Credit Card flagged as Overspent, but all transactions are budgeted for - I'm confused!
Long time YNAB4 user who finally took the plunge to switch to YNAB as a 2019 resolution.
I was able to migrate all my data successfully, but did not choose to do a Fresh Start after the migration. The migration seemed to go smoothly and I could reconcile most of my balances including the To-Be-Budgeted number.
However, earlier this week I was suddenly prompted in the YNAB app that I had overspending on one of my credit cards. Here are the details that I saw at first:
However, when I tapped on "Activity for Jan" option, I got a set of details that has left me very confused:
As you can see it says the 99.87$ of spending on the card has been budgeted for. Further, a quick calculation shows that the 150.42 of "overspending" can be calculated by taking the +250.29 on 1/8 (minus) the -62.36 on 1/5 and -37.51 on 1/1. This doesn't make sense to me but it's almost certain I've made a mistake somewhere.
Could someone please help me figure out what I'm getting wrong?
You paid $250.29 on Jan 8, of which $99.87 was spending recorded in new YNAB and is therefore budgeted for.
Of the remainder, are the categories you spent from on your cc $150.42 up? If this is the case you will need to transfer the sums from you your spend category/categories to the credit card category.
the good news is that as you move forward in new YNAB you won’t have to worry about this again if your credit spending is covered by the categories you spend from.Reply
Hi Average Geek !
I think satcook is right, if all of your expenses we're budgeted for, I think the Starting Balance is the culprit! If you had an outstanding balance on a credit card when you set it up in YNAB, and you paid that in full but didn't budget for it in the Credit Card Payments category, it'll show your Credit Card Payment category as overspent. Budgeting for that balance in your Credit Card Payment category lets the budget know you plan to take some of the money you have and use it to pay off that existing balance. Here’s a video explaining how this works.
I hope that helps!Reply
I haven't forgotten about my promise to post here with updates, but the truth is it's taken this long for me to finally get a handle on what was happening with my credit card category balances. Many thanks to YNAB Support folks especially Kat H, who took the time to record detailed videos going through my accounts and helping me figure things out.
I'm going to provide a bullet point summary of what I've understood (taken almost verbatim from an email I sent to Kat H) but it's worth pointing a lot of this complexity in my case comes up from migrating a very long account history (nearly 6 years!) into nYNAB.
- The Basics:
- If there is overspending on a category using a credit card, the category will turn Yellow. You can choose to add to the category balance in the month to offset the overspending or let it roll over.
- If you roll over, that amount will transfer to the Credit Card spending category as this represents a debt to the Card company that should be paid (either in part or full)
- Hence, trying to increase the spending category balance in the next month won't make any difference. You have to add funds to the Credit Card spending category directly.
- In my case:
- At some point in the past, I had credit overspending on one or more categories across multiple cards.
- While I always pay my credit card statements in full, depending on the timing of the transaction I might have ridden the credit card float for that over-spending from one month's statement to the next.
- When I finally switched to new YNAB, those overspending started showing up again - either as Amber or Red flag in the credit card categories, because I had not budgeted for the over-spending before and was still essentially riding a float for these amounts.
- Those Amber & Red flags might go away in one month if I moved enough money from a budget category to the credit card based on spending, but it would likely come back in another month
- The solution then:
- Add funds to the credit card category so that the Card Working Balance and the Credit Card Category Available Balance match.
- If subsequent credit card transactions are from spending categories that have sufficient balance, then going forward there should be no problem.
- However, if there is credit card spending that causes a category over-spend, either cover the overspending in the category in that month itself or add funds to the credit card category in the next month.
I hope that helps folks who are similarly confused when migrating to nYNAB or are seeing Red flags in the budget even if they pay for their credit cards in full.Reply
- The Basics: