How to fix overspending/overpayment issue
I sometimes buy things with PayPal, but charge them to a credit card, and then transfer money back to the card that month to cover it.
With the recent YNAB changes, something weird seems to be happening: I can't figure out how to cover my overspending.
For example, I bought something for $34.92. The transaction was entered into my PayPal account in YNAB, with a transfer from my credit card to pay for it. Now, my credit card shows $34.92 overspent (even though the amount was budgeted for in the original category selected in the PayPal transaction). I assume this issue is because transfers can't have categories, so the credit card perhaps doesn't know where to deduct the "overspending."
I made a payment of $34.92 to my card specifically to cover that amount. But now under that credit card account, it shows a red -$34.92 unbudgeted payment and still $34.92 overspent.
I'm confused about how to correct this situation. Is it expecting money to be moved differently? I can't find a way to simply say "this payment covers that overspending"
It would probably be easier if I just cut PayPal out of the mix and used my credit card directly, but sometimes that's difficult to do depending on what payment methods a place accepts or has on file.
To clarify one thing:
I've tried simply adding $34.92 to my credit card payment budget. However, there are two problems with that:
1. Since I already technically budgeted for this $34.92, that seems to mean I'm budgeting more for this than I should be, essentially hitting my budget twice for the same charge.
2. That zeroes out my red -$34.92 unbudgeted payment, but it still shows a yellow $34.92 overspent on the card.
I ended up moving the real transaction from PayPal to my credit card account and deleting the existing transfer between PayPal and my credit card. This seems to have resolved the issue, now both the overspending and the overpayment are gone.
I don't like this solution as I feel like my books aren't as accurate--while it won't affect the totals, it now looks like I paid with my credit card directly and my PayPal ledger has no record of the transaction at all. So I'd still really like to know if there's a better way I can handle this.
Another option might be to enter the transaction in the credit card register with a split $0 transfer to the Paypal account. At least it would show up in the Paypal account then so reconciliation wouldn't be confusing.
The credit card register could look like this.
This entry would be in your PayPal account
Edited to add: since the funds flow-thru PayPal, but the buck stops in the credit card account, I think I would prefer this method.
Glad I found this discussion! This is exactly what happened to me when I purchased a gift card with my credit card. I have a Gift Card budget account set up so that I am able to categorize the gift card money appropriately. So I did a CC transfer to the Gift Card account and saw the overspending on the CC account!
After seeing the posts by nolesrule , it helps me understand the reasons. I still don't like seeing Overspending in my CC account but I guess I have to live with it. :(
I did email YNAB technical support about this and their suggestion was to:
Instead of entering this one as a transfer, go ahead and enter it as you would any regular spending transaction. Since you're technically buying the gift card, that aligns closer with what's happening in your real-world accounts. You'll need to set up a budget category in this case, and funding that will prevent that type of overspending alert.
I don't like that suggestion because it wouldn't me categorize the gift card money spend appropriately. Instead, I've done as nolesrule suggested and budgeted the gift card money to my CC payment category.
I'm curious about the original issue on this thread, but I've never used a credit card via PayPal to see what it looks like. When I use PayPal for a direct debit from checking, I record the expense in my checking, usually with PayPal as the payee and the "true" Payee in the memo field. (I don't have my PayPal account in YNAB at all.)
I can imagine doing the same thing with a credit card, but feel like I might be missing something because I haven't seen it first-hand?
(Also, meta ... we can all just talk about this right here! That saves everyone from having to post back about this support conversation or that one. That way we all learn together, and the next person with the question doesn't have to start from scratch!)
Hey Ben McClure , HappyDance , Jess - we talked through this among the YNAB team and here are a few extra details on this scenario:
It's true that any transfers out of a credit card account are essentially cash advances. Those amounts will always show up in the overspending pill at the top right of your account register, even once you've budgeted that same amount into the Credit Card Payment category.
nolesrule nails it with the workflow detailed above (🎉):
1. Enter the initial transaction as a transfer from your Credit Card to your PayPal account (Jess in your case it'll be toward the gift card account). Notice that your To be Budgeted increased by the amount of the transfer – be wary of this though! Those 'debt dollars' come with strings attached if you don't cover the amount of the advance.
2. Budget that same amount from your To be Budgeted back into your Credit Card Payment category. At this point everything should look right on the budget.
3. Over on your credit card account register, the transfer amount will show as overspending, and that will remain throughout the current month, even when technically covered by what you've done in step #2.
4. At this point you can categorize the spending of that cash advance (from the PayPal account in Ben McClure's case, or from the gift card account in Jess's) accurately among your budget categories.
Let us know how that goes for you! :-)