Budget audit is OK but category shows overspending?

Hi! I am trying to understand if I can trust my YNAB data. I've read everything I could, and still don't know how to solve this. I've been using YNAB for six months, although I'm newbie here in the forums.

I performed a budget audit (https://docs.youneedabudget.com/article/203-unpacking-ready-to-assign) and everything matches. But I don't fully understand the process of budget audit, so I don't know if it is enough.

I have a category with overspending in the past, that apparently was not corrected timely (the same month). So, it now says something like: 

Funded    $10,000
Funded spending   $10,000
Overspending   $1,000

The category bar says Funded (because it is funded this month), it is mostly green, but it has a red section.

So, my question is: in order to trust my YNAB numbers, should I assign $1,000 in the present in order to cover that overspending in the past? Or was that already managed somehow?

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  • The past overspending was already covered. Since you talk of red I imagine it means the category with the overspent showed some red in the Available column. If that is true, then the overspending was automatically covered from Ready To Assign the next month. This means your Ready To Assign was $1,000 smaller than it would have been without the overspending before you assigned it.

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  • Thanks a lot for the reply!

    Actually, the available column showed yellow in October and November (because the overspending was in credit card, I guess). 

    So the overspending was automatically covered from Ready To Assign the next month.... that  makes sense! It is what I've read, and that would explain why my budget seems to be aligned with my actual accounts.

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      • nolesrule
      • Stealing From the Future fix is an improvement but is incomplete....
      • nolesrule
      • 11 days ago
      • 1
      • Reported - view

      Tan Piranha Overspending from purchases on credit cards is not covered by future reduction in RTA. it is covered by not transferring budget funds from the spending category to the credit card payment category, because you don't have cash to make a credit card payment on those charges.

      In other words, it means it's covered by adding to your credit card debt.

      Like 1
    • Tan Piranha If you're seeing red because of cc spending, that means you sent more to the cc than you had in the cc payment category. 

      If you can't cover credit overspending in the month it was incurred, you'll need to assign money to the cc payment category before you actually make a full payment. 

      Making a credit card payment with more money than available in the category is the same as cash overspending because that's when the money is actually leaving your accounts.

      Like 2
  • Any credit overspending that occurred in the past is resolved by moving money to your Credit Card Payment category. Once you're ready to pay that card in full again, the Credit Card Payment category will be a positive match of the amount you owe on the card. Does that help?

    Like 1
  • Thank you everyone for all your help! Unfortunately, it seems I am still missing how to solve this.

    Move Light Sound Life that seems to be the problem: making a credit card payment with more money than available in the category, causing cash overspending.  

    How do I solve it? I don't understand. I see $1,000 overspending  in a spending category (showing some red). So, I would assume that means that I must assign $1,000 in the present time (Jan). If I do it, I will see $1,000 in the available column,

    But then, when I switch to the next month view (Feb), I still see that same $1,000 in the available column. And (also in Feb), if I move those $1,000 to another category, the overspending comes back.

    So, it seems that when I try to move money to cover the overspending, YNAB acts like that money should stay there "available" forever?

    What am I missing? Marisa ?

    TLDR: I can't solve an overspending even if I try!

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    • Tan Piranha The way to fix it is different than the way to avoid it. 

      If your RTA of January (or the future-most month you've assigned money to) is $0, and none of your January categories are red, then you're good to go as far as YNAB accounting for the cash overspending. 

      The next question you need to ask yourself to move forward with this situation is, "How much will I need to put in my CC category to get things straightened out there?"

      If you're a Paid In Full (PIF) user, you'll want your CC Payment category available amount to be the positive equivalent of your negative CC working balance. Moving money to the CC Payment category in this case is a one-time event.

      If you're not PIF (maybe you're on the float, maybe you're paying down debt that's costing you interest), you just need to assign enough to the CC Payment category so that there's enough in there before you make the payment. In these cases, you'll assign more money to the CC Payment category each month as you chip away at your debt. At no point should there be red in your budget.

      Now, the way to avoid this in the future is to cover overspending in the category it happens in in the month it happens in. If you can't do that and have to carry cc debt over to the next month, you'll assign money directly to the cc payment category when you're ready to pay off that debt.

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  • Tan Piranha said:
    I don't understand. I see $1,000 overspending  in a spending category (showing some red). So, I would assume that means that I must assign $1,000 in the present time (Jan). If I do it, I will see $1,000 in the available column,

     Neither do I, unless you're confused about the columns in YNAB. Maybe a screenshot would help. Black out personal info.

    If you have -$1000 available in a category and you cover that overspending, the available should equal $0.

    However, in order to "cover" the overspending, you had to add $1000 to the category, which is reflected in the Assigned column. 

    Here's the category math: Positive Available from last month + Assigned + Activity = Available.

    So, in your case, I would expect a category that shows negative $1000 to look like this before you fix it:

    $0 Assigned +(-$1000 Activity) = (-$1000 Available)

    After you fix the overspending:

    $1000 Assigned +(-$1000 Activity) = $0 Available

     

    Now, if it's credit overspending (you said it's red, so that's unlikely unless you've got Toolkit settings selected, but let's learn here) - if it's credit overspending, then those transactions become budgeted spending on your credit card, which makes the $1000 fly up and sit in your CC Payment category so that you'll be ready to pay off your budgeted purchase. 

    Does any of that help? I suspect you're on the float, so it would be good to look up how to deal with that. I do it in an unorthodox way, but you would need to understand these concepts first:

    YNAB math of columns

    YNAB math of month turn - cash overspending

    YNAB math of month turn - credit overspending

    YNAB credit card mechanics - budgeted vs. unbudgeted spending; paying down debt; floating debt

    Like 1
      • Tan Piranha
      • Tan_Piranha.16
      • 10 days ago
      • Reported - view

      Move Light Sound Life  Thanks a lot! I mostly understand those concepts, but clearly I made a mistake that messed things up, and it seems that I don't understand well enough (yet) to fix it.

      Yes, maybe screenshots help! (note: local currency, not US dollars).

      This is how my category looks now (main section and right column). It doesn't look like you expected, I think. There you can see "Overspending $968.889".

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    • Tan Piranha Ok, I'm not used to using spending targets on the mobile app - I do my heavy budget work on the web app. If you have a computer, it will be easier for you to see more things interact.

      I think the discrepancy has to do with your spending target, not the actual category available. Are you really looking at July 2021 for those screen shots? I know you said it's now, but I didn't think targets persisted after their date. I would have expected the target to end six months ago.

      Here's my advice:

      #1 - Get out of the past. What's done is done, and there's no reason to clean it up there if you don't understand it. There are too many invisible variables.

      #2 - Reset the target. Ok, honestly, I would delete the target and use another method to remind myself what to assign/facilitate auto-assign. Targets are more trouble than they're worth.

      Maybe that white glove support can confirm if that behavior is expected for long-term spending targets. Do those targets really keep bothering you about past overspending? What about the principal behind Rule 3? What about the fact that the official line for dealing with credit overspending is *not* to cover from the CC Payment category, which I have been taken to task for suggesting? That's the way to have a clean budget. It seems that's the way to make your targets work, too. 

      This would be why YNAB needs an army of people to solve user issues. I would expect that the set of users who don't understand how to clean budgets in the past has a lot of overlap with the set of users who may need to do so, and who may use targets without understanding their idiosyncracies. 

      Tan Piranha , Please pardon my rant. Is directed at some stupid design choices that I have never agreed with. If my guesses are correct and you still want to use targets, I would suggest YNAB support walk you through how to fix the past and realign your targets. 

      I just only use monthly funding targets and do the math myself. Auto-assign works logically.

      Sorry I couldn't be more help.

      Like 1
    • Tan Piranha I cannot see your screenshots, but I think when you say a category is "showing some red" you're talking about the progress bars, not necessarily the color of the category's Available balance.

      Until you become more familiar with the mechanics of how YNAB calculations work I would suggest you: 1. Turn off the progress bars, and 2. Stop using targets (at least for now) and 3. Check for overspending (a red or orange Available amount) continually and correct as they happen (which usually includes checking in the prior month until all transactions for that month are cleared).

      Instead of using a target you can put the amount you want to contribute monthly in the category title or use the "assigned last month" figure for each category ( which is what I do to keep my monthly budget consistent). 

      Like 2
      • Ceeses
      • Ceeses
      • 10 days ago
      • Reported - view

      Tan Piranha It doesn't need to be corrected in that category. There is no red in your available column. Which means the past overspending was dealt with for that category.

      But you need to look at your credit card payment category. What is the available in that category? Is there enough there to pay for your next payment? If you don't carry debt or need future income to pay for past expense (the credit card float), you need to check if the available amount is the same but opposite sign as your negative credit card account working balance. If not, you need to assign money directly to this category to get those equal.

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      • MXMOM
      • MXMOM
      • 10 days ago
      • 1
      • Reported - view

      Tan Piranha the screenshot you provided shows the history of the funding of the category. The red there is different from the red on the budget itself (i believe). I actually can’t recreate that in my budget. What does the budget show?  Post this screenshot of your budget (see mine as an example). I very seldom look at the view you posted. In the end, I suggest you reach out to support from within the app, give them permission to view your budget, and they will be able to explain EXACTLY why this looks the way it does. 

      Like 1
  • Move Light Sound Life said:
    Please pardon my rant.

     Thanks a lot for the ideas! No worries, I understand.  The behavior of the target is not intuitive. Actually, if I delete the target -as you suggest-, the category overspending disappears. 

    Like 2
  • Ceeses said:
    you need to check if the available amount is the same but opposite sign as your negative credit card account working balance. If not, you need to assign money directly to this category to get those equal.

     Well, this is the problem. It is such a noob mistake that I am embarrassed! It is worrisome how can one do everything wrong when you think you are doing it ok.

    This is what (I think) happened, and what I will do to solve it. I share this so we all can learn one more weird mistake that people can make. And also to validate my solution, if anyone would be so kind to check it.

    1. I created a "by date" target (July 15th) for a category ("Home decor").
    2. I continued spending from "Home Decor" past July 15th, sometimes assigning less than what I was spending. I remember thinking "I will fix this next month", but I did not really understand how credit card debt operated. 
    3. Since I had a "by date" target in a category with significant overspending ("Home decor"), and the "by date" target displays cumulated overspending , I was fortunate enough to see this red flag, which alerted me something was wrong.
    4. But, at the beginning, I thought this was a problem in the "Home decor" category, since the red color was there, right? Wasn't it obvious? :)
    5. After reading all your messages, I started remembering: I created debt at some point in the past... but I don't have debt in my credit cards... how is that possible? how was that fixed?
    6. Now I realize I missed the number 1 rule when working with credit cards in YNAB. I was making credit card payments (several months) for more than what I had available in the Credit Card Payment category, due to the "Home decor" category, but also due to several other minor mistakes that I didn't notice until now. I never checked that "available for payment" were equal to "working balance" for my credit cards. I just paid them. 

    So, below you can see attached... my credit cards working balance (total: $2.248.838) and my available for payment (same order, total: $1.012.992), therefore a gap of $1.235.846 which I will solve by assigning directly to the Credit Card Payments categories. Does this solution make sense?

    Again, thank you all for your valuable time and availability to help me.

    Like 1
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