Permanently in overdraft

Here in Israel, many people live in permanent overdraft. I don't think our bank account has been out of the red for around two years. It seems like YNAB isn't really set up to handle this situation. Does anyone have any experience with it? Even with work, it'll be at least a year until we're back in the black. It would be nice to start budgeting and thinking about priorities before then.

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  • Our main checking account is a mortgage account that works like that, it's very common where I'm from but doesn't seem to a something the US has. I've done a work around by making my account balance the available in the account. So for me currently the account is overdrawn by 10000 but I have 5000 available because the limit is 15000, so I set my account balance as the 5000 available. 

    I then have put a 15000 debt in the tracking area so the reports still show the true debt I have. 

    In the budget I have put a line called revolving credit (that's what this type of thing is called here) and each month budget money for the interest due and have also set a goal to pay it off so eventually that 10000 in debt will be gone. 

    I hope that helps, probably isn't the way ynab would say to do it, but I've been doing it that way for 2 years and it works for me.

    Reply Like
  • Yeah. You can permanently live in bank overdraft in Canada too.  I did that for a few years myself. Bad times. Overdraft in the US is not the same concept from what I gather.

    I no longer have the option of overdraft. I eliminated it from my accounts when I was able to self-fund through any overdraft risk, and doing that reduced my bank fees.  But I do something similar to what  PhoenixFlying  suggests for my line of credit account.  Rather than enter it as an on-budget account, I entered my line of credit as a tracking account, and I have chosen the other liability account type for it. My thought is that if I should ever need to borrow from the LOC, I would enter a transfer from Line of Credit to Chequing (categorized as Income To Be Budgeted), then budget those funds where needed to deal with expenses. The balance on that account is currently zero. If I entered a transfer from it, the amount transfered would then display as a negative amount in the tracking account. When repaying it, I would enter a transfer from Chequing to Line of Credit, until it was back to zero.  In order to make this work, you will need a budget category to budget your payments to overdraft. I suggest you call it Overdraft Smackdown. 馃檪 Good luck!

    Reply Like 2
    • HappyDance Thanks very much for your explanation!  I live in Canada and was wracking my brain about how I should handle the overdraft on my deposit account.  Your method really helped me!

      Reply Like 1
      • HappyDance
      • YNABing consistently since 2014
      • HappyDance
      • 7 mths ago
      • 3
      • Reported - view

      Itchy McScratchy  

      Glad my post turned out so helpful for you. Fingers crossed that it gets you out of any mess quickly.  If you run into issues with a tracking account method, you can check out this step-by-step instruction post in anther thread on overdraft, posted by dakinemaui .  It is a practicable and workable method of dealing with Cdn- or UK-style overdraft in YNAB.

      Reply Like 3
    • HappyDance Nice!  Thanks again!

      Reply Like
  • It sounds like you're referring to what we call off set accounts. There is a way to follow that in YNAB but, apologies in advance鈥擫ONG directions:

    In order to set up your offset accounts in a budget, you will need two key pieces of information: the current balance of your account, and the maximum credit line on your account.

    Step 1: Add Your Offset Account

    You鈥檒l add an account that represents your current debt balance. This is the account you will spend from and record all transactions in.

    Add a new account and select account type 鈥淐hecking.鈥
    The balance of this account should be set as the current balance of your offset account and will be negative.

    Step 2: Add an Offset Credit Limit 鈥淎ccount鈥

    This is not a real 鈥渁ccount鈥 with your bank, but simply a way of expressing your borrowing limit in a way that offsets your debt balance. 

    Add a new account and select account type 鈥淐hecking.鈥
    The balance of this account should be set as the limit you are able to borrow, expressed as a positive number. For example, if your borrowing limit is $150,000, enter that as a positive amount in the account set-up process.

    Step 3: Check your Budget

    If your accounts have been set up correctly in steps 1 and 2, you should now see a positive amount in To be Budgeted on your budget. This number represents the difference of what you can borrow and your current debt balance. It does not represent liquid assets, and you should not plan to spend all of it!

    Step 4: Set a Goal

    Your next step is to set a goal to pay off that offset balance completely. You want out of that debt, right?

    1. Establish a category in the Debt Payments category group called 鈥淥ffset Payoff鈥 (or whatever you鈥檇 like to call it!).
    2. Select that category and click 鈥淪et a Goal鈥 in the Inspector.
    3. Choose a Target Category Balance by Date goal.
    4. For the amount, enter the credit limit of the offset account.
    5. For the date, enter the month and year that your loan matures (when your bank will require you to have paid off your loan).
    The amount displayed in that goal is the minimum you should set aside each month to pay down your offset account to zero. Budget at least that amount now! If you don't, you'll be living on debt, not the assets you are depositing in the account.

    Step 5: Budget

    The remainder of the amount in To be Budgeted should be divided among your categories. But remember that this represents all of your available credit. You should budget and spend as little of it as possible, budgeting most of it to your Offset Payoff category. In the future, you'll focus on budgeting new funds that arrive from new income.

    *As noted above, spending any of these funds before depositing more income increases the amount you owe on your Offset Account.

    Step 6: New Income

    This is the exciting part! When you receive new income, enter it in the Offset Account as To be Budgeted. This money will be available to budget, and unlike your initial budgeting in Step 5, represents real money! Be mindful of budgeting first to that Offset Payoff category to meet your goal, and follow our prioritization process.

    Step 7: New Spending

    New spending should always be entered in the real-life, real-world Offset Account. This will allow you to track an accurate balance on that account.

     

    Let me know if I'm on the wrong page here! :)

    Reply Like
      • HappyDance
      • YNABing consistently since 2014
      • HappyDance
      • 1 yr ago
      • 2
      • Reported - view

      Faness at YNAB 

      I think your detailed procedural is something to be used for someone using an offset account or an all-in-one account (as we call them in Canada). This implies that all the accounts and debts are in one big pot and separating debt from asset, when complicated by mortgage and equity, is a math exercise.

      Overdraft is something else. I suspect that the overdraft referred to by the OP is more of a line of credit feature, which is attached to one specific account. I have no experience with Israeli banking, but this is fairly commonplace in Canada. We can have an overdraft feature on an account and it might stay negative for a very long period of time. Overdraft and offset are not the same product.

      Reply Like 2
    • HappyDance aha! Thanks for clarifying! I thought it sounded like an offset account but I wasn't too sure. In the US an overdraft account is cash overspending. If you have $50 in your checking account but you spend $75, the account is overdrawn by $25 - this usually comes with a number of bank fees and most banks won't allow you to make any other purchases while the account is overdrawn. At my old bank it was $35 each day the account remained overdrawn. There isn't an option to pay it back over time, so when money is added to the account the overdraft portion is immediately taken by the bank (along with those fees). If the account stays overdrawn for too long, then it's closed by the bank and the balance due is sent to a debt collection agency. Overdraft can be a very scary thing here.

      If it's more of a line of credit, I'd definitely suggest setting it up that way. Then, YNAB can help you budget for that 'credit spending' and pay it back at a later time. :)

      Reply Like
      • HappyDance
      • YNABing consistently since 2014
      • HappyDance
      • 1 yr ago
      • 3
      • Reported - view

      Faness at YNAB 

      Overdraft can be really pernicious. Canadian bank accounts don't come with automatic overdraft, you have to apply for it and have reasonable credit in order to get it, and it's usually opened at $500 or $1,000. My bank recently sent me a congratulations, you're pre-authorized for an overdraft in an amount equal to my entire take-home income for a month! I mean, Yeee-ikes! I will not be taking them up on their offer.

      The difference between a line of credit and overdraft is that the LOC is usually separate from your chequing account and you pay interest monthly on whatever you've borrowed. Overdraft lives in your chequing account and immediately takes an amount from your paycheque that is equal to how much you owe, the entire amount you owe, which leaves you with a seriously reduced amount of cash to handle your expenses, and the sure knowledge that you have to use overdraft again for your essential expenses. You tell yourself that you will not spend on anything that isn't necessary in order to not max it out, but It's very hard to not spend the entire amount available to you.

      I think it takes a lot of discipline to get out of overdraft, and I might even say that I think it takes even more discipline than dealing with other types of debt because it is infused in your account and becomes indistinguishable from your own funds. It's like trying to diet and eat salad with a plate of chocolates sitting on the table in front of you. What's one chocolate? you say to yourself, and this inevitably sabotages your progress.

      Reply Like 3
    • Michele I'm pretty sure I can understand anything explained to me in chocolates, so thank you for that! 馃榿

      That sounds like dangerous territory and a fine line to walk. It's good to have that sort of safety net if you need it, but at the same time needing it means already reaching a point where a turn around is necessary. Here's this line of credit which is really the end of your money and where you should be forced to stop spending, but we're going to let you go beyond that... Yikes is definitely right! 

      Reply Like
      • Albert
      • Cadet_Blue_Disk
      • 1 yr ago
      • Reported - view

      Faness at YNAB I'd love to have an easier way to do this.  Here in New Zealand it's very common to have an offset account where you'd be in debt for 20+ years. It would be nice if there was a sleek way of doing this without too much fiddling.  

       

      Especially to help out less savvy users.  I constantly try to get people on board the YNAB train but when cases like this comes up, it's not a great look and they get confused.

       

      Cheers,

      Reply Like
      • Ceeses
      • Ceeses
      • 1 yr ago
      • Reported - view

      Albert Actually  Faness at YNAB  explanation might be long to read but it's not complicated. You basically start by creating 2 accounts: one you will work with and one that is simply set and forget. Then the rest of the explanation is explaining the best way to budget to make sure your debt is paid on time. It's simply: use the tool to know the min. amount you need to save per month to ensure you pay the debt in time, then budget to your debt every month for at least this min. amount. 

      But I agree with  HappyDance , I'm not sure offset account is the best term for what Faness is describing. It's spot on for the OP problem though who has the overdraft in his/her bank account. I guess every country call these debt facilities differently.

      Reply Like
    • Ceeses Thank you for the short summation! That made me think it might be best to go through and try to shorten those directions somehow.

      Albert If it's an offset account those long (sorry about that!) directions should do the trick! If it's a line of credit attached to an account, or something else along those lines, it might be a better idea to set it up as a separate account (depending on what the account actually is).

      Reply Like
      • Ceeses
      • Ceeses
      • 1 yr ago
      • 3
      • Reported - view

      Faness at YNAB Actually, having detailed instructions is good. But starting with a short summary of what is required to do could help users to know where they are going before starting with the details.

      Reply Like 3
    • Faness I have completed Step 2, but just wanted to check on Step 1. I already have an existing checking account that all the transactions come in and out of and it doesn't currently have a debt balance. So do I leave it as it is? (I have just arranged an overdraft for house renovations but haven't spent any of the $ yet).

      Reply Like
    • Hi Khaki Unicorn !

      Is it an offset account? What you're describing sounds like the overdraft protection we mentioned in the other comments. If that account has a positive balance but might someday go negative if you overspend (fingers crossed that doesn't happen!), you can set it up as a normal Checking account in YNAB. :)

      Reply Like
    • Faness  No it's not an offset. It's an overdraft that we plan to use for house renovations. Will just set it up as checking account and not create the 2nd account.

      Reply Like
    • Khaki Unicorn When the account goes negative in a checking account, it affects your To Be Budgeted. Any money you receive in that account, goes to cover the negative amount first and anything more than the negative amount, will be left for you to use in your budget.

      Reply Like
    •   Faness this is a great guide and imho should be added to the general overdraft support doc.  I think the doc should also be updated to highlight the fact it's dealing generally with the US idea of an overdraft. I had worried that YNAB wasn't going to work me due to the way overdrafts work in the UK, but this seems like a simple and effectively solution.

      Thanks

      Nick

      Reply Like 2
    • Cadet Blue Cheetah 

      I'm happy you found this helpful, Nick! You're right, the overdraft documentation is geared towards the US process. I'll pass this feedback along to make it a bit clearer! :)

      Reply Like
      • Peter
      • Professional Designer, Web Developer
      • lasty
      • 5 mths ago
      • Reported - view

      Faness Dang, I could have used this explanation the last five years I've been in overdraft. Trying to get out of it without the method you've explained was a mess and riddled with setbacks.

      Can you tell the others in your team that when somebody asks support about budgeting while being in overdraft and they're not from the US this might be the right explanation?

      Reply Like
      • Technicolor Cheetah
      • Not sure when I became a cheetah...but I'll run with it
      • technicolor_cheetah
      • 5 mths ago
      • 2
      • Reported - view

      Peter Faness

      Or, wild thought, maybe have some of the non-US YNAB crew write user manuals/suggestions for various parts of the world.  A Kiwi is going to be better at explaining the differences and accommodations necessary for various New Zealand realities than someone from Minnesota or Nevada.

      Reply Like 2
    • Hi Peter ! 

      I'm happy this explanation helped! I'm going to pass this feedback and Technicolor Cheetah's idea along to the team. We want the documentation we post and recommend to be as clear as possible! :)

      Reply Like
      • Peter
      • Professional Designer, Web Developer
      • lasty
      • 5 mths ago
      • 1
      • Reported - view

      Faness I suggest a guide along these lines: "Depending on where you live in the world, you may encounter other types of credit, debt and overdraft. Here's how to identify them and some best practises"

      I suspect I had such a hard time because I didn't understand that overdraft in my vocabulary is very different from overdraft in the US (I think?) and following the corresponding guides and suggestions from support didn't clear this confusion up for me

      Reply Like 1
      • Peter
      • Professional Designer, Web Developer
      • lasty
      • 5 mths ago
      • Reported - view

      Faness oh and perhaps a note on the overdraft guide with a short definition would be helpful for this as well

      Reply Like
    • Peter I hope you don't mind me stepping in for Faness where! We appreciate your feedback on that, to let us know where we can improve our documentation on these type of accounts, and the additional details. I've let our team know!

      Reply Like 1
  • Albert Faness at YNAB  I'm also in NZ with a new offset/ revolving credit mortgage structure - was really struggling to work out how to set up YNAB with the same as I've used and loved YNAB the last couple of years. I've just done a test budget with Faness at YNAB 's suggestion above which works well.- thanks! But as a reasonably savvy, non-new YNAB user I've found it super difficult to find any info on this before now- perhaps some clearer info under your help docs? It's pretty difficult to find answers buried midway through a forum post! I'm pretty sure I would have given up if I wasn't already a YNAB-coolaid drinker :) 

    Reply Like 1
    • Lavender Koala I'm happy to hear you already like the coolaid! ;)

      Thank you for the feedback! I hadn't realized this wasn't covered in the help docs! I'm going to pass this along to see if we can't get that rectified!

      Reply Like 2
  • An overdraft is a line of credit in most ways.

    The method I use is to set up a credit card account called overdraft. Whenever the checking / current account went overdrawn I would fund it from the credit card account to ensure it never went below zero. I treated the overdraft in the same way as a credit card in YNAB as it is similiar in many ways.

    This helps me see the overdraft as a separate debt that I can budget for and pay down.

    Reply Like 3
  • I also live in New Zealand and have a revolving credit as part of my mortgage (called a Flexi Home Loan). I'm trying to keep this account balance slightly negative (but not too negative) for the life of my mortgage and put any surplus towards my fixed mortgage account.

    I'm new to YNAB and have wasted multiple hours trying to get my accounts to do something sensible using a Line of Credit account type. If I weren't so determined, I would have given up long ago.

    I just found this forum, but after reading it I'm still confused about the best way to set up my accounts.  The chatter about Overdraft Protection in this forum is also confusing. I appreciate what Albert has said - there has got to be an easier way.

    Currently I'm still having problems  - either with 2 accounts and with way too much money available to budget or with 1 account and no money to budget.
    What YNAB account types do I need to set up to do budgeting when I have a New Zealand style revolving credit account? The United States is not the center of the world.

    Reply Like
    • Hi Spring Green Horn !

      Sorry for the delay here! Did you follow the steps above and add the two separate accounts? If so, the extra funds you're seeing are from the unused portion of your credit limit. You should budget that amount towards your Offset category because those funds are sitting in your Offset and aren't being used in your other categories.

      Reply Like
  • Hi all - sorry to bring a topic back from the dead but - I cannot find any other support. I have an account which, for various reasons... is 拢10,000 into an overdraft. I'm not clearing it first because the interest rate is far lower than any of my other debts. But it is the true balance and it's an account I use every day.
    I'm in the UK - there doesn't seem to be any way of handling this, quite common, occurrence at all?

    Reply Like
      • Jannelle
      • jannelle_ynabsupport
      • 7 mths ago
      • Reported - view

      Tetsugaku It sounds like it (for the most part) would just be handled like any other debt account? But you don't spend from it, correct? You just pay it off (but not as aggressively as your other debt accounts)? 

       

      Anyway, I would add it as a Tracking account (Liability), so it won't affect your daily budgeting and you can make transfers as needed (payments or withdrawals). 

      Reply Like
      • Tetsugaku
      • Tetsugaku
      • 7 mths ago
      • Reported - view

      Jannelle thanks for the reply I appreciate you taking the time. 

      I actually do spend from the account, all the time. 

      I鈥檓 a contractor with a business, it鈥檚 the business account that鈥檚 overdrawn. I鈥檓 the sole employee and all my money comes in through there. I will be paying it off, but it鈥檚 the debt with the lowest interest, so it goes last. This means I need to use the account all the time, but I also need a true balance. 

      What I鈥檝e done, for now, is set up a new YNAB account that doesn鈥檛 exist in real life, for the total available credit of the OD and put the true balance of the real account in. This gives me my true available funds. 

      However. It鈥檚 obviously a hack and in a couple of years time when I come to pay the OD off, it will cause problems. So on that note could you ask for this to be out on the roadmap for the developers and UX? This is not an uncommon situation in the UK at all so there is a use case for it. 

      Thanks!

      Reply Like
    • Hi Tetsugaku !

      What you described is currently how we suggest handling an offset account. As you mentioned, it allows you to have those funds available in your budget. When you close the account, you'd close both the overdraft account and the extra account that's been added.

      You can let our development team know how you'd like to see those accounts treated by submitting a Feature Request. That form goes directly to the development team, so be as detailed as you'd like! :)

      Reply Like
      • dakinemaui
      • dakinemaui
      • 7 mths ago
      • Reported - view
      Tetsugaku said:
      when I come to pay the OD off, it will cause problems.

      Not sure what problems you anticipate. Once the OD funds are segregated from your normal categories, you can leave it forever. Or make a single to drain the OD account/category and close/hide them if you really want to sweep it under the rug. 15 second effort.

      If YNAB were to implement it, they would probably do the same thing but not make that OD account visible. However, I really cannot imagine how ongoing usage could be any easier.

      Reply Like
      • Tetsugaku
      • Tetsugaku
      • 7 mths ago
      • Reported - view

      dakinemaui please - this is just a dirty hack and you know it, don't be an apologist for YNAB. Basic functions, like having an actual true balance, the easy ability to plan towards paying off the OD in an ordered way, are just not available and they should be given that the entirety of the UK runs like this, businesses and the public. It's a poor work around that should be instead baked into the system.

      Reply Like
      • dakinemaui
      • dakinemaui
      • 7 mths ago
      • 2
      • Reported - view

      Tetsugaku I really don't think we are talking about the same thing. I developed my own workflow shortly after launch (a recent description of it linked by HappyDance a couple days ago, here it is again), which does everything you just mentioned and some you didn't:

      • Make a spending plan that includes both cash (if any) and overdraft funds
      • Facilitates development of good habits (e.g., covering all overspending)
      • Actual (negative) balance on your checking account -- reconciliation is seamless
      • A clear plan toward getting off the OD, with obvious indication of progress
      • Easy setup and easy teardown should you wish to do so

      I'm certainly not a YNAB apologist, evidenced by the scathing criticism I've levied their direction at times. Over and over, I've talked about the lack of built-in overdraft capability (and many other things, for that matter) and railed at their attempts at guidance (still present in the user's guide, BTW).

      At the end of the day, though, people need something that works. I've had numerous UK users send their appreciation and feedback that it's exactly the workaround (no argument that's what it is) they needed to continue using YNAB. It does utilize an auxiliary account to inject the overdraft funds into the budget, but being able to see the inner working of your car doesn't stop you from driving from A to B does it?

      Sure, it would be nice if YNAB had something built-in, but there are a lot of things that could be improved about YNAB that have yet to see attention from the devs. (In other words, don't hold your breath.) Again, if you want something NOW that's effective and easy to use, feel free to give it a go.

      Reply Like 2
      • bevocat
      • Sometimes, It Just Sucks to Be You
      • bevocat
      • 7 mths ago
      • 1
      • Reported - view

      Tetsugaku None of us is being an apologist for YNAB. If you want to make it work, dakinemaui has kindly volunteered his time to show you all how it can be done. What you do with that information is up to you.

      Reply Like 1
      • Tetsugaku
      • Tetsugaku
      • 7 mths ago
      • Reported - view

      bevocat with respect - that is being an apologist. YNAB is not feature complete, for the UK, under a very common scenario. The work around is convoluted and would not be required if the functionality was built in, it's the very definition of a dirty hack. It's not resilient or reliable, nor is it fire & forget.

      Reply Like
      • bevocat
      • Sometimes, It Just Sucks to Be You
      • bevocat
      • 7 mths ago
      • Reported - view

      Tetsugaku I don't disagree with you on that point. Congratulations. So do you want to be right or do you want to be happy? I choose happy.

      Reply Like
      • Tetsugaku
      • Tetsugaku
      • 7 mths ago
      • Reported - view

      bevocat Right. That's absolute. Happiness, which I also am, is relative.

      Reply Like
      • Tetsugaku
      • Tetsugaku
      • 7 mths ago
      • Reported - view

      Not that my money situation is making me happier :( YNAB however, is.

      Reply Like
      • Khaki Storm
      • YNAB book topics online: https://support.youneedabudget.com/r/q5w48j
      • Khaki_Storm.1
      • 7 mths ago
      • Reported - view

      Tetsugaku one of those words I don't understand. If I made a mistake, I apologize for it. If I want to defend my position and argue for it, I'm an apologist. 

      Reply Like
      • bevocat
      • Sometimes, It Just Sucks to Be You
      • bevocat
      • 7 mths ago
      • Reported - view

      Ben K. I figured it meant trying to help someone cope with something we've both acknowledged is a problem. Apparently. Or something.

      Reply Like
      • Tetsugaku
      • Tetsugaku
      • 7 mths ago
      • Reported - view

      bevocat I鈥檓 sorry I鈥檝e used confusing words. 

       

      Your solution is is a hack. A work around. Making the system do something it鈥檚 not designed to. That鈥檚 a hack. 

       

      The sustem shoild be designed to do what do what people need it to do. Therefore it needs changing. See?

      Reply Like
      • Khaki Storm
      • YNAB book topics online: https://support.youneedabudget.com/r/q5w48j
      • Khaki_Storm.1
      • 7 mths ago
      • Reported - view

      bevocat terms matter :) 

      Reply Like
      • bevocat
      • Sometimes, It Just Sucks to Be You
      • bevocat
      • 7 mths ago
      • Reported - view

      Ben K. You're right, they do matter!

      Tetsugaku Firstly, it's not my solution; I'm just pointing out that one of our other forum members was kind enough to give generously of his time to you to help you out and in repayment of that you were rude and ungrateful to him and he deserves better than that. Secondly, I don't see where anyone ever called it a solution. Thirdly, we're agreeing with you. Why are you being argumentative about it?

      Reply Like
      • Tetsugaku
      • Tetsugaku
      • 7 mths ago
      • 1
      • Reported - view

      bevocat I鈥檓 not being rude or ungrateful I鈥檓 being blunt and to the point because life is incredibly short. 

       

      This is is a paid service. Advertised internationally. It has holes in its functionality.  Gaping ones. The work around is a dirty hack. I design software more complicated than this as a particularly well paid consultant and as a paying customer I鈥檓 at liberty to point out it鈥檚 short comings. 

       

      Ironicallt not not paid enough to get myself out of a financial hole without the help of YNAB but that鈥檚 besides the point...

      Reply Like 1
      • bevocat
      • Sometimes, It Just Sucks to Be You
      • bevocat
      • 7 mths ago
      • 1
      • Reported - view

      Tetsugaku By all means, point out the product's shortcomings.

      It nevertheless is rude to call people "apologists" for trying to teach you how to bail water out of the lifeboat we're all in together, however.

      If you read half as much as you type, you'd see lots of us here pointing out shortcomings as well, and then getting down to the business of getting on with it, because as you say, life is short.  Too short to simply curse the darkness instead of lighting a candle. Perhaps you'd care to contribute to the efforts of the people who volunteer their time to produce the YNAB Toolkit browser extension? Perhaps this is something that could be addressed with the browser extension?  Or do you look down your nose at the toolkit as a dirty hack too?

      Reply Like 1
      • Tetsugaku
      • Tetsugaku
      • 7 mths ago
      • Reported - view

      bevocat there are no absolutes in social etiquette. You *choose* to think it鈥檚 rude. I am not responsible for your thoughts, only you鈥檙e responsible for those. 

      And no, a browser extension couldn鈥檛 deal with this problem. It鈥檚 on the data and behaviour level, not interface. 

      Reply Like
      • bevocat
      • Sometimes, It Just Sucks to Be You
      • bevocat
      • 7 mths ago
      • 2
      • Reported - view

      Tetsugaku You have opinions about the shortcomings of the product and I have opinions about the shortcomings of your treatment of your fellow forumites. Fortuitously, we are both able to express those.

      I honestly didn't expect that the toolkit could deal with it, but I was curious whether you saw the use of that as a dirty hack too. I personally feel that many things in the toolkit are important enough that YNAB ought to bake it in to the product, but stamping my feet about it has yet to result in any forward motion on their part. Therefore, I am enormously grateful to the volunteers who build the toolkit extension and the people on the forum who help me learn how to use it.

      Reply Like 2
      • Tetsugaku
      • Tetsugaku
      • 7 mths ago
      • Reported - view

      bevocat good for you. Hope you鈥檙e happy. 

       

      As for volunteers helping out with a paid, for profit product? A little hard to swallow. 

      Reply Like
  • Another uk person here. With a lot of debt. Husband and I both have current (checking) accounts with big overdrafts (ie agreed negative balances on which we pay low interest to the bank), and between us we have 10 credit cards, all carrying balances we can鈥檛 clear month to month, and 2 loans. Our starting account position total gave me the shudders when I set YNAB up! It was good to know exactly where we are for the first time. Problem is, when either one of us gets paid, our checking account goes (briefly) into positive balance, and we have a tiny 鈥榞reen鈥 to be budgeted amount, but not enough to even cover minimum card/loan payments, let alone groceries, bills etc.  Struggling to see how we can use YNAB to sort this out. Our overdrafts are our least toxic borrowing, we are unlikely to pay those off first. But if there鈥檚 never enough in 鈥渢o be budgeted鈥 to make sense... and as soon as we allocate some of it / do a couple of transactions,  we鈥檝e nothing to budget, but we need to use the overdraft to cover. We want to sort this out, and I am hoping YNAB will help, but can鈥檛 see how to set it up.

    Reply Like 1
      • Tetsugaku
      • Tetsugaku
      • 7 mths ago
      • 1
      • Reported - view

      Slate Blue Tugboat I鈥檓 in a really similar situation, although only 3 (!) cards. What I鈥檝e done for now is create an account in YNAB that doesn鈥檛 exist in real life, with a positive balance of my total overdraft. I don鈥檛 use or touch that account. That makes my available funds to budget, true. Now, long term this is no good when I鈥檓 in the process of paying the overdraft off, but I鈥檓 2 years out from doing that, minimum. So for now I鈥檝e got this hack, and I鈥檒l deal with that problem in 2 years when my CCs are cleared and my loans are settled!

      think that would work for you?

      Reply Like 1
    • Tetsugaku yeah that seems like the best solution. Is going to make reconciling account balance etc a bit more of a pain, but achievable!

      Reply Like
      • dakinemaui
      • dakinemaui
      • 7 mths ago
      • Reported - view

      Slate Blue Tugboat No issues reconciling whatsoever with the approach HappyDance linked. The chequing account balance is negative, matching that of the real world to the penny.

      Reply Like
  • Tetsugaku and Slate Blue Tugboat

    Here's a link to a step-by-step instruction post in anther thread on overdraft, posted by dakinemaui .  It is a practicable and workable method of dealing with Cdn- or UK-style overdraft in YNAB.

    Reply Like 3
      • dakinemaui
      • dakinemaui
      • 7 mths ago
      • 2
      • Reported - view

      I wonder if the Aussies/Kiwis or other Europeans have this style of overdraft? I suspect many "down-under" use mortgage offset accounts, which seem pretty similar.

      Reply Like 2
      • Tetsugaku
      • Tetsugaku
      • 7 mths ago
      • Reported - view

      HappyDance thanks for the links and reply I appreciate it. But it鈥檚 not a practical or workable solution, it鈥檚 a dirty hack. This functionality should be built in. There are more than enough YNAB users in the UK and my situation is absolutely not unusual! I鈥檓 hoping that the developers have this in their road map to deal with as soon as possible. Until then I鈥檒l have to deal with the workaround of having this extra, non existent offset account set up with 10k in it!

      Reply Like
    • HappyDance that鈥檚 really helpful, thanks to you for pointing the thread out and dakinemaui for the original post. Agree though that it would be really helpful if overdrafts were somehow baked in to YNAB as I鈥檓 sure they鈥檙e one of the most common forms of debt in a lot of the world.

      Reply Like
      • Ceeses
      • Ceeses
      • 7 mths ago
      • Reported - view

      dakinemau  A French-Aussie here. Offset accounts are completely different. Offset accounts are just normal bank accounts (in that they need to stay positive!) but the balance of the account "offsets" the balance on your mortgage. You only pay interest on your mortgage on the part that is not offset. So if you have a $600,000 mortgage and $400,000 in offset. You only pay interests on $200,000. 
      In effect, it's like paying the mortgage early except you keep the money to yourself instead of giving it to the bank.

      The other thing that exists is a redraw facility. This is if you pay more on your mortgage. So you really put the money in your loan. Then you can redraw this extra money if/when you want. Depending on the bank some conditions apply on how frequently you can do that. In that case, if someone uses the redraw extensively, I would create 2 accounts: one for the loan (tracking) and one for the redraw (on budget). Each payment to the loan, one would need to decide whether it's the min. payment -> to the tracking loan account, or an extra payment -> to the on budget redraw account or a mix (split transfer). 

      A lot of mortgages come with both redraw and offset. I'd assume a lot of Aussies use their redraw facility but don't necessarily redraw money from it. The reason it is used is that: your min. payment is calculated on a monthly basis. Then you can choose to pay your loan weekly, fortnightly or monthly. But then the fortnightly (weekly) payment is calculated by dividing the monthly payment by 2 (4). So in effect, if you pay more frequently than monthly, you pay 13 months of mortgage/year instead of 12. That's an easy way to "force" yourself to get ahead on your mortgage. This and the fact wages are mostly paid fortnightly here means a lot of Aussies would pay their mortgage fortnightly.

      Note for non-Aussies: mortgage with offset accounts have higher interest rates than other loans. So if one isn't going to put a lot of money in their offset, it's probably better to use a normal loan with a redraw only. That's why both still exist I believe. And I think redraw-only loans have different interest rates depending on conditions on using the redraw (the more flexible,  the higher the interest rate).

      Reply Like
      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 7 mths ago
      • 3
      • Reported - view

      Tetsugaku It is both a hack and a practical/workable solution, because it allows you manage overdraft/offset situations while still being able to use your budget for spending guidance, which prevents digging a deeper hole for yourself.

      And yes, there should be an out of the box solution for this without the need for a hack. I doubt that HappyDance and dakinemaui would argue with you on that point. We've discussed it for more than 3 years.

      Reply Like 3
      • jenmas
      • jenmas
      • 7 mths ago
      • 2
      • Reported - view

      nolesrule is exactly right. Even if YNAB vowed here and now that they would create an out of the box solution, the past 3 years have demonstrated that it would likely take them years to get a workable fix rolled out to users. In the meantime, you're going to have to hold your nose and deal with this offensive hack because that's the reality that is facing you. And realistically, I still wouldn't hold your breath on a fix. You may notice from other threads that they haven't been rushing to get non-US banks integrated into their direct connect set-up. If the international users were a big slice of the pie, I'd think there would be more movement on that.

      Reply Like 2
      • Khaki Storm
      • YNAB book topics online: https://support.youneedabudget.com/r/q5w48j
      • Khaki_Storm.1
      • 7 mths ago
      • 1
      • Reported - view

      Tetsugaku If I tell others around me that there's a national numeracy challenge to help people with maths, they will just look at me funny because our terms are different across the pond. Terms matter. I want to run an example, keep it simple, and try not to use too many terms. If I miss a tool your banking system has that ours doesn't, then let's focus on that and raise it to YNAB as a regional need. 

      Tom graduates high school with 1000 (pick your own money units for this whole example)

      Opens a checking account, deposits 1000 earned last month. 

      Rents a flat 500 first month

      Total bank balance 500 (living on old money)

      Second month: earns 1000, pays rent 500, pays university 400, pays credit card (cc) 100.

      Total bank balance: 0 (living on this month's money)

      Third month: earns 1000, pays rent 500, pays university 400, pays cc 200. 

      Total bank balance: Overdraft kicks in moves 100 into checking, but creates a personal line of credit LOC (he only has a rented flat, no assets) for -100. Now, checking is 0, LOC is -100.  (living off of tomorrow's money)

      Fourth month: 500 income due to days off to travel with school, pays rent 500, pays university 400, pays cc 300.

      Total bank balance: overdraft kicks in moves 700 to checking form LOC. Checking is 0, LOC is -800. (living off of next months pay) 

      Tom can do this over and over, sometimes paying a little off to LOC, sometimes going more into debt. 

      I can do this with my bank now. I don't want to, but I could with a personal line of credit or a home mortgage line of credit. 

      Does this describe the situation in its simplest? No long winded answers about it not being complex enough. I want to make sure I got the basic idea down, then we can add a mortgage or tax loan or other stuff. 

      Reply Like 1
      • Tetsugaku
      • Tetsugaku
      • 7 mths ago
      • 1
      • Reported - view

      Ben K. I think that covers it, yes. A UK Overdraft just means the floor level for an account is set at say -10,000, not 0. There are charges and interest for sure, but you can use the bank account as you like, just not going below that new floor level.

      Adding an account in YNAB, with a balance of 10,000, that doesn't exist in the real world, does give a true number on the available money to spend (leaving aside that of course the overdraft isn't my money). The problem, and genuinely, it's not that big a one, lies in there not being a structured process you can build into YNAB to pay down that overdraft in a formalised way.

      Reply Like 1
      • Khaki Storm
      • YNAB book topics online: https://support.youneedabudget.com/r/q5w48j
      • Khaki_Storm.1
      • 7 mths ago
      • Reported - view

      Tetsugaku Great! That helps me and hopefully others. You're basically living off a really large credit card. The next question is how to best model this in YNAB. I tried three simple ways in two fake budgets and I didn't like any results. 1)neg. starting balance in credit card acct. only (no other accts), income to cc, didn't sent it to tbb, rent from cc didn't seem to take it out of tbb. results: just have a spending ledger not a budget. 2) neg. starting balance in line of credit acct. only, similar results to credit card. 3) neg. starting balance in checking, tbb was negative but there's nowhere to take the money from (must be where your idea for a bogus positive account comes from), then spending on checking takes from tbb or category, and income to checking goes to tbb. #3 seems like the closest, but there's nowhere to take the initial negative balance from in the budget to make tbb zero.  If it was more static, then I'd suggest creating the bogus account you mentioned, and then creating a tracking account for the same amount as a loan. Then you're net would even out.

      Reply Like
      • dakinemaui
      • dakinemaui
      • 7 mths ago
      • 3
      • Reported - view
      • Khaki Storm
      • YNAB book topics online: https://support.youneedabudget.com/r/q5w48j
      • Khaki_Storm.1
      • 7 mths ago
      • Reported - view

      dakinemaui I don't follow your recommendation.

      Reply Like
      • dakinemaui
      • dakinemaui
      • 7 mths ago
      • Reported - view
      Ben K. said:
      I don't follow your recommendation

      I'm sorry, I must need more coffee. Does that mean you don't understand it? If you have a specific question, I'm sure there are a number of us who can help you out.

      Reply Like
      • bevocat
      • Sometimes, It Just Sucks to Be You
      • bevocat
      • 7 mths ago
      • Reported - view

      dakinemaui I mean, you can hand them the algorithm on a silver platter and still years go by before they do anything with it (if they do anything with it).

      Reply Like
      • Khaki Storm
      • YNAB book topics online: https://support.youneedabudget.com/r/q5w48j
      • Khaki_Storm.1
      • 7 mths ago
      • Reported - view

      dakinemaui yes, I don't get what you said to do. Are you saying to make a loan account and hide it?

      Reply Like
      • bevocat
      • Sometimes, It Just Sucks to Be You
      • bevocat
      • 7 mths ago
      • Reported - view

      Ben K. No, it's exactly step by step. You make a cash account on-budget, which is where you get your money from to allocate to budget categories for the month.

      Reply Like
      • dakinemaui
      • dakinemaui
      • 7 mths ago
      • Reported - view

      Ben K. No, I'm not saying to make a loan account and hide it. The walkthrough describes what to do. I suggest you make a test budget and... well... walk through typical usage.

      Reply Like
      • HappyDance
      • YNABing consistently since 2014
      • HappyDance
      • 7 mths ago
      • 3
      • Reported - view

      I can enthusiastically recommend the creation of a test budget to play around with concepts outside of your own budget and before implementing them into your budget.

      I frequently relied on my test budget to see how concepts would work or not work and to see how the data would be dealt with in month rollovers.  This overdraft solution is one I didn't need in YNAB -- I'd already won my fight with chequing account overdraft before finding YNAB -- but I immediately recognized how useful it would have been to give me the clarity to separate available overdraft from desired budget control from income.  I still trial other concepts, and sometimes I use the test budget just to get clean specific screen shots to post in illustration for others in response to questions.

      Reply Like 3
      • Khaki Storm
      • YNAB book topics online: https://support.youneedabudget.com/r/q5w48j
      • Khaki_Storm.1
      • 7 mths ago
      • Reported - view

      dakinemaui thanks,  I didn't see the walk thru before.

      Reply Like
  • Ceeses said:
    The other thing that exists is a redraw facility.

    This is more what I was thinking about. I'm sure it's natural to want to "park" as much as you can in that account, while maintaining that money in your budget categories. I didn't realize rates would be different, but unsurprising in hindsight. Thanks for all the information!

    Reply Like
  • Is there a charge or interest rate for being in overdraft? Does this come from your credit card reversing money in your checking? In from the USA, and this seem very different. 

    Reply Like
      • Khaki Storm
      • YNAB book topics online: https://support.youneedabudget.com/r/q5w48j
      • Khaki_Storm.1
      • 7 mths ago
      • Reported - view

      Ben K. wow,  very different ideas on banking. Maybe this thread is driving to region specific versions on ynab? 

      Reply Like
  • I do have a similar problem in understanding how I could implement European reality in YNAB. The situation here is as follows:

    One typically has attached to a standard checking account (usually called *giro* or *current account*) something similar to a "Line of Credit," often referred as *dispo.* In addition to this there is the possibility of additional overdraft that works just as overdraft in the US. In difference to the US, most credit card debt is typically consolidated in this *dispo* at some fixed date in the month. Unfortunately, YNAB is handling this very poorly, as it should be possible to

    (1) treat the amount available as budgetable AND
    (2) keeping these in one account instead of drawing these out into a separate and fictitious "Line of Credit" account AND
    (3) compute the quarterly interest on the *dispo* in function of the days and amount in [- value of dispo line, 0]

    The second aspect of these is that very often credit cards moonlight as money market accounts when the balance is above 0.

    Please note that in addition to these, we also have "Line of Credit" accounts, classical instalment-based credit cards and debit cards, albeit as far as I know, the former is much more common. I have tried to set my dispo up as Line of Credit first then switched to overdraft as already the setting up made every little transaction super-complicated and further ruined the budget overview. Having switched to treating these as simple overdraft entirely cuts out my ability to budget money I could actually budget (and will be very obligated to do so). It would be very nice to have these features included.
     

    Reply Like
  • Ben K. said:
    If it was more static, then I'd suggest creating the bogus account you mentioned,

     It is static. The overdraft limit is static. And that's what the bogus account is for. What is not static is how much of the limit is currently used. But this is covered by the checking account. So  dakinemaui  method works. And I believe  Tetsugaku  agrees it will work. He just doesn't like it because it's a workaround and not something ready-made in YNAB.

    Reply Like 1
      • Khaki Storm
      • YNAB book topics online: https://support.youneedabudget.com/r/q5w48j
      • Khaki_Storm.1
      • 7 mths ago
      • Reported - view

      Ceeses I just meant, if it was like a student loan where you borrowed $6,000 and are paying it back. However, the amount borrowed changes. I think it's an extreme example of the credit card float, it's just been extended by the banking rules. 

      Reply Like
  • Tetsugaku said:
    there not being a structured process you can build into YNAB to pay down that overdraft in a formalised way

    It really seems like you have not read the post that HappyDance linked earlier describing the approach for UK overdraft operation. In that post, there absolutely is a definite, systematic path to getting off the overdraft, with obvious progress as you go. It absolutely maintains an accurate (negative) account balance yielding a totally seamless interface to reconciliation. It is trivial to setup and trivial to dismantle when you're off the OD (about 30 seconds for either).

    I've had a post telling you all this sitting in "Pending" status for 2 days now, for some reason, which still hasn't been approved.

    Do go read that post. Don't bother to reinvent the wheel. It works perfectly, judging from the feedback of various UK users who have said it was exactly what they needed in order to continue using YNAB.

    Reply Like 2
      • Tetsugaku
      • Tetsugaku
      • 7 mths ago
      • Reported - view

      dakinemaui it鈥檚 a hack convoluted workaround that has the potential to confuse, fail or otherwise screw things up therefore I won鈥檛 use it. Dirty hacks are called that for a reason. 

      Reply Like
      • dakinemaui
      • dakinemaui
      • 7 mths ago
      • 2
      • Reported - view

      Tetsugaku Right, so you think you are less likely to be confused, fail, or otherwise screw things up without a plan (a.k.a., a budget) to help guide you. I do wish you luck finding a solution that suits your demands.

      Reply Like 2
      • HappyDance
      • YNABing consistently since 2014
      • HappyDance
      • 7 mths ago
      • 5
      • Reported - view

      Tetsugaku 

      A hack is a software person's quick fix to accomplish something in particular with the software.
      A dirty hack is a quick fix like this that the hacker is not at all proud of, or risks some unpredictable consequential effects.

      Okay.  I had to Google the terms to see what the difference is. That's how I finally figured out that the repetitive use of the  word "dirty" is not simply an adjective as I originally thought. I'm not a software developer, or much of a "hacker" for that matter.

      Given the definitions I was able to find for the term "dirty hack",  I don't think the term is actually applicable to the overdraft method dakinemaui proposed in detail.  That specific hack came from a user of the software and not the developer.  When users come up with creative way(s) to deal with something outside the experience of the US-based designers and that something is unlikely to ever be addressed by the software designers, like a style of overdraft that does not exist in the US and won't be needed by the majority of their subscriber base, I really don't think that fits the actual definition of "dirty hack".

      It was posted by a user. It was developed collaboratively by users to assist other users who had need of it. There is no unpredictable or unintended consequence that results from using the method as recommended. The method facilitates clarity by allowing the YNABer to separate available credit from desired spending (per the budget) and give them a way of getting out of overdraft, which is the desired outcome, at which point they can dismantle the process and move on with their lives.

       I spent a long time getting out of my overdraft mess, and I can easily see where having YNAB and this method would have sped up the process exponentially. 

      Unless.....there is another definition.

      Reply Like 5
      • Khaki Storm
      • YNAB book topics online: https://support.youneedabudget.com/r/q5w48j
      • Khaki_Storm.1
      • 7 mths ago
      • Reported - view

      HappyDance my thought is the software doesn't do it well, it is country specific, then just ask ynab for a country specific login/version/toolkit. I'm not a developer either, btw.

      Reply Like
      • bevocat
      • Sometimes, It Just Sucks to Be You
      • bevocat
      • 7 mths ago
      • 3
      • Reported - view

      Ben K. Pigs will fly and they will be breaking out the ice skates in hell first.

      Reply Like 3
      • Khaki Storm
      • YNAB book topics online: https://support.youneedabudget.com/r/q5w48j
      • Khaki_Storm.1
      • 7 mths ago
      • Reported - view

      bevocat  It's a thought. Perhaps if there are more country differences than just this one.  

      Reply Like
      • jenmas
      • jenmas
      • 7 mths ago
      • 1
      • Reported - view

      Ben K. You seem to be coming from a place of believing if only YNAB knew this was an issue they would fix it. Well people have been raising this issue since at least January 2016. It is now February 2019.

      Reply Like 1
      • Tetsugaku
      • Tetsugaku
      • 7 mths ago
      • Reported - view

      dakinemaui No need to be touchy mate - I just ask that software I pay for is fit for purpose :D This isn't. If you say it is, you're an apologist :p

      Reply Like
      • Khaki Storm
      • YNAB book topics online: https://support.youneedabudget.com/r/q5w48j
      • Khaki_Storm.1
      • 7 mths ago
      • Reported - view

      jenmas that's where I come from. I'm I in a perfect world no, but if enough customers (or just a few really large customers) raise their issues to Oracle they will change. When? It could be a year out or more. 

      Reply Like
      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 7 mths ago
      • 3
      • Reported - view

      Tetsugaku 

      Tetsugaku said:
      If you say it is, you're an apologist

       There's a big difference between defending the software for not having the requested functionality, and showing you a way to accomplish what you want within the software despite the software not supporting it directly out of the box.

      If you don't want to try it, fine. But that says more about you and your own stubbornness. Name calling (and that's what the use of the word "apologist" is despite your incorrect application of the word) is uncalled for. Good luck finding a solution that works for you, even though one has been provided that has no drawbacks.

      You should come over to the legacy forums, where us old-timers are constantly ripping YNAB to shreds for lack of functionality and loss of features from YNAB4 that were very useful.

      Reply Like 3
      • Khaki Storm
      • YNAB book topics online: https://support.youneedabudget.com/r/q5w48j
      • Khaki_Storm.1
      • 7 mths ago
      • 1
      • Reported - view

      Tetsugaku my credit union offers a budgeting software within their online banking app. Of course,  I didn't see that until after I joined.  Maybe your bank has something to try. 

      Reply Like 1
      • Tetsugaku
      • Tetsugaku
      • 7 mths ago
      • Reported - view

      nolesrule it's not fully featured. Your opinion that it is, is controversial. Therefore you're an apologist.

      noun

      1. a person who offers an argument in defence of something controversial

      Reply Like
      • Tetsugaku
      • Tetsugaku
      • 7 mths ago
      • Reported - view

      Ben K. I'm with Barclays who have the most fully featured user experience - but no budgeting, not to the level that I have here anyway. The work around works, it's just using the software not as it was intended, therefore potentially has unintended consequences. I don't like risks...

      Reply Like
      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 7 mths ago
      • Reported - view

      Tetsugaku Can you articulate the potential unintended consequences? What do you foresee going wrong? Some of us have over 3 years experience with the current version of YNAB and know what it can and cannot do with respect to limitations and what it will and will not do with respect to the YNAB budgeting method and philosophy.

      YNAB can't break something that uses categories and accounts in the way described by dakinemaui because it would destroy the fundamental philosophy behind the YNAB budgeting method.

      Reply Like
      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 7 mths ago
      • 1
      • Reported - view

      Tetsugaku I don't think it's fully featured, and I never said it was. I don't think anyone here stated that.

      I also don't use it for my budgeting because I do not like it. I play around with it about once a month to see if I find it usable, and it's still not there for me. I still use YNAB4.

      I cannot be both an apologist and a hater, can I?!?!?!

      Reply Like 1
      • dakinemaui
      • dakinemaui
      • 7 mths ago
      • 2
      • Reported - view

      Tetsugaku It's simply a tool, and in fact, one can use it to easily apply the 4 rules in a UK overdraft scenario. Therefore, the tool clearly serves its purpose.

      I can declare a hammer "unfit for purpose" because I'm trying to drive nails with the clawed end, and it obviously doesn't work. However, that really only speaks to my ignorance because I don't know how to apply the tool to the task at hand in an optimal fashion.

      I've explained how the tool can be applied to your particular scenario. Whether you choose to use it in an effective fashion or not is entirely your call.

      Reply Like 2
      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 7 mths ago
      • 1
      • Reported - view

      Tetsugaku Mirror dude. Peace.

      Reply Like 1
      • Khaki Storm
      • YNAB book topics online: https://support.youneedabudget.com/r/q5w48j
      • Khaki_Storm.1
      • 7 mths ago
      • 1
      • Reported - view

      Tetsugaku there's a lot of options for sure. If my old software would have stayed current/supported I'd not even be here. If you and many others have a need not fulfilled by anything on the market, then create it, market it, and enjoy the rewards. Isn't that the basic store of Apple, Facebook, etc? 

      Reply Like 1
      • Tetsugaku
      • Tetsugaku
      • 7 mths ago
      • Reported - view

      nolesrule Unintended consequences. As soon as you start to use something that is out of your control (this software) in a way it was not intended, you cannot guarantee that it will keep working in the future, therefore it is a risk, therefore it is to be avoided. Any work around is subject to change especially in a SASS (software as a service) situation. This is a fundamental, commonly found problem, that needs addressing and properly. That YNAB are dragging their feet over a known issue that is causing bad feeling amongst customers is a sign that perhaps I should not be trusting them at all with either my money or my budget.

      Reply Like
      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 7 mths ago
      • 1
      • Reported - view

      Tetsugaku I see your point, but the method described by dakinemaui relies solely on the standard use of accounts and categories. YNAB's entire budgeting system method would break if something were to change that caused the "hack" to be problematic. And at that point everyone would just stop using YNAB and move on to something else.

      So while I understand your concern, it seems you don't have a solid grasp of the budgeting philosophy (in programming terms we'd call this the business requirements) behind the software to make an informed decision on level of risk.

      Reply Like 1
      • Tetsugaku
      • Tetsugaku
      • 7 mths ago
      • Reported - view

      nolesrule much as I appreciate you making choices for me about the level of risk I鈥檓 willing to accept, that鈥檚 not how I feel about it. Work around a are always a short term stop gap to be avoided where possible. Also fundamental budgeting basics should be built into what advertises itself as a fully featured solution. 

       

      Id like to leave this as it is now thanks. 

      Reply Like
      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 7 mths ago
      • Reported - view

      Tetsugaku Suit yourself.

      The point is, of course, that method and functionality are inextricably tied. This overdraft management system, even though it is a workaround, works perfectly well in every version of YNAB going back more than a decade. And the reason is because it relies on standard functionality that is a requirement of the YNAB method. In other words, it's what makes YNAB YNAB. if this basic functionality could no longer perform in this manner, it would not be YNAB any longer.

      If you are going to form a conclusion based on opinion, it's best to make it an informed one, rather than one based on an internal sense of FUD.

      Reply Like
      • Tetsugaku
      • Tetsugaku
      • 7 mths ago
      • Reported - view

      nolesrule As I say, you're wrong, and I'd like to leave it there.

      Reply Like
      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 7 mths ago
      • Reported - view

      Tetsugaku How am I wrong? The entire basis of your argument is you're scared that SAAS means the functionality can change. It is an untenable argument if you choose to use SAAS at all, since SAAS can change functionality at any time.

      But the basic premise you are saying would be you are concerned that a SAAS spreadsheet would change the way it calculates =A1+A2. There are just some mathematical fundamentals you can't change in a zero-sum budget system, just like you can't change 1+1=2.

      Reply Like
      • Tetsugaku
      • Tetsugaku
      • 7 mths ago
      • Reported - view

      nolesrule You have a really great day now.

      Reply Like
      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 7 mths ago
      • Reported - view

      Tetsugaku Same.

      Reply Like
  • Tetsugaku said:
    I just ask that software I pay for is fit for purpose :D This isn't.

    How long are you going to continue to pay for software that doesn't meet your needs? Having been a YNABer for a very long time, I can tell you that YNAB isn't going to add support for what you are requesting any time soon if at all.

    Reply Like 3
  • I'm curious on everyone's opinion. If YNAB introduced functionality that broke the basic concept of money in accounts = money in the budget, would the zero-sum allocation budget system still work?

    Reply Like 1
      • WordTenor
      • Arranged the menu, the venue, the seating.
      • WordTenor
      • 7 mths ago
      • 3
      • Reported - view

      nolesrule I mean there was the time in V3 and earlier when they didn鈥檛 actually enforce that connection, but that was unintentional. 

      Reply Like 3
      • dakinemaui
      • dakinemaui
      • 7 mths ago
      • 2
      • Reported - view

      nolesrule Yes, zero-sum would be broken as well... mandating a workaround. 馃槆

      Reply Like 2
      • Patzer
      • Retired at age 60. Thank you, YNAB!
      • Patzer
      • 7 mths ago
      • 2
      • Reported - view

      nolesrule YNAB would not work for me with such functionality, unless I could either ignore it or disable it with a workaround.

      Reply Like 2
      • Khaki Storm
      • YNAB book topics online: https://support.youneedabudget.com/r/q5w48j
      • Khaki_Storm.1
      • 7 mths ago
      • Reported - view

      nolesrule I'd like to see it as an option that could be turned on and off. Please hear me out, you and I are driving separately to a sports event about 2 hrs away. We start from the same town. Halfway in the trip, I stop for gas, and make a mistake getting on the wrong the highway. I realize it after 20 mins. I call you up for help. You could say the only directions you can give are from the gas station, go back there and you'll help me. Or you could say, where are you now, and let's see if there's an alternative route to get you moving in the right direction while making turns to get to the game. In one path I backtracked 20 min, total of 40 mins lost. In the other path, maybe I'm not so far off course and continuing with slight corrections gets me there only 20 min late. 

      Reply Like
      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 7 mths ago
      • 1
      • Reported - view

      Ben K. I'm not following you at all.

      Reply Like 1
      • Khaki Storm
      • YNAB book topics online: https://support.youneedabudget.com/r/q5w48j
      • Khaki_Storm.1
      • 7 mths ago
      • Reported - view

      nolesrule I could use a math analogy if that helps. This looks so much better on a white board. We start at the origin (0,0) with to goal of going to (5,5). The shortest path is (1,1), (2,2), (3,3), (4,4), (5,5). We get to (1,1) and I decide to go off course. I end up at (3,1) while you head onto (3,3). Now, you want to help me. You have two choices, you can tell me yo go back to (1,1) were I left the easiest path to the goal and follow exactly in your steps from there. There was a right path, you got off it, so you must get back on it. OR you can notice that I'm just due south of you and a new course from (3,1) to (5,5) is best for me. On the second path, we'll not even see each other until the goal is reached. I first heard this example given in a business setting addressing people's behavior. Say you're late every day at random times, do I just tell at you and tell you to be on time, or do I ask you to set a time you will make it consistently. Once you're doing well at that, I ask you to move the time up in small bits. Eventually you get to coming in like everyone else. 

      Reply Like
      • Khaki Storm
      • YNAB book topics online: https://support.youneedabudget.com/r/q5w48j
      • Khaki_Storm.1
      • 7 mths ago
      • Reported - view

      nolesrule ps I also think you made a joke there

      Reply Like
      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 7 mths ago
      • 1
      • Reported - view

      Ben K. It was definitely serving a dual purpose in how I phrased it. But my point was I am not sure what you meant by an option to turn something on and off. Turn what on and off?

      Reply Like 1
      • Khaki Storm
      • YNAB book topics online: https://support.youneedabudget.com/r/q5w48j
      • Khaki_Storm.1
      • 7 mths ago
      • Reported - view

      nolesrule The ability to operate in the red. Call it a country option, or some other setting in your profile. If you set it to Yes, then you could operate in the red. If you set it to No, then it would act the way it does right now. If you allow the operation in the red, and everything is red (negative) then that reflects reality, the tool operates basically the same, and will be used by people who are just in that situation. In the business tool we use at work, there's something similar to allow negative inventory. It's not a good idea to have negative inventory. How could it ever happen, like you go to the store room and see -3 boxes? However, some business need to be allowed to start there because that's where they are. Yet, they using a tool and will get better over time. They will see the problems negative inventory causes, start to measure and improve, and finally get to a point where they are positive and turn the feature off. 

      Reply Like
      • Khaki Storm
      • YNAB book topics online: https://support.youneedabudget.com/r/q5w48j
      • Khaki_Storm.1
      • 7 mths ago
      • Reported - view

      Ben K. Another time we use this thinking is if a company is late on all their orders. There's no reason to have them measure on-time deliveries. Everything is late. They have to measure their average lateness and work that down to zero, then start focusing on on-time deliveries. 

      Reply Like
      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 7 mths ago
      • 3
      • Reported - view

      Ben K. There should be native support for managing a zero-based budget while operating under any kind of debt, which includes all versions of overdraft. What shouldn't be an option is operating without a zero-based budget.

      Reply Like 3
      • Khaki Storm
      • YNAB book topics online: https://support.youneedabudget.com/r/q5w48j
      • Khaki_Storm.1
      • 7 mths ago
      • Reported - view

      nolesrule I think we agree, unless you disagree.  

      Reply Like
  • I've just tried using a workaround that I used in YNAB classic for using a UK overdraft on a regular basis and seems to work at the moment!

    In the main budget, I set an 'Overdraft' line under 'Debt Payments'. 

    I then created a checking account with a starting balance of, say, -拢1000 (negative balance).  In the checking account I then changed the starting balance category form 'To Be Budgeted' to 'Debt Payments: Overdraft'.

    I then added a new transaction in the current account with a payee of 'Starting Balance', allocated the category as 'To be Budgeted' with an inflow calculated to be where my current balance is.  E.g. if my current balance is 拢250, then the amount enter in the inflow is 拢1250 (difference between overdraft and current balance).

    The working balance is now 拢250 in the current account and when you go back to the main budget is displays a figure of 拢1250 to be budgeted and identifies that 拢1000 as an overdraft debt which can then be budgeted for paying back in the usual way through goals etc.

    Not sure its the perfect answer but it seems to be working, certainly for this month at least!

    Reply Like
      • dakinemaui
      • dakinemaui
      • 6 mths ago
      • 3
      • Reported - view

      Cornflower Blue  You will find that this method fails starting next month. YNAB will wipe out the overdraft category you so carefully constructed.

      Reply Like 3
      • dakinemaui
      • dakinemaui
      • 6 mths ago
      • 2
      • Reported - view

      Cornflower Blue Nomad A better approach is described here. It keeps the overdraft in an auxiliary account rather than a negative category so YNAB doesn't wipe it out. It also uses a category to allow you to gradually pull the overdraft funds out of your normal categories.

      Reply Like 2
  • Here's how I do it : Much like the explanation in the beginning of this thread.

    I live in Belgium, and here most people are allowed to overspend their checking accounts up to a certain amount, but usually 1240 eur.

    Now, the problem at first was that this money is not ACTUAL money, but it can be spent if need be.

    That poses a tricky problem which I solved by creating an additional account with a credit line of the said 1240 eur, entered as inflow to start with. This allows you to budget the money (although you don't actually have this money).

    In an ideal situation, I have a budget category that is called 'emergency funds' where I budget AT LEAST these 1240 eur. So basically the credit line that is available, is there for emergencies only.

    Now, if at some point we need to overspend, we move the money from the emergency fund to the category needed, but we will try to get the minimum of 1240 available in the emergency fund asap.

    So basically, our line of credit is (a part of) our emergency funds category.

    This has a certain logic to it, since this credit line is indeed invented for those emergency moments where you need some extra cash for a limited time.

    The only problem I'm still facing is that the line of credit is not "linked" to the said checking account.

    In an ideal situation, when overspending e.g. 100 eur in the checking account, the line of credit should be showing 100 eur less automatically, which it does not. Also the line of credit shows up below the credit cards, which I understand, but it is not showing anything when using the line of credit.

    I know we need to get to debt free asap, but sometimes people have no choice. 

    Here in Belgium, you need to have a POSITIVE balance on your checking account at least every 3 months. So it would be ideal if the following scenario would work in YNAB : 

    1) Add a line of credit LINKED to your checking account, with the limit of the credit as a positive balance.

    2) Budget the money of that line of credit if need be in to e.g. an emergency category.

    3) When overspending on the checking account, it should show a negative balance (since you need to be able to reconcile, BUT the overspending amount should be automatically subtracted from the balance of the credit line. Once this credit line is at 0, you're done spending.

    4) The Credit line in the budget shows a negative balance of the amount spent, much like the credit card. You could enter a goal to get this line of credit back up to 1240 by a certain date (in my example three months from now), showing you what amount you need to budget next month on building your credit back up.

    My initial thought was to add transactions to the checking account until this hits zero, after which one could add transactions to the line of credit account BUT, you hardly never hit 0,00 with 1 transaction. The last transaction is usually partly paid from available funds and partly with the line of credit. Furthermore one could no longer reconcile the checking account after you hit the line of credit, since it would stay at zero.

    Just a thought.

    Reply Like
      • dakinemaui
      • dakinemaui
      • 5 mths ago
      • Reported - view

      Leo Gerber I'm not sure how you're able to budget those overdraft funds, since credit accounts do not contribute to budget funds. See my post below for what I think is the best way to deal with overdraft, which has a clear path toward getting out. Real world account balances are accurate.

      Reply Like
      • Leo Gerber
      • Lavender_Tiger.5
      • 5 mths ago
      • Reported - view

      dakinemaui I read your post, and we are kinda on the same page. Where you use a cash account in order to be able to budget said credit, I did the same by putting a positive balance in the credit line. It was a very interesting read, and it all boils down to interpretation.

      Where YNAB is based on US account systems, other systems around the globe will have to find some workaround. Being in overdraft on your checking account here in Belgium for example is very normal, and very inexpensive (very low intrest rates). People often allow their checking accounts to show a small negative balance, in order to avoid having to transfer money from their savings account. At the moment we don't get too much intrest on our saving accounts, but we normally get a basic intrest + a fidelity bonus intrest for money we don't touch for a year. Transferring money from the savings account might result in losing said bonus, so people prefer the overdraft for the small intrest we need to pay.

      This basically means that the overdraft limit is for a lot of people actual spending money on a monthly basis. This does not mean that they have financial problems, it's just a cashflow issue. They don't want to touch their saving assets, that in some cases can be "tied up" for a couple of years, and can cost you a lot of money if you need cash from your portfolio for example.

      Therefor, it makes perfect sense to allow for a credit line to be budgeted. Obviously you have to make sure the credit is covered one way or the other.

      Let's say I have 50K tied up in an investment fund for 5 years. This is actual money, that I COULD spend if the "you know what" hits the fan, but since this will cost me a considerable fee to sell this fund before the end date, I really don't want to do this unless there is absolutely no other way. But in the end, it is spendable money. I could even add this to YNAB and create a category "investments".

      Now, if I'm 100 eur short at the end of the month, I'm not going to sell this fund now, am I? So I'll deliberately go in overdraft.

      That's why IMHO there should be a way to add a credit line limit to your checking account, allowing you to budget it. Once your balance goes below 0, it should show up with your credit card debts, making sure you know that this has to be covered with actual funds.

      In the end (at least here in Belgium) it is the same as a credit card. BTW, a lot of people in Belgium don't even own a creditcard for this reason, they don't need it. You use your credit line knowing that you have to clear it every month or every 3 months.

      I hope this makes a little sense ;-)

      So in short, I would really like the possibility to add a credit line (that can be budgeted) to an existing Checkings account, where once a negative balance is reached, it is treated the same as a credit card, that's the bottom line.

      Reply Like
      • dakinemaui
      • dakinemaui
      • 5 mths ago
      • Reported - view

      Leo Gerber 

      I do take back what I said about the credit account not participating in the budget -- it does since it's a positive balance. FWIW, the workflow I described was tailored to the NON-US scenario. The point of what I described is two-fold:

      1. Allow budgeting with the overdraft funds. You have an agreement with your bank that allows you to spend it, after all, should you so choose. This is especially important for people who are constantly in overdraft, otherwise they would not be able to budget at all.
      2. Provide a clear path toward reducing the overdraft funds in the budget. Once the entire overdraft account balance is sequestered in the Reserve category, it's obviously not part of your normal categories.

      You'll note that in #2, it's likely that you have a positive chequing account balance well before the OD funds are sequestered. That's fine, it just means that those OD funds are still part of the spending plan. Most people will get lucky and the timing of outflows will allow the account balance to stay positive, and that's cool too. In other words, the plan isn't tied to your chequing balance, because that's not the only money available to you. (Non-overdraft users face this all the time because they have a chequing and savings account.)

      Reply Like
      • dakinemaui
      • dakinemaui
      • 5 mths ago
      • Reported - view

      Leo Gerber 

      Leo Gerber said:
      That's why IMHO there should be a way to add a credit line limit to your checking account, allowing you to budget it. Once your balance goes below 0, it should show up with your credit card debts, making sure you know that this has to be covered with actual funds.

      You cannot take your balance below 0. You are only authorized to spend a certain amount -- you can only take your real chequing balance so far negative. If you try to go more negative, the cheque will typically be declined unless you are lucky enough to have a bank that will automatically increase the overdraft limit.

      Reply Like
      • dakinemaui
      • dakinemaui
      • 5 mths ago
      • Reported - view
      Leo Gerber said:
      When overspending on the checking account, it should show a negative balance (since you need to be able to reconcile, BUT the overspending amount should be automatically subtracted from the balance of the credit line. Once this credit line is at 0, you're done spending.

      You're missing the fact there is no overspending. Remember, you budgeted the entire overdraft amount.  Furthermore, reducing the checking account AND the credit line -- in order to make the balance eventually go to 0 -- is double-counting that outflow. It removes 2x the outflow from the budget!

      I think if you actually try to use your described process, you'll find it doesn't work exactly as you have envisioned it. Yes, it's trying to exploit the same concept as what I suggested, so it's close, but not quite workable as is. 

      FWIW, people in the UK and NZ have been successfully using the workflow I described for several years now. Feel free to use it as well if you have need of a robust, workable process for using YNAB while you're near overdraft.

      Reply Like
    • dakinemaui I have followed the workaround, but it messes up the net worth figures which is annoying.

      But the real issue is that is hard to keep the available amount clear in your head.

      In Oz it's a standard (but dangerous) practice to have an interest only mortgage.

      The workaround does not make the Available Balance clear.

      Reply Like
      • dakinemaui
      • dakinemaui
      • 3 mths ago
      • 1
      • Reported - view

      Slate Blue Koala If you want a more accurate Net Worth, you can add a tracking account with a negative balance for the same amount as the Overdraft Limit Account. For example, if you have a limit account of +5000, give the tracking account a -5000 balance.

      I'm not sure why you need the available amount clear in your head -- it's built into the budget. Are you applying this to an overdraft account or to some type of offset+redraw mortgage account?

      Reply Like 1
    • dakinemaui It is an interest only mortgage of more like $50,000. Many people here have one of these along with a Principal + Interest mortgage to fund renovations etc. The rate is much lower than separate bridging mortgage or credit card.

      So you are saying I need three accounts.

      A Checking (for actual balance) another Checking account for the mortgage limit plus another Tracking account to offset the positive amount of the Limit account in net worth?

      And I don't make payments just have the To Be Budgeted amount reduce itself by the amount I budget in a Mortgage Reduce category each month?

      If I want to dip into the limit, I would just move money from Mortgage Reduce category to To Be Budgeted?

      Is this correct?

      If so, it would help if this in the  "Instruction" or even better in a formal Article in the YNAB doco, rather than in the forum.

      Reply Like
      • dakinemaui
      • dakinemaui
      • 3 mths ago
      • 1
      • Reported - view

      Slate Blue Koala The approach I described is for an overdraft account, which allows for a negative balance in that account (equal to the overdraft limit agreement). I rather suspect it will not apply to your mortgage account scenario without some modification. You probably need to add an account for the mortgage and deal with transfers in both directions.

      My advice to you is to reflect everything that happens in the real world within YNAB. Then add an auxiliary account (and category) to inject (and sequester) funds you wish to budget, but you must ensure there is something "backing" those funds n the real world.

      Reply Like 1
      • dakinemaui
      • dakinemaui
      • 3 mths ago
      • 1
      • Reported - view

      Slate Blue Koala I'd also encourage you to start a new thread if you want help designing a workflow for your particular situation, since it would more easily help any others with a need similar to yours. Again, I'm almost certain the result will be quite different than the original posting in this thread (i.e., overdraft). 

      Reply Like 1
  • HappyDance said:
    I think your detailed procedural is something to be used for someone using an offset account or an all-in-one account (as we call them in Canada). This implies that all the accounts and debts are in one big pot and separating debt from asset, when complicated by mortgage and equity, is a math exercise.

     Sounds like this actually IS the right thread to me!

    There is no separate mortgage and nowhere to move money between.

    But happy to start a new thread for people outside the USA 馃檭 Even though I suspect the same solution will be put forward.

    Reply Like
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