Refunds on Money You Never Had

Hey team - I've been searching the forums and haven't been able to wrap my head around refunds in YNAB, specifically refunds on money that I never actually had (shameful, I know.)

So I created debt on my CC. Spent money I didn't have / didn't budget for, and then returned those items. For example, say I spent $200 on clothes. When that transaction hit my CC I categorized it as "Clothing." Then I decided to return the clothing (because I am an adult and don't need to be spending money I don't have!!), and if I'm understanding the forums correctly, when that refund hits I should be assigning it to "Clothing" as well. 

That money doesn't exist, and yet by following this method it goes to my YNAB budget in the "Clothing" category, saying that I have $200 to spend on clothing and that isn't true. 

How do I resolve this? Do I move that $200 to my credit card payment to try and balance it out? I am feeling INCREDIBLY dense over this and it's making me insane! Hehe.

TIA for any help!

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  • Magenta Welder Credit card refunds can feel a bit mind-bending for sure - we can figure it out together! I'd love to gather a couple more details that will help us get this return all sorted in your budget:

    • Did the initial transaction and the return happen in the same budget month in YNAB? 
    • Did the initial transaction create overspending in your clothing category? 

    You did the right thing by categorizing that return back to the spending category - this will keep your spending reports happy! But depending on the answer to the above questions, it's possible, indeed, that the return transaction sent money from your Credit Card Payment category and into your clothing category. We can dig deeper into exactly what happened once we know more about the sequence of events.

    No matter the case, you're absolutely right that if you don't want those dollars in your clothing category, the solution now is to move them back into your Credit Card Payment category 馃憤馃徎

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    • Rachel you鈥檙e amazing, THANK YOU! And the random name assignment magenta welder is making me smile, hehe. 

      These are great questions and probably where I鈥檓 getting messed up! The spending occurred in December and the refunds hit in January. Yes, the original transaction did cause overspending in my clothing budget. 

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    • Magenta Welder Okay, yes, this is super helpful! Since the refund occurred in the next month, here's what happened: 

      • The initial transaction created overspending in December (represented by money not moving into your Credit Card Payment category). 
      • The month rolled over and the Available amount in your clothing category resets to zero. At this point, the debt is only represented by the increased shortfall between the balance owed on your card and the Available amount in your Credit Card Payment category.
      • The refund came in January - when you categorized it to your clothing category, money was moved from your Credit Card Payment category to your clothing category.

      We want to leave that transaction as is - because we do want it to offset the spending in your reports. But we'll follow the action of entering the transaction with another action: moving that money right back into your Credit Card Payment category from your clothing category.

      The first action keeps your reports happy, the second one keeps your Credit Card Payment category happy. Of course, let me know where I can add clarity here!

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