The Jesse Mecham Show

Jesse has become a fan of James Clear's Atomic Habits, in which Clear explains how small changes to your habits can build up to big changes in your life. Naturally, Jesse saw how atomic habits could work for budgeting too. So for the next few weeks, Jesse will be covering several aspects of "atomic budgeting," starting with the power of compounding interest. Atomic Habits by James Clear: https://www.amazon.com/Atomic-Habits-James-Clear-audiobook/dp/B07RFSSYBH/ref=sr_1_2?dchild=1&keywords=atomic+habits&qid=1592096296&sr=8-2 Sign up for a free 34-day trial of YNAB at www.youneedabudget.com

Jesse and the YNAB team are excited to announce a new service: financial wellness for businesses and their employees! For any company, big or small, YNAB will educate your employees on the most important yet often overlooked aspect of financial wellbeing… budgeting of course. Financially stress-free employees are good employees. They are empowered, they have freedom to be creative in their life, and they are more productive as a result. This is a FREE service for the business. You can find out more by going to: https://www.youneedabudget.com/wellness/

The attentive gardener notices the small things. The way plants grow, flourish, and wither on a daily basis. He knows that weeds are easily dispatched when pulled daily. The gardener plays a long game, but sees each move in detail. Budgeting is no different. The attentive budgeter notices small things, finds small efficiencies there, because she checks in often. She knows that it's easier to correct course when her budget is moving in the wrong direction, because she watches carefully and often. The daily reconciliation becomes a joy, not a chore. Sign up for a free 34-day trial of YNAB at www.youneedabudget.com

It's a common refrain in times of crisis. We must do something. But inaction is, in fact, always an option. Many times, especially when it comes to finances, it is a great option! Jesse reminds us that, in light of current economic conditions, it's perfectly OK to do nothing. Sign up for a free 34-day trial of YNAB at www.youneedabudget.com

There's something growing at the Mecham household... and it's in the backyard! Jesse confesses he spent a good portion of his paternity leave preparing a garden with a handful of chicks, fruit trees, and a garden full of asparagus, cantaloupes, and other goodies. As always, while exercising his green thumb Jesse was thinking about budgeting. Immediate gratification is rare in the natural world. Nearly everything worth having takes time, effort, and care to grow and develop. Chicks need to be fed and kept safe and healthy before they can grow into egg-laying hens. Fruit trees take years before they bear their first fruits. Yet these things, once harvested, can be so much more satisfying than, say, a generic carton of eggs at the store. Budgeting is no exception to the rules of Nature. Good things come to those who wait, and steward their money well. But the good things are worth it. Sign up for a free 34-day trial of YNAB at www.youneedabudget.com

After receiving several questions about what to do with windfall money during times of economic uncertainty (like these), Jesse tackles the topic in today's episode. As always, but especially true nowadays, cash is king! Sign up for a free 34-day trial of YNAB at www.youneedabudget.com

Freshly returned from paternity leave, Jesse discusses how YNAB has handled the coronavirus pandemic as a company. As always, his focus and the company's focus has been on giving the best budgeting advice they can. Additionally, the YNAB team has written articles exploring how people can weather the financial storm in the wake of COVID-19. You can read the blog entries here: https://www.youneedabudget.com/blog/ Sign up for a free 34-day trial of YNAB at www.youneedabudget.com

Jesse examines how the recent panic buying of food, home goods, and other staples highlights the intrinsic value of certain things that we take for granted. When demand for historically safe assets like bonds and gold falls, yet demand for household goods like flour and toilet paper soar, it shines some light on the practical value of things. In short, you can eat flour, but you can't eat a bar of gold! In the future, Jesse encourages us to consider saving not only for future expenses and retirement, but also for some staples and basic goods for unexpected times. Sign up for a free 34-day trial of YNAB at www.youneedabudget.com

Jesse muses on the impact the coronavirus will ultimately have on people and their habits. When society reopens, will people return to their previous habits? Or will they grow, having spent their time in isolation examining themselves and their priorities, their Rule Zero? Jesse hopes that people do use this time to reflect, to re-examine their life and rediscover their priorities, and, most importantly, write down the wisdom that comes from that process! Sign up for a free 34-day trial of YNAB at www.youneedabudget.com

Last week Jesse discussed the importance of Rule #1, giving every dollar a job. Rule one is always important, but in uncertain times like these it takes on renewed significance. Jesse has often talked about the rule before the rule, though, the so-called Rule Zero. Rule Zero is understanding what's important to you, why you're bothering to give your dollars a job in the first place. At the end of the day, to what end are you budgeting? What's the purpose? In the wake of the pandemic and economic woes gripping the country, consider whether the answer to Rule Zero has become clearer to you. Perhaps in these times you can find not only the resolve to budget like you've never budgeted before, but also to clarify why you're budgeting in the first place. Sign up for a free 34-day trial of YNAB at www.youneedabudget.com

With the world at a standstill due to the COVID-19 pandemic, one thing is certain. We've never budgeted at a time like this! Jesse offers some comforting words in this time of crisis, and reminds us to follow Rule #1: Give Every Dollar A Job. Never stop budgeting. Even if it's only a week ahead, a day ahead, staying engaged and continually planning will give you the best chance to survive financially in these times, and, eventually, thrive. Budgeting is one area of our lives that we can control, in the midst of so many things we cannot. Sign up for a free 34-day trial of YNAB at www.youneedabudget.com

At YNAB there is a document called the Vision Doc, which spells out the "commander's intent" for the company, how to behave and act on the company's behalf. Employees must make many decisions on a day to day basis, but with a clear commander's intent they have the freedom to make those smaller decisions while adhering to the company's greater goal. It's useful to develop the same commander's intent for your budget. With a clear goal and aim for the budget, it becomes easier to make those small, day to day money decisions that, as we know, can add up to big dollars over the course of a year! Sign up for a free 34-day trial of YNAB at www.youneedabudget.com

Jesse reads an excerpt from the book The End of Average by Todd Rose. In the late 1940's the Air Force had a dangerous problem on its hands -- aircraft of all kinds were malfunctioning and crashing at alarming rates. The Air Force brought in scientist Lt Gilbert S Daniels to diagnose the problem. Daniels discovered that the Air Force had designed cockpits based on thousands of physical measurements taken from its ranks of pilots, then averaged. Daniels ascertained that despite the rigor and breadth of the measurements, not a single active pilot in the Air Force actually matched up with all the averages. In short, the Air Force had designed their planes around an average pilot that didn't actually exist, causing pilots to have trouble controlling their planes. We can take a lesson from Lt. Daniels discovery when it comes to our budgets. It's tempting to come up with an average for each line item, and compare your budget to someone else's or perhaps even a regional or national "average." Designing your budget around averages may not actually fit your life, and, going back to Episode 420, may leave your budget rigid and inflexible. Sign up for a free 34-day trial of YNAB at www.youneedabudget.com

We often talk about the budget as if it's a noun. Is it "in the budget"? Did you check the budget? When you treat the budget as a noun it takes on a rigid, inflexible quality, like the budget is set on stone tablets. But what if we thought about "budget" as a verb? As an action, an activity, budgeting becomes a process, a thing which can change and evolve with each iteration. Jesse discusses the importance of budgeting and not just setting a "budget." Thanks to Hannah who shared this revelation in her video My 5 YNAB Beginner Mistakes on the YNAB YouTube Channel. Sign up for a free 34-day trial of YNAB at www.youneedabudget.com

Money is made to spend. We all want something, and that something usually costs money. Some of the "wants" are fleeting desires, spurred by mood or peer pressure or perhaps just a whim. Other "wants" are genuine desires and items or experiences that actually add value to your life. Whichever it is, Jesse argues that you should wait. Wait before you buy anything, even the genuine wants. For one thing, waiting helps you parse out the genuine from the ephemeral. Jesse keeps a running list of wants on his phone. If he wants something, he adds it to the list rather than buying it right away. If he still wants it when he checks the list again later, he buys it. Many times, however, he will find things on the list that he hasn't thought about in a while, and that he really doesn't want. So the list can act as a simple filter and a sanity check for purchases. Sign up for a free 34-day trial of YNAB at www.youneedabudget.com Also, go to https://www.youneedabudget.com/bootcamp/ to sign up for the YNAB Debt Bootcamp!

There's a cliche in TV and film whenever something bad happens in a crowd of people, inevitably someone in the crowd shouts "why doesn't someone do something!" This is usually the cue for the superhero to enter stage right. We hear this sentiment all the time, not just in bad cinema, but in real life. Anytime a problem reaches a level of widespread concern -- whether it's a local neighborhood issue or a national one -- something must be done about it. Some problems have no easy answers, and we often forget that inaction is a valid response. The same goes for our budgets! Not every budget problem can be solved right now. Sometimes you don't have the right information, or enough of it, to fix every issue in your budget. That's OK. Sometimes your budget is working just fine, and there's no reason to tinker with it. That's OK too. Don't fix it if it ain't broke! Whatever your situation, remember doing nothing is still doing something. Sign up for a free 34-day trial of YNAB at www.youneedabudget.com Also, go to https://www.youneedabudget.com/bootcamp/ to sign up for the YNAB Debt Bootcamp!

They are prepared for emergencies, for setbacks, for unexpected life changes. In fact emergencies don't seem to happen as often to them. YNAB'ers are a lucky set, it seems, but maybe there's more to the truth than a roll of the dice. Survivorship bias is a logical fallacy in which you focus on a group of people or things that made it past a selection process, without considering those that failed. This bias can lead to a number of erroneous conclusions. In finance, survivorship bias occurs when evaluating the returns of, say, companies in a certain sector of the economy. If you only look at current technology firms, you might look at the technology sector and determine that it radically outperforms the market… but those same returns may look very different if you consider all the technology firms within the same time period that went bankrupt. Survivorship bias appears everywhere in life, and YNAB'ers are no exception. At first glance it may seem like those in good financial health just didn't have the same number of setbacks that those in poor financial health did. But maybe it's not just luck. Maybe those with good financial health stay that way because they budget responsibly. Sign up for a free 34-day trial of YNAB at www.youneedabudget.com Also, go to https://www.youneedabudget.com/bootcamp/ to sign up for the YNAB Debt Bootcamp!

In episode 411, Jesse decried the ubiquity of credit cards and the fact that they enjoy a number of benefits that plain old debit cards do not... at the risk of getting yourself in debt. Since then, he's learned of a few strategies for managing fraud risk with debit cards. Sign up for a free 34-day trial of YNAB at www.youneedabudget.com Also, go to https://www.youneedabudget.com/bootcamp/ to sign up for the YNAB Debt Bootcamp!

Jesse admits he's got an itch to scratch. He likes to invest gamble in the stock market from time to time, using an app that allows him to trade at the swipe of a finger. At least he's honest -- it's gambling with fun money, not investing. And that's the key. It's money he can afford to lose, and it's not much. Sign up for a free 34-day trial of YNAB at www.youneedabudget.com Also, go to https://www.youneedabudget.com/bootcamp/ to sign up for the YNAB Debt Bootcamp!

Wealth is not a dirty word. After all, wealth can allow us to do many interesting and fulfilling things with our lives. At the very least, it provides options, opening up the range of possibilities before us. Simply put, wealth can allow us to live the life we want to live. The only problem is that the accumulation of wealth is often followed by increasing expenses. Some of these are obvious -- a bigger, newer house usually costs more than a smaller, older one -- while others are insidious. A larger house requires more energy to heat and cool, more time and effort to clean and landscape, and more things to fill it up. That's just one example. We could say the same about cars! Left unchecked, these growing expenses can once again eat into our wealth, robbing us of the optionality of wealth. As Thoreau once wrote, "he who owns little is little owned." Sign up for a free 34-day trial of YNAB at www.youneedabudget.com Also, go to https://www.youneedabudget.com/bootcamp/ to sign up for the YNAB Debt Bootcamp!

Save money for known future expenses, or pay down debt? It's a challenge many people face while trying to eliminate their debt. It's a conundrum too -- you could take your savings and pay down debt now, or hold onto to those savings for the new tires you know your car needs next month, or the Christmas gifts you want to buy for the family. If you do that, though, the debt balance stays the same while you continue to pay interest... Jesse argues that optionality is the key here. Obeying rule #2 -- embracing your true expenses -- means setting aside money for those known expenses and eventualities in your life. It's tempting to pay down as much debt as you can now, but setting aside cash for your true expenses gives you options. What if your true expenses are bigger than you anticipated? What if you get hit with unexpected expenses on top of that? If you've set aside the cash, you are in a position to handle those expenses when they come. If you've already used the cash to pay down debt, then you won't have any to cover unexpected expenses. This makes you much more likely to put those on the credit card and then... now you are in debt again. Jesse often meets people whose finances look like their diets -- they yoyo in and out of debt constantly. It's a mentally and emotionally draining prospect. But by giving yourself options, you can have it both ways. You can prepare to pay your true expenses in the future AND pay down debt. And you'll be more likely to stay out of debt, which is the ultimate goal! Sign up for a free 34-day trial of YNAB at www.youneedabudget.com Also, go to https://www.youneedabudget.com/bootcamp/ to sign up for the YNAB Debt Bootcamp!

Jesse reflects on a Senate bill -- now signed into law as the Setting Every Community Up for Retirement Enhancement (SECURE) Act -- which will require a greater amount of employers to offer 401(k) plans to employees. The new law also makes it easier for annuities to be included in 401(k) offerings by easing the fiduciary rules around fees and expense ratios. 401k) plans are excellent vehicles for saving for retirement because they allow employees to put away a lot of money every year -- up to $19,500 in 2020. Some employers offer matching on 401(k) contributions, further boosting savings rates. However, the inclusion of more annuities in 401(k) plans has a darker motivation. Annuities typically charge higher fees than mutual funds and index funds -- sometimes a percentage point or more -- making them an inefficient and expensive way to save for retirement for most people. On the other hand, they are very profitable for insurance companies! Not surprisingly, insurance companies lobbied hard for the relaxation of fiduciary rules in the SECURE Act. Just like Jesse discussed in last week's episode #411, wherever there are incentives, there are people making money. The wise investor follows the money! Sign up for a free 34-day trial of YNAB at www.youneedabudget.com Also, go to https://www.youneedabudget.com/bootcamp/ to sign up for the YNAB Debt Bootcamp!

For better or worse (probably worse), credit cards are a major part of our financial world now. Cash is becoming less and less convenient to use every year, and debit cards continue to lack the same level of fraud protection that credit cards enjoy. This isn't coincidence either. Jesse attended a "payments trends" conference in 2019, where the main topic was how to make payments easier, to remove as much friction as possible from the process of buying things. Why? Simply put, when you spend more money, more often, payment vendors make more money. The problem is, you can't win the credit card game. Not only do payment vendors make money when you spend, the banks that underwrite credit card debt know (because they have studied human behavior) that when you swipe a credit card, you tend to spend more money. Credit card points and rewards are carefully designed to entice you to spend more money, because banks know that you will likely carry higher debt levels with a credit card. So if you can't win the game, maybe the solution is just to opt out. Sign up for a free 34-day trial of YNAB at www.youneedabudget.com Also, go to https://www.youneedabudget.com/bootcamp/ to sign up for the YNAB Debt Bootcamp!

It's time to blow it all up! Every January, Jesse takes time with his family to "blow up" his budget and all the assumptions that drive it. He takes a fresh look at the dollars in the budget, and starts to question everything. Need to set aside $400 for a new set of tires in March? That's a responsible Rule #2 line of thinking. But the burndown is your chance to think deeper... do we even need a car? Could we sell it and ride our bikes to work instead? This is your time to think big, re-evaluate your priorities and life goals, and then question everything about your money. Nothing should be off the table at this point, because you're just talking. In the process, you may discover that your priorities have shifted, and it's time to take some new steps with your budget. Sign up for a free 34-day trial of YNAB at www.youneedabudget.com Also, go to https://www.youneedabudget.com/bootcamp/ to sign up for the YNAB Debt Bootcamp!

If you made it through the last few weeks, you know why Jesse hates debt and why you should too! Start the New Year by putting those feelings into action. Jesse has created a "debt bootcamp" for YNAB users to help you get serious about getting rid of your debt for good. Best of all, it's FREE for all YNAB software subscribers. The Debt Bootcamp will be an intense, 8-week challenge to get rid of as much debt as possible. The camp will be run through a private Facebook group where you can stay accountable with other YNAB'ers and share your successes and challenges. Go to https://www.youneedabudget.com/bootcamp/ to sign up now!

The corporations are playing a game, and you can't win. So opt out and stop playing the game! In the part 4 of the "Why I Hate Debt" miniseries, Jesse explains how behind every credit card is a clever system of points, travel miles, and other "free" rewards designed to keep you spending and in debt. Credit cards are a very profitable industry. Would banks and finance companies be giving away rewards if they weren't making a profit from it? Of course not! They've got the data, they've studied the statistics, and they know people will drive themselves into debt, where they can rack up fees and interest. So join Jesse, stop playing the game, and start hating debt! Sign up for a free 34-day trial of YNAB at www.youneedabudget.com

Jesse hates debt, and you should too! In Part 3 of anti-debt miniseries, Jesse argues that debt is not just a drain on our cash flow and creativity, it also restricts our future opportunities! The burden of debt keeps us from realizing our full potential in many ways -- starting a business, taking a lower paying job for more fulfilling work, moving to a new state or country -- often in the early phases of life when we are most energetic and open to growth. Sign up for a free 34-day trial of YNAB at www.youneedabudget.com

In Part 2 of the Why I Hate Debt miniseries, Jesse explains why debt is a non-negotiable for him, and why is should be for you too. At 22 years old, trying to finish his Masters degree and expecting his first child, Jesse found himself caught between two non-negotiables: 1.) Living without debt, and 2.) Allowing his wife to quit work to focus on raising their child. The problem? They didn't have enough money to last until Jesse started working his new job after graduation, even living a very frugal existence. At this point, it would have been so easy to simply sign for a student loan to cover the shortfall. It was only about $7,000. Other students around him were borrowing far more. The interest rates were low, the payback period would be short… debt was the easy way out. But choosing to borrow would have blinded Jesse to the possibility of another solution, another way to make up the shortfall. The constraints of his non-negotiables led him to start selling his budgeting spreadsheet, which eventually turned into You Need A Budget. Sign up for a free 34-day trial of YNAB at www.youneedabudget.com

Jesse hates debt, and you should too. Debt service constricts our cash flow, limits out ability to do other things like savings and investing, and generally introduces more stress into our lives. In this first part of a mini-series on debt, Jesse makes a case for living completely debt-free. Sign up for a free 34-day trial of YNAB at www.youneedabudget.com

Some of you may be thinking, YNAB sounds great, but what if I don't get a regular paycheck? How am I supposed to budget with that? Well, first off, you definitely need a budget! Planning to fund your expenses in future months becomes more critical the more variable your income is. Sign up for a free 34-day trial of YNAB at www.youneedabudget.com

Jesse is thinking about launching a separate podcast to discuss small business, internet marketing, and how you can use YNAB to manage your business cash flow, and he wants to know what you think! Would you be interested in a business-focused podcast? What kind of topics would you like to hear about? Email Jesse at [email protected] and share your thoughts! Sign up for a free 34-day trial of YNAB at www.youneedabudget.com

Jesse asks the most important question about your reasons for getting out of debt, saving money, and achieving your financial goals. Why? Why do you do it? What's the reason behind the goals? If you could write a mission statement for your life, what would it say? Answering the simple question "Why?" might be the most important thing you do after you complete the blocking and tackling of paying off debt and building an emergency fund. Sign up for a free 34-day trial of YNAB at www.youneedabudget.com

"FI" is an acronym that has steadily grown in popularity over the last decade, though the concept is much older than that. It stands for financial independence -- some people call it early retirement (the longer acronym FIRE stands for financial independence, retire early) -- but the idea is simple. Live below your means, drastically increase your savings rate and accumulate enough wealth to "retire" or perhaps better said, until you can do what you want to do. Time and savings rate are the key components of financial independence. What if you could save half of everything you make? What if you started doing that from the beginning? Jesse shares some lessons he's trying to instill in his kids as they take their first steps toward financial independence. Sign up for a free 34-day trial of YNAB at www.youneedabudget.com

It's common to set milestones for paying down debt. They're usually big, round numbers like $500, $1k, $5k, $10k. At the end of the day though, the goals are arbitrary. It's just a number, a stepping stone, toward the greater goal. So if the day to day grind of fiscal responsibility is getting to you, change your milestones! Maybe it's $749, or $362.54. It's all arbitrary, right? Have fun with the game, and make it work for you. Set a new milestone -- whatever you like -- and celebrate when you reach that new number. Sign up for a free 34-day trial of YNAB at www.youneedabudget.com

How do you order your categories? What's on top? What's on bottom? And how did you decide that? Categories are easy to order once you understand your priorities. Rent, utilities, food -- these are non-negotiable. You can and should, however, drill down into the details of each category and ask yourself whether you could live without some of the expenses in that category. You need utilities to live, clearly, but if pushed, what would you keep and what would you cut? Could you live without internet if you had to? Once you understand which categories sit above the line (necessities) and which sit below the line, then you can total up how much you spend on "below the line" items. Then ask yourself: do you want any of this money to go to above the line items? Try this exercise to clarify your budget and see whether your budget is in line with your priorities. Sign up for a free 34-day trial of YNAB at www.youneedabudget.com

Why do we become desensitized to the upticks in price of just about everything? Sign up for a free 34-day trial of YNAB at www.youneedabudget.com

"We could spend less if we wanted to." Sign up for a free 34-day trial of YNAB at www.youneedabudget.com

New feature alert: two factor authentication Sign up for a free 34-day trial of YNAB at www.youneedabudget.com

Everyone is getting into the lending money game. Sign up for a free 34-day trial of YNAB at www.youneedabudget.com

Jesse discusses payroll advance apps. Sign up for a free 34-day trial of YNAB at www.youneedabudget.com

Jesse discusses payroll advances in relation to age of money. Sign up for a free 34-day trial of YNAB at www.youneedabudget.com

Jesse goes back to basics and breaks down YNAB's Rule Four: Age Your Money Sign up for a free 34-day trial of YNAB at www.youneedabudget.com

Jesse goes back to basics and breaks down YNAB's Rule Three: Roll With The Punches Sign up for a free 34-day trial of YNAB at www.youneedabudget.com

Jesse goes back to basics and breaks down YNAB's Rule Two: Embrace Your True Expenses Sign up for a free 34-day trial of YNAB at www.youneedabudget.com

Jesse goes back to basics and breaks down YNAB's Rule One: Give Every Dollar A Job. Sign up for a free 34-day trial of YNAB at www.youneedabudget.com

How do we curb the immediacy bias with DIY? Sign up for a free 34-day trial of YNAB at www.youneedabudget.com

How many dollars are you sending to your retirement fund? Sign up for a free 34-day trial of YNAB at www.youneedabudget.com

Jesse reviews the automated investing app, Acorns. Sign up for a free 34-day trial of YNAB at www.youneedabudget.com

The rock solid measure of whether or not you're succeeding Sign up for a free 34-day trial of YNAB at www.youneedabudget.com

Jesse takes issue with a phrase we use when it comes to spending money on children. Sign up for a free 34-day trial of YNAB at www.youneedabudget.com