YNAB's living on last month's income plus betterment = earning interest on "spending" money.
We use YNAB and the whole point is to pay bills with last month's income. So for a month (or more if you budget further ahead, which I plan on doing) my paychecks come in, sit in a checking account, then go out to pay monthly bills when needed. As we budget further ahead, the money sits longer.
So let's say I save 2 months ahead and need $3,000/mo. Rather than letting it sit in the checking account, what if I move my paychecks into Betterment as soon as they come in? They sit for 1.5 to 2 months depending on timing of paychecks. Then when I need to be "paid" I transfer the money back into the checking account and count it as income.
If there's an average of $4,500 or so at any given time, that's a fair amount of interest long term I'd just let the excess build up. If I'm 2 months ahead, my investments could drop in half and I'd still be able to pay the bills.
Thoughts?
A little background if you find it helpful:
A few months ago I started using YNAB. A friend mentioned it was on sale for $14.99, so I figured it was worth a shot. WOW! What a difference that has made. First by saving hundreds each month, then finding this site through some blog posts there. Since then I've been actively changing everything about our finances. I felt that we were frugal and always had money to save - but it wasn't enough.
I'm 25, married, 2 kids, we bought a house exactly 1 year ago when interest rates were low. (FYI - USDA loan for anyone looking to buy, way better than FHA on monthly payments, fixed interest, and noorta money down if played right.) Our automatic mortgage payment adds enough principal to cutoff about 7 years as is. As work bonuses come in I'm trying to cut it down to 15 years. Past that the amount saved seems better invested.
We have a roth IRA and started contributing when we got married. No 401k or benefits through work. The long term potential with the bonus structure is well worth it though.
At the moment, our income is just not enough to accomplish the high savings rate I'd like. We've cut expenses and now it's time to increase income.
