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I appreciate the dialogue about the burger costing more than $17 because it's $17 less than I have to put towards debt. I need to think about every spending decision this way.

It's good that you're thinking this way now. When you do your budget in YNAB, that's the kind of choice you are making when you allocate funds to eating out. You're deciding that the $17 you put into the Dining category (or whatever category you use) is a higher priority than putting it into any other category, including the Pre-YNAB debt categories.

I plan to re-categorize my spending to separate out groceries from eating out, along with lots of other re-categorizations.

This will be helpful to the extent your categories line up with the actual decisions you are making as you budget and adjust that budget for unforeseen events. Those decisions tend to be of the form, "Is category X more important to me than category Y?" Early in my use of YNAB, I noticed that my actual priorities, as revealed by a series of this type of choices during the month, were frequently quite different from what I *thought* my priorities were when I made the budget at the beginning of the month.

That having been said, I don't think the expense categories are your biggest issue. The income and tax issues have been hashed over quite a bit in this and other threads. From a budget perspective, what that amounts to is knowing what income goes into your budget at the top line. YNAB is a wonderful allocation system that helps you determine your true priorities, but it won't work right if you don't know how much money really ought to be in the personal budget.

When you get your business in order so that the right amount of money is flowing from the business budget to the personal budget, you'll begin to make real progress. Meanwhile, the spending cuts are Good Things. You might not yet know exactly how much ought to be in your personal budget, but it's pretty clear it should be a lot less than you've put there historically.

Once you get to the point of really knowing how much money should be in your personal budget each month, there's a game you can play in YNAB. Say you budget $250 to groceries, and spend $239 in a given month. If $250 is the correct amount, and you don't need $261 of groceries the next month, you have $11 that can be re-allocated elsewhere. In your situation, the obvious place to put it would be one of the pre-YNAB debt categories.

After a few months, you could find that it's fun to see how far you can come in under budget for categories like groceries and dining out, because that gives you more money to throw at debt. And that is when the question of whether you want to spend $17 on a burger more than you want to be $17 closer to being out of debt becomes real to you at the time you make the spending decision. The answer won't always be that the $17 goes toward debt; but the question should always be fairly considered at the decision point.

Patzer
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