Excluding CC payments in budget

I did try to search for an answer on this, but how are people that pay the cc every month preventing it from effectively doubling expenses in the budget? Our situation: our credit card is effectively a debit card. That is, we don't spend more than what we have in our checking account, and we budget each category and expense as though it comes directly out of our checking. However, this makes it look like, in my budget, that not only do I have each category, I also have a cc payment which matches the overall total budgeted. This leads to weirdness with my budget making my outflow look much higher than my inflow (which, trust me, it is not). Isn't there a way to exclude the credit card payment from the outflow? All I need to see are the individual transactions on the credit card, categorize them, and see that they match the inflow. I don't need the extra cc payment added to my outflow because it's effectively already been added with each transaction. Does that make sense?

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  • Doesn't sound like you are using credit cards correctly in YNAB. You put the CC transactions in your CC account. YNAB then moves the money used from your budget from the spending category to the CC payment category. When you makethe payment, it's just a transfer from the bank account to the CC.

    https://docs.youneedabudget.com/article/180-credit-card-basics

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  • lancherider said:
    I also have a cc payment which matches the overall total budgeted

    Your CC Payment should match the total debt -- a.k.a., the account balance. When you record a grocery purchase in the CC account, money automatically moves from the Grocery category to the CC Payment category. This reflects the new job for those dollars of "Pay the debt incurred for the grocery purchase".

    Your CC payment itself should be a transfer (in the Payee field), since that's not actually spending. The spending occurred when you swiped the card, not when you send money to the CC company.

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  • If you are using the credit card mechanism in YNAB correctly, and you're PIF (paid in full), and you only pay the statement balance on the due date (not pay the balance down to zero), then your total activity for the month as displayed in the inspector will be skewed. 

    NBD, just select all the categories, then deselect only the CC category group (and anything else that skews the number, like an INM category), and look at the number. 

    The total activity would display correctly if you paid the entire balance down to zero at month's end, but that's not a good reason to do so.

    The actual reports already don't include the CC, if I remember correctly.

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    • Move Light Sound Life That is a good tip, thank you! A couple clicks and then I can see it they way I want.

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  • That all makes sense, and is what is happening. My issue is with the Quick Budget over on the right hand side. So on the right, I see Total Budgeted, Total Activity, Total Available, and Total Inflows. It's the Total Activity that I take issue with. For example, let's say I spend $500 in groceries. This shows up in the grocery category (great) and gets moved over as you describe into the cc payment category automagically (also great). But then my Total Activity category shows $1000, instead of the $500 I actually spent, making it appear as though I've over spent my budget. I simply want Total Activity to not reflect that cc payment, because in my budget, it has already been spent. In a perfect situation, Total Budgeted = Total Activity = Total Inflows. Instead, I'm seeing Total Budgeted = Total Inflows, but Total Activity is double that. Maybe this is just me, but it messes with my brain when it looks like my total activity is greater than what I've budgeted, even though I can look at each individual category and see that I haven't overspent.

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    • lancherider Yes, I like to select the appropriate categories and click through the months to get a sense of how much I normally spend each month. I wouldn't want my activity to match my inflows, though, as that would mean I'm not saving anything.

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  • lancherider said:
    it messes with my brain when it looks like my total activity is greater than what I've budgeted

    You're just going to have to let that go. Hint: being able to spend more than budgeted in a single month is exactly why we save. It's not uncommon for Activity to exceed Budgeted. Hopefully Total Available will dwarf Total Activity, as that means you're not living on the edge. Similar with Total Inflow typically being greater than Activity (as that means you're saving), but it's not a problem when it isn't.

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  • being able to spend more than budgeted in a single month is exactly why we save

    This is effectively why I want the total activity to change. Most months, my expenses are less than my income, so even after budgeting savings, I can move more money to savings that is underspent. But in order to know how much more I can move to savings, I need to know what my total activity is, less the credit card payment, which skews it. Move Light Sound Life 's suggestion above did the trick for me

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    • lancherider As a completely separate concept, consider putting your savings account on budget so that you can divvy it into specific categories (Income Replacement, Medical, Veterinary, Home Maintenance, Car Maintenance, Vacation, Tech Replacement, Unexpected, etc).

      It's very useful, but if you're not ready for it yet, come back to this idea in a while.

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    • Move Light Sound Life Yep, already doing that! 🙂
      This was more of a situation like, let's say my budget has $10,000 every month. I budget everything, and at the end of the month I find, hey, I actually didn't spend as much on gas as I expected to. I know I can carry it over to the next month, but I like zero-based budgeting, so I move it to savings instead and start fresh next month

      Like 1
  • lancherider said:
    Total Budgeted = Total Activity = Total Inflows.

    Let's say you have $5000/month in inflows every month from you wages. And you save up to replace your HVAC system which costs you $8000. The month that you have the HVAC replacement done, your outflows are going to exceed your inflows and that is completely normal.  

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  • lancherider said:
    But in order to know how much more I can move to savings, I need to know what my total activity is,

    You can move anything to savings that you don't need to pay an upcoming bill regardless of activity that month. I mean yes, it's a bit more complicated than that but over time I know that on AVERAGE, my mortgage + utilities + all my credit card bills (I pay the statement balance on the due date, though I have enough allocated in the credit card payment categories to pay them down to 0 at all times) = $X. So I keep $X + Y% in my checking account. Any amount over that can go to my savings account.

    And guess what, sometimes I get it wrong. But that's okay because I get a credit card bill on the 8th and the payment isn't due until the 2nd of the next month so there is more than enough time to transfer funds from my savings account back to my checking account (or for my checking account to be topped by an incoming paycheck). This is all fine because I have "saved" for something when I allocate the funds in the budget, not when I move the money to my savings account. Therefore transferring funds from my savings account back to checking account is in no way, shape, or form "stealing" any money from my new car category to pay my Visa bill.

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  • lancherider said:
    in order to know how much more I can move to savings, I need to know what my total activity is

    That's too late, IMHO. Many people use the Running Balance in conjunction with Scheduled transactions to assess when to move between checking & saving accounts.

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  • lancherider said:
    so I move it to savings instead and start fresh next month

    Define "move it to savings". If you mean transfer it to a savings account, that has nothing to do with the budget page. If you mean reallocate to a different category so that it can fund something I am saving up for, that has nothing to do with you accounts pages. 

    Every month I have some money left over in my gas category. Sometimes it is $5, and during a pandemic where I'm working from home and not going anywhere, it's usually most of the original category balance. So at the end of the month I take all the left over money from my gas category (along with money from a few other categories that I always sweep at the end of the month) and I reallocate those funds to other categories (I have a formula that I use that allocates amongst income replacement, charitable giving, taxable investing, and Savings Priorities 1, 2, and 3 whatever they might be at the moment). This has zero impact on my checking account balance because none of my categories is held in any particular account. What account is my income replacement fund in? All of them. Same for my grocery category. All money is fungible.

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    • jenmas Broadly speaking, move to savings = move to the Savings: Roth IRA category in my budget. 

      This really seems like it's a personal preference for me, so not a big deal. I just like seeing my total activity without the cc payment because that payment is redundant. I got a good suggestion that allows me to see what I want, thanks to all for the help!

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    • lancherider Another option is to represent your paid-in-full credit cards with checking accounts. In that case, there are no CC Payment categories to throw off your Total Activity. Nor do you have to babysit the category for purchase reward credits, outgoing transfers to gift-card accounts, etc.

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      • Superbone
      • YNAB convert since 2008
      • Superbone
      • 2 wk ago
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      • Reported - view

      lancherider This is what I do. If all your cards are PIF like mine, the credit card system is unnecessary.  Transferring your CC accounts to checking accounts removes the middle man and any room for error in the CC payment category. It has been bliss ever since I did this a couple years ago.

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