I started budgeting in 2012 when I first found the YNAB software. It was a life changer. I had no clue how much I was spending every month until I could track it and plan out my spending. After 7 years, I’m bring my budgeting to an end.
Just last month, January 2020, I decided that I am done with budgeting. At least for now. It’s a weird enough feeling that I thought I should write about it.
Spending Without a Budget (2006-2010)
As a physician budgeting can create massive financial changes. You can go from having $1,000/month of disposable income to $7,000/mo. Few other professionals have so much wiggle room in their budget.
From 2006, when I first started moonlighting, until 2012, I spent money without a budget – I spent a lot of it, and then some. I was always in $25,000-50,000 of credit card debt. And I either had very little in my 401k or I would raid it as soon as it became anything substantial.
Tracking Spending (2008-2012)
At some point I started using Mint – a spending tracker. This was probably back in 2010. But tracking my spending wasn’t as useful. I needed something else, a way to plan my spending and not just watch my checking account get lower.
Most budgeting software is meant for tracking spending. The software designer assumes that if you can track your spending then you’ll curb your spending.
It’s the same backwards mentality we have with our patients; we have them check their blood sugar and blood pressures completely unnecessarily. Tons of data, and little they can do with it.
Most have learned to dislike budgeting because they have only interacted with spending tracking software. YNAB changed everything for me.
The YNAB Era (2012-2020)
In 2012 I was doing online search for ‘maximizing income’ and came across a post on tax strategies. This, then, took me to a blog post on budgeting, which took me to a forum from YNAB (You Need a Budget).
I had never come across such helpful and positive group of people online. It was amazing and I drank from the firehose for 6 months, learning everything I could about personal finance.
As soon as a paycheck came in, I would be on my YNAB software and I’d assign a task to each dollar. I clearly remember that I would be planning it down to the last dime – each penny mattered.
Debt Payoff, Savings, Real Estate, Investments
Because of YNAB and my own hard work I was able to pay off all of my student loans just 6 years after finishing residency. Only 4 of which was dedicated to paying off the debt.
Ever since 2012 I have been sending some money towards my investments. Even when the medical board suspended my medical license and I lost all of my clinical income sources, I managed to earn some money some way and continued to contribute to my investments.
That is the wealth equation, isn’t it? You pay off debt, you avoid debt, you add to your investments.
I have learned a whole new definition of frugality, all because of budgeting. It’s different from being cheap. And I didn’t suffer because I wasn’t spending as much money.
Over the years my investments have kept growing. They offer me enough passive income that I don’t need to do any work. But I also have enough income coming in from my online businesses that I don’t need the passive income from my investments.
The income that comes in now from my businesses and investments is mostly discretionary income. I’ll certainly continue to stash some of it aside – no need to be wasteful.
But I can’t justify budgeting any longer. I don’t see the need to budget. My spending habits have transformed over these past few years – I’m no longer a wasteful spender.
Tracking Net Worth
I have taken the same approach to checking my net worth. Just a few months ago I would check my net worth every few days. I would track it on a spreadsheet monthly – but no more.
My net worth is diversified enough that it will likely continue to grow. A sudden drop is possible, but quite unlikely.
Since I don’t plan on living on fixed income anytime soon, it’s not necessary for me to be so diligent about checking my net worth.