Credit card budget item issues
Either I'm doing something wrong or I just don't understand how this system is supposed to work, or both. I've watched videos and read other posts and I still don't know.
1. My first problem is what am I supposed to budget for the card? I pay it in full every month, but it just shows a negative number for "available". This number does NOT match what my actual balance on the card is FWIW. My current balance is about -$500, but the "available" is like -$1500. This is probably my largest source of confusion. Shouldn't it match the running balance?
2. This negative "available" amount gets less negative if a new charge comes in. Using the same example as above, if I add a charge for $10, the "available" amount will now show -$1490. Shouldn't it get more negative?
Background in case it's important: due to a whole host of simultaneous life changes and the pandemic, my wife and I basically didn't use YNAB for about a year and a half and now we're trying to get back into it to get a better handle on things. We managed to enter in all of the receipts/entries for that time, but the budgets for that same period are basically non-existent. Most budget items during that time are overspent because we just didn't bother with it and most of it was allocated $0. Not sure if this matters.
The totals/running balances for each account are all accurate and are on the appropriate accounts: I went through every single entry on all my statements to confirm. Everything else makes sense except this one budget category.
If your CC balance is -$500 then you should budget +$500 to the Payment category. If the Payment category is currently -$1500, then you would need to budget $2000 to the Payment category to get it to $500. When you first added the card, you were supposed to budget for the initial balance.
All future CC purchases are added to the Payment category automatically. That’s why you’re currently seeing it get less negative when you make CC purchases.
1. Available should match the running balance on the account. So you should budget about $2000 to it now. I know it's not a good news to have to move that amount out of other categories. But that money is actually not categorised to the correct job, you need it to be able to repay the credit card.
2. A new charge will add money to the credit card payment category available. This category shows you how much money you have reserved to pay your credit card debt. So currently you have overspent on this category, you have sent more money to the credit card company than you had earmarked for that purpose. When you make a budgeted purchase, e.g. groceries, the money that was reserved for buying groceries is not needed there anymore, but it is needed to repay the credit card. So YNAB will move the money from the groceries category to the CC payment category to increase your available for the category.
At the end, when you do a purchase on your CC, the amount of cash you own hasn't changed. So the total in Available should stay the same. So the +10 you had in groceries becomes +10 in CC payment.
Your credit card is a bill just like your electric bill *in that* you need to have enough money in the category for the amount of the payment that you're making, so your CC payment category should always be positive or zero, never negative.
YNAB helps fill up your CC category by automatically moving the money for *budgeted* purchases from the purchase category to the CC category - this is why as things stand right now, when you add a new spending transaction, your CC category gets less negative.
But if you have past *unbudgeted* spending - either from before you began YNAB or, say, from entering 18 months of transactions but not filling out the budgets for those months - you need to directly assign money to the CC category to catch things up. As the others have said, if the actual balance on your card is -$500 then your CC category available should be $500 if you plan to pay that entire $500 on the due date.
To add to what everyone else said, because what they said is accurate but didn't quite fit your situation....
When you started using YNAB again, that's like starting to use YNAB at all. Your YNAB is going to think your credit card is carrying debt, because you didn't budget the money for it/the categories in those intervening months. To fix it, you need to assign the "starting balance" to the card category - what it was after you entered all those missing charges and didn't also clean up the category.
If your current balance is 500 and available to pay is -1500, that means you "started" with 2000 from when you weren't using YNAB. Just like with your original starting card balance, you need to budget the 2000 to the credit card category to fix this.
Does that make sense?
One more thing: there are a number of reasons the CC payment available can end up differing from the CC account balance. The most common is overspending. For example, at the start of a new month, sometimes there are charges that post late from the previous month and might overspend the categories in the previous month. And those overspent categories are hidden on the budget page unless you go and check the previous month. In this case, if you find the cause, you can cover the overspending in the previous month. But finding the cause, takes time.
There is one thing to remember. No matter what caused the CC payment to diverge from the CC account balance, you can always fix it in the current month by budgeting to the CC payment category until the 2 are inline. It could be adding money if the CC payment available is short or removing money if the CC payment category has too much in it.
It's normal to want to know the cause but if you don't have the time to track it, just budgeting in or out of the CC payment category will always resolve the issue.