Credit card paid off from external source
My roommate paid off a credit card balance for me (and I now owe her). I already owed her money so that has a line item that gets budgeted each month. But how do I handle the transaction for the credit card? I closed that account since it's paid off but the transaction is still uncategorized. The credit card line shows as red and there is an uncategorized green balance for the exact same amount at the top of the Budget since it now thinks I have that money to spend. Since the money did not come from any of my accounts, what do I do?
Good question! Since that payment came from an outside source, you can enter it as a regular inflow to your credit card account. So the payee can be your friend's name and the category is Inflow: To Be Budgeted. You won't see anything appear in To Be Budgeted or the Credit Card Payment category, but you should see the account balance turn to zero. Let me know how it goes!
This solution doesn’t work if the respective charges put a given category into the negative.
For example, I used a credit card to pay for a charge which I knew would be covered by a non-YNAB account. The charge needed a category, so I put it under “Vacation,” which put the category into the negative (there wasn’t anything in it).
The card was paid with the non-YNAB account and added into “To Be Budgeted” for the credit card account, but the “Vacation” category still shows as in the red for that total amount. To Be Budgeted shows a zero balance.
*le sign returned* lol
I do appreciate your reply (though admittedly, the assumption that someone posting on here isn't familiar with YNAB sufficiently to use it is a tad condescending :D )
The 1st suggestion simply doesn't work. Check this quick screen capture for details. https://youtu.be/OF9_QB6xUEM
You already said why the 2nd option won't work, and that is because the reports will be incorrect.
There is a 3rd option, which also results in incorrect reports. Create a "deposit" to the checking account in YNAB and simply make the payment to the credit card account from there. But once again, the reports will be wrong.
As a note -- I am well aware that YNAB's philosophy is to have all accounts in YNAB or put all money into a single account. The former doesn’t work for my family for several reasons and the latter is just a bad practice by keeping all the eggs in one basket. Based on many, many posts on here and reddit, a good number of YNABers are dissatisfied with that approach, as well (though it is fair to assume that the same number are likely satisfied with it).
YNAB evangelists always say, "But this is how YNAB works! Just do it the YNAB Gospel way and it will work!" Then a sufficient end-users comment offer complaints/suggestions for improvements and YNAB eventually releases an update to alleviate the complaints. So, this is my feedback that YNAB sucks at handing inflows to debt from external sources. :) Again, thank you for taking your time to reply and suggest solutions.
One last thing on the credit card behavior. Another way to consider it.
Since the Vacation category was overspent at the time of the purchase and you knew that you were not going to fund that payment amount from the budget, an even more correct procedure would have been to move money from the CC payment category to the Vacations category at the time the Vacation overspend occurred. This explicitly turns the overspend into credit card debt in the current month (rather than waiting for the next month). Then, when the external payment was made to the card to cover the debt, nothing is out of whack.
What actually happens: 1. Credit card balance goes to $0; 2. Credit card payment remains $500; 3. TBB remains $0.
This is exactly what I except to happen, Here is my reasoning;
Everyone including you promotes YNAB as an envelope budgeting system, So when I budget I put money into an envelope for the credit card payment or as I use my CC I move money to my CC envelope from another envelope. Then I get a statement credit or someone gives money to my CC company on my behalf. CC balance goes to $0; TBB remains at $0 because I wasn't given the money to budget. There would still be $500.00 in the CC envelope for the original payment. I would have to take it out of the envelope and move it to TBB and budget it someplace else.