How I became $9,000 more profitable in one month with Ynab
Last week, I spent a few hours cutting $800 worth of monthly expenses from my business budget. Honestly, I was surprised I could cut so much because I thought I was already running a lean operation. Still, the savings will put me in a much better position moving forward — so I’d like to share my process.
Since I use YNAB and already sort business expenses into categories, it made everything super easy to review. Here’s what I looked at first:
One reason I was so surprised that I could cut back was because earlier this year I had already cut over $1,400 worth of monthly contractor payments. (Surprisingly, I now enjoy the added work and it has resulted in a higher quality end-product for my customers.)
So I wanted to try this again, by starting here first. Out of 2 recurring contractors (a tax-planning service and a book-keeping service), I decided to keep one service and end the other.
🔻 Book-keeping / planning
Even though my book-keeper was undoubtably worth more than the $500 I spent, I’ve decided to use that money paying down debt instead. It was the toughest cut to make (and I honestly can’t recommend his services enough) but also the single largest expense I cut.
On the other hand, keeping my tax-planner meant skipping a $100 a month savings. I decided it simply wasn’t worth the risk. My desire to not worry about taxes is too strong. I know in the next couple months I’ll be using them again so dropping now would make no sense. (By the way, taxes, I hate you).
The next category I looked at was training because I have a tendency to overspend here as well. Online courses, especially, add up pretty quick and, while I don’t mind investing in them, I haven’t made proper use of past purchases.
I actually didn’t realize I had a paid Skillshare account so I’m cutting it. While I do think it’s a valuable subscription, I haven’t been using it. I might come back someday, though.
🔻 Seanwes community membership
I also decided against saving to renew my Seanwes community membership. I love the community that Sean and his team is building I just don’t have much time to be a regular participant.
👍 Audible annual membership
Currently paying $229 per year for up to 24 audiobooks. I listen to these pretty regularly so it’s a great investment that I actually use.
I want to be more judicious about the books I buy but I’ll probably continue to buy a new book every month or so for the foreseeable future. However, to cut down on this category I’m also going to look at free options more aggressively from now on.
Software subscription apps is one of the last categories I looked at because I thought it would have the smallest gains. But I was wrong! I actually saved quite a but here.
🔻 Youtube Red
I signed up for this a while back because of one weird feature: being able to listen to videos in the background. At $12.99 / month it’s just not worth it.
🔻 Apple music
I don’t really listen to music when I work anymore so this was another easy one to put down. Plus, I’ve been meaning to try Spotify.
🔻 Adobe CreativeCloud
My go-to graphics tool is Sketch, so decided to pause the subscription for now.
Initially, I signed up to support the platform because I believe in a business model that charges it’s customers for the value it provides, but honestly I was turned off by the paid content. Seemed overly preachy and misaligned with my values so I decided to cancel.
🔻 Heroku (paid db & SSL add-ons)
This was one of the biggest wins in the entire process. I was able to cut almost $120 in superflous monthly charges that I didn’t even know was optional!
(Note: if your Heroku bill is $200+, like mine was, it’s probably worth seeing if you can save some cash with just a few extra clicks.)
An app I signed up for a few months ago to that’s going to be awesome. But I just haven’t had time to log into.
🤔 Random one-off apps
This category is mostly for apps I download on my iPad. I haven’t made good use of them, so I’ll be scrutinizing purchases in this category more.
This is a credit card dunning app that I think about canceling every once in a while but always decide not to. It simply prints me more money than it costs.
👍 … Basecamp, Ynab, Typeform, Drip, Github, and Zapier
All of these app provide something unique and valuable to my business that I don’t think I can do without or find a cheaper alternative.
General business stuff
👍 Kaiser Health Insurance
I asked a few people what they pay for health insurance, (I’m on Kaiser’s silver plan) and was quickly thanking my lucky stars about my price.
👍 Verizon phone plan
Believe it or not for a second I even considered slashing my phone bill and switching to a flip phone… but alas practicality prevailed.
👍 Wireless internet
Pretty much necessary. Not worth it to run to Starbucks to check my email, although there is something weirdly romantic about not having wi-fi at home.
In the past year we’ve traveled to Utah, Chicago, and Arizona for business-related reasons. These were great experiences but I currently have no other trips coming up.
✳️ Roth IRA
I need to follow Ramit’s advice and open up a Roth IRA this year. I’m currently calculating how much I’ll be spending on this new expense. Hoping to do atleast $100 a month on it.
A few months back I started putting $50 into a bitcoin account on autopay. It’s almost doubled since so I’m relatively happy with the expense so far.
👍 Credit card interest / Stripe fees
I’m not happy how much I pay in CC and Stripe fees, but currently have no solution for completely eliminating it besides paying down my debt.
✳️ Saving for new computer
I realized one of the only pieces of equipment that I need to run my business is a laptop. So I decided to put $50 a month away for a replacement. I don’t think I’ll need a new one for atleast 2 years.
🔻 $500/month ($6,000/year) : Book-keeping
🔻 $11.95/month ($144/year): Skillshare
🔻 $32.50/month ($390/year): Seanwes Community
🔻 $12.99/month ($156/year): Youtube Red
🔻 $14.99/month ($180/year): Apple Music
🔻 $49.99/month ($600/year): Adobe CreativeCloud
🔻 $120/month ($1,440/year): Heroku add-ons
🔻 $5/month ($60/year): Medium
🔻 $50/month ($600/year): Rightmessage
Total saved before new expenses:
+ $800/month or $9,570 / year in new profit!
Conclusion and next steps…
I know that cutting back on paper is easy and actually sticking to the new budget is the hard part, so I plan on watching my expenses like a hawk in the coming months. In particular, I plan to be extra tough about new spending when I’m having “a good month” because that’s when I’ve found it’s easiest to slip on sticking to a budget.
Again, my business is pretty small — so a $800 a month savings was something I didn’t think was possible.
I recommend reviewing your expenses following Ynab’s 4 rules every month or so.