Starting CC balances--question from transitioning YNAB4 user

So I understand CC usage in YNAB4, but I'm still a little iffy on this new one, since I just started it yesterday (fresh start, not import).   I'm switching finally largely for the direct import after not really keeping up with the budget for the last year or so.   Financially we've been fine, but I'm sure we'd have been in better shape if I'd been paying attention.

For clarity, I use CCs for majority of daily spending.  All my CCs are paid in full monthly (statement balance).  I am not on the CC float as I currently have enough cash to pay off all balances on all my cards and fully budget rest of February/all of  March. 

I understand I have to budget for the starting balances on my cards.   However, when I link my CC and my bank account, I have a 5K payment that has cleared my CC but not hit my bank account yet.  That means this 5K isn't showing up as part of my starting balance even though it is.  The charge is pending so I assume it will clear checking on Tuesday after the holiday.  I've left the correct amount sitting in my TBB to cover it, so the cash is there and ready to be budgeted,  

I'm assuming the answer is simple, but I want to make sure I categorize the payment and adjust the starting balance correctly so that I don't mess up the credit card balances right of the bat.  (CC handling and work reimbursement have been my two largest obstacles to moving over.)  How do I do that?


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  • Adjust one or the other starting balances to account for the pending transaction. Either make checking $5K higher and enter the pending transfer, or making credit $5K higher (ie you owe $5K less) and delete the payment if/when it comes in via import. 

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      • WordTenor
      • Can we agree that goals are dumb and immature? Sure.
      • WordTenor
      • 4 mths ago
      • Reported - view

      rereading; I got the numbers backward but you get the idea, hopefully. One account’s starting balance will need adjusting. 

  • Thanks.  So I just manually adjust the CC balance to be $5060 higher and budget the payment and it will all work out?  That's easy enough.

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  • Hi Purple Yearling (2cd528ad6a0c)

    I'm  also a very recent switcher from YNAB4. If you genuinely aren't floating your credit cards (which it sounds like you aren't) then I would definitely recommend setting them up as overdrawn checking accounts rather than credit cards. Your budget will then work just like you are used to. No faffing around with 'budgeting for the card payment' as it's just a simple transfer from checking to card, just like in YNAB4.

    As for reimbursements, the closest workaround that works for me, is to actually create a pretend checking or cash account (a budget one, not tracking) for them instead of a category. I actually have one for each of my children and also my mum (who lives with us) and a work one to keep track of each as the balances can go up and down, above and below zero. Well the work one doesn't, but the others do. None of them are particularly significant amounts, it's more about just keeping track.

    It works like this:

    Say I order something from Amazon on behalf of my mum, or work, that goes as a transfer from the account I used to pay for it to the mum/work account. (Make sure to use the memo box to remind yourself what it was.) If/when I'm reimbursed, it's a transfer back again. This works as long as you don't use a YNAB credit card. You can make it work with credit cards (I did, before I realised how much easier it is to set them up as checking accounts instead) but it's a bit more complicated because the way YNAB deals with cc is different to a proper, fully 'on budget' account.

    The 'problem' with this is that you are potentially budgeting money that you don't actually have available (because you've lent it to someone) so (as YNAB warns) you now cannot truly trust your other category balances. This was the same 'problem' with the old 'red arrow' in YNAB4. YNAB will argue that this didn't represent reality, but it is reality for me. It's just as 'real' as putting money in a bank and assuming you can access it when you need it. (Frozen or lost card, anyone? And even banks collapse.) Or once you build up a good buffer, moving some of it into a savings account with a better interest rate but that might not be as easy/quick to access. It just then becomes a cash flow issue. Just like any bank, you just need to make your own judgement call on the risk, which will vary depending on each situation. I wouldn't do it like this if I was lending a large amount to a friend in financial difficulty for example. Or if my budget was still really stretched and couldn't cope with not being paid back/restricted cash flow. If I ever 'write off' what someone owes me (which does happen - family, obviously, not work so far!) then that's just a spend transaction from 'their' account, using whatever category balance I'll choose to cover the amount.

    For me, this does represent reality because conversely, if my daughter has lent me a tenner (transfer from daughter account to cash account) I don't want that to effect my TBB or available to spend categories either. (Which it would with any other method I've read about.) It's in my account/purse, but it's not 'mine'. It may have been helpful for cashflow when I borrowed it (maybe I left my purse at home or lost my card) but I don't want it anywhere near my TBB. It will remain as a white bubble/red number in the account list which a) keeps it out of my TTB so I *can't* give it a job and b) reminds me that I still need to pay it back. Just like an overdrawn checking account. The cash to pay her back is implicitly reserved (just like for the credit cards if you set them up as checking accounts) because it has never entered the TBB to be given any other job.

    Another example of this working: Say my son grabs some groceries for me on his way home from school, that I will then owe him for. I record this in YNAB as an outflow from the 'Son' account, using the groceries budget. Son account now shows as 'overdrawn', amount available for groceries goes down, but TBB doesn't change. The overdrawn figure in the accounts list is my reminder that I owe him some cash.

    Later, he wants to borrow some cash as he doesn't have change for the bus. I record this is a transfer from my cash account to the 'Son' account. No category needed (as it's just a transfer). Cash account goes down but 'Son' is now less overdrawn. It might even be positive (which means he now owes me). No change to TTB, or to any available amounts in any category. This is what I want. It's just a simple way of keeping track of how much we all owe each other, making sure it never gets too out of hand.

    Sorry - this turn into more of a waffle than I intended.

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