2022 was a great year for Peace of Mind Organizing. I had put away 15 percent of my net revenue for taxes, though I did raid that category to give my employees year-end bonuses. The bonuses were a great idea, but raiding the tax category was not. (The good news is that I’m putting money away every month for 2023 year-end bonuses, so that won’t happen again.)
On April 17, the day before the tax deadline, my CPA give me some bad news. We owed $8903 for federal, state and local taxes for 2022. In addition, I needed to pay $4900 in estimated taxes for the first quarter of 2023.
That meant I needed to come up with almost $14,000 overnight to pay my tax bill. The good news is that thanks to YNAB and Profit First I have money. But I needed to find it in the budget so that I didn’t overspend in YNAB. After working so hard to get out of credit card debt, I was bound and determined not to go back.
Fortunately I had been working hard on my True Expenses and there were categories I could cut back on. I borrowed from the future a little – I dipped into my computer replacement category, for example and I took a little from profit reserves. But within an hour or so I had $14,000 in my tax category. I started the day with $5800 in the category but I had to move the remaining $8200 from other categories.
Here’s a screenshot of just some of the moves I made that day. It’s a little painful to see those accumulated funds going to taxes, but it would have been much more painful to see them on a credit card balance.
If this had happened to me six years ago I have no doubt that I would have gone into credit card debt to pay this bill. I’m so proud and happy I was able to pay these bills without incurring any debt or dipping into our personal savings. Thank you, YNAB!
P.S. I changed my tax allocation from 15 to 20 percent and am hoping that the increased estimated tax payments will mean I don’t face this again in a year.
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