Overspending and creditcard/line of credit

Hi all,


I'm setting up a budget for our household. And we have a creditcard and line of credit, which behave more or less the same.

I've already noticed that if I add a transaction, and I have budgeted money for the category I want to use, it automatically moved funds to the cc/loc.

However, if I don't have anything budgeted for it, it doesn't do this. Which is somehow fine I guess. But now I am wondering, if I don't budget for it in the current month, which results in overspending, will it create the automatic transfers in the next months, once I budget for it?

Looking at the next month doesn't show this, but I can also imagine that overspending is moved to the next month at the beginning of that month.

Since I am using the trial, I'd like to know how this is handled.

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  • If you didn't spend budgeted money and don't have enough reserved for the payment, then you'll need to budget money to the payment category so you have enough or make a smaller payment.

  • The idea of YNAB is to not have any overspending hence the Rule 3: Roll with the Punches. If you have an expense you haven't budgeted for, YNAB's method would want you to move funds around your budget to reprioritise your money. To ensure this reprioritisation happens, YNAB will do it automatically at the month roll-over if you haven't done it.

    If the overspending is with cash, it reduces your To Be Budgeted, possibly taking it to negative in the new month. Which then needs to be covered in the new month by moving money around.

    If the overspending is with credit card or LOC, YNAB will assume you want to increase your debt. This means the overspending in the category will be reset to 0 and the CC/LOC payment category will not increase. If you want to pay this expense in the new month, you will have to budget directly to the CC/LOC category to reduce the debt incurred in a previous month. You know you can pay all previous debt on the CC/LOC when the available column for the CC/LOC payment category equals, with an opposite sign, the debt on the account (working balance, not just cleared balance)

  • When you make a credit card purchase, you obviously take on debt immediately. The Budget is the plan for your cash and cash alone. If there were Available funds in the spending category, YNAB helpful changes the job of that cash from "buy groceries" (for example) to "pay off CC debt". Otherwise, you took on debt without a plan in place to pay it off -- thus the yellow warning.

    You may move funds into that overspent category in that same month's area (or earlier) to achieve the automatic money movement. It's not uncommon to scroll back to correct late-month overspending. Obviously only money that was present in the budget during that month can be used, so typically one moves funds from some other category in the same month.

    If you don't correct the overspending and later wish to reduce CC debt, just budget directly to the CC Payment category.

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