Credit Card Payments Question

Did I do something wrong?  For October (it is currently October 29, 2019), the first month we are using YNAB, I set the budgeted amount for each credit card payment to be the scheduled payment that was automatically going to be taken out for each card during the month of October; $1938.35, $3360.08, and $385.05 respectively.   

First question is, was that the correct thing to do?  If not, why not, and what should I have done differently instead of that?

The activity column reflects all of the activity on each card, including each of the aforementioned payments.  See the activity screenshots for each card.

What is the significance of a negative or positive number in the activity column?

The latter two cards are indicating that I need to budget more, but why is it saying that?  And why doesn't it say that for the first card?  Thanks!

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  • It's tricky because YNAB  has opted to use yellow to mean 2 different things, but I believe the last 2 are yellow because you added goals to those 2 categories and you haven't met them.

    If you are not carrying credit card debt, your credit card payment category should be equal to the account balance on the left of the screen except the account balance will be a negative number and the category balance will be a positive number.

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      • Victor Rodriguez
      • Husband, Father, Software Engineer
      • victropolis
      • 1 yr ago
      • Reported - view

      jenmas Oh, I didn't remember adding goals, but I must have clicked yes when it asked to create a goal to pay off the card every month.  Should I remove those goals then?

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      • Victor Rodriguez
      • Husband, Father, Software Engineer
      • victropolis
      • 1 yr ago
      • Reported - view

      jenmas I'm "carrying" credit card debt only for the duration of the grace period allowed by each card.  Everything is paid in full automatically on the due date and not a day sooner than that.

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      • jenmas
      • jenmas
      • 1 yr ago
      • Reported - view

      Victor Rodriguez in that case what I said about the two amounts matching holds. You have to keep an eye on it, not just assume that they match because returns, statement credits, cash back and incorrect starting balance can mess it up.

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  • jenmas ok.  I removed those goals and now I have this.

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      • jenmas
      • jenmas
      • 1 yr ago
      • Reported - view

      Victor Rodriguez assuming all of your accounts are accurate, then if you want to pay off your balances, you need to move money from your other categories into the credit card payment categories to get the two sets of numbers in line. If you cannot afford to do so, it is highly likely that you have been living on the Credit Card Float - using tomorrow's money to pay for today's purchases. It is entirely possible to go through your whole life on the float and never pay a penny in interest, but one direct deposit snafu can mess it all up. Take a look at the materials in the link to see if that describes your situation.

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      • Victor Rodriguez
      • Husband, Father, Software Engineer
      • victropolis
      • 1 yr ago
      • Reported - view

      jenmas I don't understand.  "If I want to pay off your balances"?  Yes, I do, but the money won't come out of my checking account until some time next month; not this month.  I want to understand how to figure out what I should put in the budgeted column at the beginning of each month.  Should I put the payment that's due during that month?  Or, is it the balance from the day before (i.e the ending balance of the previous month)?  Or, is it the value in the payment column above on the day before (i.e. the last day of the previous month)?  Or is it some other magic formula that's a combination of some or all of these plus an estimate of what I will be spending in the current month.  I don't know why this has to be so complicated.

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      • jenmas
      • jenmas
      • 1 yr ago
      • Reported - view

      Victor Rodriguez Once the initial balance is taken care of, as long as you are only making budgeted purchases you shouldn't have to budget to the credit card payment category.

      Example: Add a new credit card that has a current balance of $1234. On the left under accounts, the balance will say -$1234. I must budget $1234 to the credit card payment category for this card making the category available balance +1234. After that, as long as I am only making budgeted purchases, I never have to budget anything directly to the credit card payment category. If I buy a sweater for $29.99 on my card and I have $100 in my clothing category, YNAB will reduce the available balance of the clothing category by $29.99 and increase the available balance of the credit card payment category by $29.99 with no input from me other than entering the transaction in my credit card register.

      Real world example. Right now my Target RedCard has a balance of $95.62. I have a payment due on November 24 in the amount of $81.54. The credit card payment category has an available balance today of $95.62 because all the purchases made on that card were budgeted. If I go to Target tomorrow to see if Halloween candy is on sale yet (they will have cleared the aisles by 8pm on Halloween) and buy $11.55 worth of candy, the card balance will go to -$107.17 in the account balance and the credit card payment category balance will go to +107.17 but the payment due in November will still only be $81.54.

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  • jenmas does YNAB discourage taking advantage of the grace period, but to instead close every month with a zero credit card balance?

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      • jenmas
      • jenmas
      • 1 yr ago
      • 1
      • Reported - view

      Victor Rodriguez No not at all. Whether you choose to pay the statement balance, the minimum payment, or the outstanding account balance is up to you. What YNAB does do is discourage you from making purchases with credit cards that are not fully backed with cash on hand in one of your accounts on the day you make the purchase. It's an envelope budget. If you don't have $500 in your clothing envelope, don't spend $500 on new sneakers. Or if you only have $350 in the envelope, you should take $150 out of other envelopes today rather than waiting to get your paycheck next Monday to come up with the $150.

      Like 1
      • WordTenor
      • I have the honor to be your obedient servant
      • WordTenor
      • 11 mths ago
      • 2
      • Reported - view

      Victor Rodriguez Or another way to put what @jenmas  has said...they don't force you to close every month with a zero balance, but your budget should still enable you to get to a zero balance at any time. 

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      • jenmas
      • jenmas
      • 11 mths ago
      • 1
      • Reported - view

      WordTenor Yes! Right now, my credit card balances total about $3,700. If I wanted to, I could pay them down to 0 right this second without impacting any of my other categories because I have that much allocated to my credit card payment categories. I won't do that. I have 4 cards with payment due dates on the 4th totaling about $1900, another on the 8th for $6, one on the 24th for $81.54. I'll have other payments on the 23rd and 27th, but those account statements haven't posted yet,  so not sure what those will be. In the mean time, I will continue to make budgeted purchases on my cards. I ordered about 8 pairs of shoes from Zappos that are coming tomorrow (I need 1 pair of black loafers) so that's going to be a $300+ return (I hope at least one of them fits! And is comfortable! And looks good! . . .I have many needs) that's going to require me to keep an eye on the payment category as the return won't be processed until November and no matter what YNAB says, that transaction is going to the Clothing Category where it belongs.

      Like 1
  • Since you've already stated it's all budget backed purchases AND you have the cash to pay it off, the setup is simple.

     

    1) Budget the "Starting balance" of the card into the Credit Card payment category;

    2) Only spend budgeted spending in the future

    3) Always ensure the "Payment" is the inverse of the Account balance - so adjust the budgeted amount if it ever gets out of whack (like with returns)

    The starting balance may or may not be the payment due this month. Looking at your screenshots, it probably wasn't. Your payment includes spending that happened prior to setting up YNAB and that's what you have to account for. 

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  • Victor Rodriguez said:
    the first month we are using YNAB, I set the budgeted amount for each credit card payment to be the scheduled payment that was automatically going to be taken out for each card during the month of October

    Based on your later comments that you pay the statement balance, not the current balance, this is where you went wrong. Your first month, you need to budget for the ENTIRE balance on the card, not just the payment that you plan to make. You don't have to PAY that amount. You will just have some green available balance left over, reflecting the new charges made between your statement closing date and your payment date.

    Like 1
  • I suspect you are riding the CC float and would benefit from a payoff Goal to allow you to gradually increase the amount reserved for each CC payment until it covers the entire debt (i.e., the working account balance).

    Of course, if you can reallocate from elsewhere to make the Payment categories match the account balances right now while maintaining sufficient funds for the various higher priority categories, then so much the better.

    Whether you actually pay the entire debt (account balance) or just the amount for which you've been billed (statement balance) is a separate decision, but having paid-in-full (PIF) status means you can do either. (Most PIF users just pay the statement balance.)

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  • Victor Rodriguez said:
    First question is, was that the correct thing to do?

     Ideally, you would have budgeted for the entire account balance at startup. However, not everyone can afford to do that. You'll have to look at your budget to see if that's possible right now or you have to build up to it.

    At a minimum you must ensure the Available amount is at least what you send them.

    Like 1
  • Victor Rodriguez said:
    What is the significance of a negative or positive number in the activity column?

    Positive activity means more budgeted purchases were made than were paid off. Neither is good or bad, it's just showing you how the Available value is calculated:
          current available = last month's available + budgeted + activity
    (Exactly like all other categories, FWIW.)

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