Purchase incorrectly linked to credit card
After some help to make sense of why a purchase would appear in my debt.
I have a category for books, at the start of the month I made a book purchase and charged it to credit, I know this reflects as an overspend in the book category and any money I assign to it will automatically show up in the credit card debt category which is what happened when I paid off that credit purchase with my next income.
I have just made another book purchase, however I didn't use credit - I spent money that was in my bank account but was assigned to a different category 😔🤦♀️ (I know I shouldn't have).
When I went to adjust my budget, the book category showed an overspend and my credit card debt category showed an over-budget, so it was linking the purchase to credit like the last time but I never used credit.
I checked the transaction I manually entered and the payee was to the correct company, the category was to books and it was from the correct bank account.
Can anyone help me understand why this would have shown up against credit card debt/category??
There was nothing in the manual transaction that linked the purchase to credit at all.
YNAB prioritizes cash spending over credit spending. Let's say you had $100 in your book category. You spent $95 on books using your card. The $95 is moved out of your book category and down to your credit card payment category, ready to pay your card. But the money hasn't left your bank account yet. Then you got to the store and buy another book for $10 and you use your debit card and it comes out of your checking account. Well, now there is not enough money in your checking account to send $95 to pay your credit card, there is only $90. So now you are going to have $5 in credit card debt because you can't pay the bill in full. So, add an additional $5 to your book category and everything is fixed.
Sorry not sure if I explained myself properly... Hopefully this explains what happened better.
I had $0 assigned to books, made a purchase on credit (Afterpay) for books so the book category is showing as overspent (with that icon to indicate a credit card purchase). I received income and assigned money to the book category which then automatically moved that money to credit card, I then paid the credit card.
Now the purchase on credit has been covered and paid off..... there is no more assigned money in the book or credit card/Afterpay category.
2 weeks later I make another purchase for books but used money I had in my account (not credit/Afterpay), however my budget did not reflect this. The manual transaction I put in was from my checking account, correct payee and category (books) but the same icon that shows a credit card purchase appeared again and my credit card category was showing red as in over-budgeted.
I've attached screenshots to show what I mean. The transactions showing are from my checking account which had money in it. The budget picture shows how they came up once I entered the transactions. I have since moved money to cover the book category which has cleared the credit card/Afterpay category but I don't get why a transaction made from a checking account was reflected in the budget as credit ???
The problem is that YNAB does not have the fidelity to differentiate transaction order (it simply lumps all transactions together within the month). This can cause a lot of confusion when using a credit card. In my opinion if you paid the credit card off and then overspent a category that had previous credit transactions but used cash then YNAB should assign that to cash over spending not credit over spending. I pay my credit cards off often and actually had a situation once where I had paid 2 credit cards to 0 and then made a transaction using cash in a category that caused an overspend situation and YNAB assigned that cash transaction to 2 different credit cards, I was left really scratching my head trying to unwind that one. Of course if you correct the over spend the problem goes away.
The solution I chose to use is to convert my credit cards to checking accounts since I basically treat them as debit cards anyway, I do not need the credit card baby sitting YNAB provides, especially since the fidelity is not there. If you are a paid in full user you may want to look into this method. The previous version of YNAB (YNAB 4) actually treated credit cards like checking accounts. Another benefit of doing this is that all over spending will be red, regardless of type of payment, and all under funding will be orange.
Hi Ivory , if I'm understanding correctly, if you are saying that you used your DEBIT card instead of credit, have you checked your credit account register on the left hand side of your budget screen. If not go into the credit account register. If the $12.40 is showing there, check the transaction and move it to the bank account register using the edit button.
Hope that makes sense, as I had the same issue a couple of days ago after my optician appointment.