Budget Debt Smackdown when Account remains the same
just a stupid question: For a better Budgetplanning I'd like to budget for a debt smackdown on my checkings account. The problem is: This is not an outgoing transaction. When my salary arrives, i just don't spend all the money. But when i create a budget category for it, there is money left i don't really have, same with a tracking account.
How can i solve this? I know exactly how much i earn every month. And I'd like to see this amount in the "Budgeted this Month" on top...
Hi Orchid Beat !
I'm not sure I completely understand what you're asking. You want to set aside a portion of your salary to pay down debt later, is that right?
If so, you're absolutely right to create a category and budget funds towards that category. You'll categorize your paycheck as Inflow: To Be Budgeted and then budget the portion that you don't want to spend towards your Debt Smackdown category. :)
We think of savings a little differently at YNAB. Here are a few resources:
– Here's an article showing you how it all works.
– Take a look at this 7-minute Whiteboard Wednesday about savings.
– Attend a free workshop about savings called Reach your Savings Goals!
Take a look there and let me know if you still have questions!
Hi, Orchid Beat
Sounds to me like you are clawing your way out of an overdraft in your transactional account. There was some discussion on that topic on this thread linked here, and Faness at YNAB provided a step-by-step for that poster that you might find useful.
You can do this.
I think you are also trying to pay your credit card with your overdraft, so paying debt with debt. This gets a little complicated in YNAB, and the software seems to have trouble when we use credit accounts to pay credit accounts. I would respectfully suggest that until you can get out of overdraft and stay out of overdraft, you really don't have the extra funds to use as a debt smackdown; you are just transfering the debt from one account to another.
Actually using the method Faness at YNAB explained in the other thread, paying down both the credit card and the overdraft is easy. Simply when budgeting put some of your funds, that aren't needed for your expenses, in the overdraft reduction category and some in the credit card payment category. It simply means you will get out of overdraft slower. I'm guessing you are trying to do that because the interest on the CC is higher than in the overdraft. If so, why not put all the "excess" funds towards the CC? Do you have a min. payment necessary for the overdraft?