’t like, Oh, I bought a 15 $100 TV I didn’t need oops, you know? Like, yeah, then you you might have to, like address your spending addiction and like, just wanting to have things problem. Like, I feel bad for people whose happiness is based on things. Yeah. And that’s, that’s a never ending. Just, you get it. And then the novelty wears off. And then two days later,
Phil Salter 16:42
you have buyer’s remorse. It’s true. And I’ve had that feeling myself. And it’s something that you start to realize, the more you have wins financially, like, Oh, this feels way better than that immediate rush of buying that thing that I really knew I shouldn’t have, you know, so yeah, for sure.
Erik Donohoo 17:02
I mean, there’s some things that you know, you can justify, like, how often do you use it? How like, that’s the thing is like, is it actually going to improve the quality of my life? Like, is there really a difference between my evening enjoyment? When I look at a $500 TV versus a 15 $100? TV? Like, is there really going to be a difference there? Yeah, I would spend good money on your bed, you spend a third of your life in your bed by quality bed, it’s worth the $2,000 if you’re going to be in it eight hours a day. Yeah, have a reliable vehicle, get get it paid off as quick as you can, and then just ride it till it’s dead.
Phil Salter 17:34
Yeah, and I think that, um, that’s the thing, I always thought it was about, like, being super disciplined, and, like, super minimal and scrounging all the time and like, eating really simple food or not, you know, not eating, you know, but it’s like, no, it’s about like, just having a plan and sticking to it. You know, if you say, hey, for me, I want this much money for groceries. And that’s a high priority for me, because I want to eat like fresh vegetables and fruit every day. And I want to have really offerings, do it, but just know what that budget is for that and stick to you just
Erik Donohoo 18:04
have to know what it means for the other things in your life.
Phil Salter 18:06
And wow, that means so I guess that means like, I can’t do these other things. And that’s fine. You know, so yeah. And that’s, I think, I think we get it. But I just think that it’s so important to, to not have a minimal, like a minimalist or a scarcity mindset. I mean, around this, because it’s easy to think that’s what it is. But really, this is about creating abundance, man, it really does. We’re asking the other day about how well in my account my bank account, because money just kind of starts to because it’s cool, because with the wind app, in particular money kind of rolls over into categories. You know, it’s really nice. It like helps you see, like, Oh, I budgeted, let’s say 500 for groceries, I spend 400 I wish that was the case. But like $100 rolls over, I wish I only spent 500 on groceries. Yeah. And that I ever went $100 under budget for groceries. But um, you know what I’m saying. But then like, you could say, let’s say like, there’s a particular category that keeps like, Oh, I don’t always spend it all, you know, then you can re just say I maybe I don’t need to put as much in blah, blah, but it’s really great. But like, I’ve never noticed, I’ve never had so much money just sitting in my bank account. Over time, it just continues to grow because more money kind of gets building up in these different categories. And that’s, that’s how it was for me too. Yeah, so some
Erik Donohoo 19:19
more money helps. But like, if you don’t already have a good habits with how to how to handle money, then you can make a lot more money. And then you can be like the guy that gets an $800,000 bonus and still feel stressed out about it.
Phil Salter 19:30
Yeah. And if someone’s listening this and like you can either be the person that doesn’t make that much money is trying to make more money. learn these skills now because it’s just gonna benefit you. If you’re someone who makes $200,000 a year and you feel like you were living paycheck to paycheck. You’re not alone. Like this happens to like a lot of people and you can get out of that cycle and you can, it is all about budgeting. Yeah,
Erik Donohoo 19:51
I was I was in that cycle. I know how it is.
Phil Salter 19:53
I appreciate you taking the time to talk about this. I know it’s something it’s made a huge benefit in my life. to focus on budgeting more. And one thing that me and my wife do, and I don’t know if you guys do this, but and we’ve gotten kind of bad at lately, we’re trying to get back on the wagon is having like meetings every week where we talk about the budget and our plans. And we’ve had so much success in the past where we’d say, this is the week, what do we do? Well, this last week, where do we kind of fail? Oh, we overspent here. What do we need to what do we need to have money for this in this coming week or month? You know, so it’s like, oh, actually, we have this extra thing we don’t normally have we have to get putting money aside for that. When we’ve done that it’s made the biggest difference. It’s very similar to like, when you’re on a software development team, and you have a planning meeting, right? And you decide what you’re going to do that week. Have you ever done something like that? Yeah, yeah.
Erik Donohoo 20:46
I agree. It is powerful. It’s, it’s hard to always do, you kind of get in a rhythm and and you learn what your what your goal, what’s your priorities aren’t what your habits are. And you just kind of get a discipline of like, well, there’s this much in the budget. And I know I can spend that much. And if it’s if it’s gone, it’s gone. And yeah, till next month,
Phil Salter 21:04
I think that’s the place to start for maybe anyone who doesn’t budget is if you have a significant other to have candid conversations about what your goals are, and what you’re doing, and where your money’s going. And that’s really hard and scary. And depending on who’s the person who maybe is more apt to spend, that could be difficult. But usually one is potentially more interested in the finances, and the other one just doesn’t want to care about it and wants to just go to spend money and not worry about it. But once you both start to see the wins together, that’s when it really starts to gel. And that’s super vital to be on the same page, because you could be working your butt off. And if the other person is just not staying with the plan, then it’s just it’s not going to work. But Yep. Anyways, that’s just a little thing. Anyways, I’ll go ahead, sorry,
Erik Donohoo 21:49
I was gonna say I would just say like, if you feel like you’re in a situation where thinking about your finances stresses you out, then I would recommend giving wine ab a try and stick to it for at least three months and watch how you actually have some money in your bank account and you start to get a little breathing room. As long as you committed to it. I can promise you that you’ll start to see a difference. And you’ll feel like you’re in more control of your life and not like you are just at the whim of whatever bill comes up. Yes,
Phil Salter 22:19
yes. Be able to go do the things by the things you need, with competence knowing, oh, this is the I have this money. And it was meant for this and that’s okay. That’s why I put it there. Alright, thanks, Eric, for joining me, I really appreciate it. If anybody wants to add to the conversation. If you have questions, or topics you’d like to be discussed on the podcast, you can email me at No Better Time. podcast@gmail.com All right, thanks. Have a great day and start thinking about how you can have a plan with your money and stick to it and just do better. Always just love to do a little better each month because we’re going to make mistakes. We’re going to fall short. But if we just do a little better each month, then that’s the that’s the winning trajectory. So Alright, have a good one.
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No Better Time 