Category temporarily negative

I have a clothing category with about $700 in it. My college-age kids needed to buy boots for ROTC but were unsure of the size, so they ordered 2 pairs each, with the intent of returning the pair that didn't fit as well. That was over $800 worth of boots, making my category negative. What is the best practice here? I could WAM and fix it, but it will fix itself in a few weeks once they do the return and then I would need to undo the WAM-ing, provided I remember what category I WAM'ed from.  What to do?

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  • We actually do this a fair bit, and use the Temporary Debt reimbursement approach in a dedicated category for the amount we don't intend to keep. Split the purchase, putting the "keep" amount in the real category -- keeping that category's balance accurate if there's additional spending later -- and the "return" amount in the Return category. That's overspent, but no big deal, as it's credit.

    Categorize the inflow back to Return category. If the Return category turns green (as would be the case if you crossed the month boundary), move those funds to the CC Payment category.

    You can also cover the overspending from the CC Payment category if it bothers you. The inflow will obviously then turn the category green, which is the signal to move those funds to the CC Payment category.

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    • Melissa
    • Routinely questioning every assumption I have about my budget, my spending, and my savings habits.
    • todays_mel
    • 5 days ago
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    If the refund will be received before then end of this month (January), I'd just leave it for now. Best practice is to still cover it with money if possible though... If the refund doesn't show up until the following month, things can get a bit more convoluted. It also depends on the payment method a bit:

    If the purchase was made with a credit card, then read this link about how to handle credit card returns: https://docs.youneedabudget.com/article/1090-credit-card-refunds

    If the purchase was made using a debit card that pulls money from your checking account, the rule is to cover the amount overspent with funds from another category that can take the hit temporarily - since failing to do that will screw up your budget if you have to wait until next month to get the refund. 

    You can read up on reimbursements here: https://docs.youneedabudget.com/article/183-reimbursements

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