Overspending and Neglecting Your Budget

So, my goal is to start to use YNAB after not using it properly for a few weeks. to try and understand my budget after I haven't been using it. I didn't check or do any planning of my budget and I spent my money as I saw fit at the time. I know... I have sinned...

Now that I want to work on getting back in control and back on that wagon. I feel overwhelmed and unsure about how to work with YNAB. I have seen a lot of video's but the main issue I have is I have yet to see any tutorials about getting back into control after setting up YNAB and then neglecting it for weeks. Like we have a "roll with the punches" rule but not a what do do when you get "knocked out and down for the count".

 

Some questions I have are...

Do I even bother adding money to the budget for spending that as already taken place? Or because it has already subtracted from the to-be-budgeted do I just leave that as a ZERO to be budgeted and let the ACTIVITY side speak for it's self?

How do I work with Credit Cards in this regard to?

Am I just Overthinking this? I understand the theory of how to use YNAB and have everything set up, but I'm a very visual learner and some of the features are not as easily to grasp... like I still don't understand how much I'm supposed to put to my cards.

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    1. Reconcile your accounts to this cleared balances as of today, making an adjustment transaction as needed. 
    2. Ensure you don’t have any money budgeted in future months.
    3. Use the quick budget option to set all available amounts in April to $0. 
    4. At this point, your TBB will be equal to the sum of the cash in your cash-based accounts. 
    5. Budget the money where you need it, just like always. 
    Like 2
      • dakinemaui
      • dakinemaui
      • 1 mth ago
      • 1
      • Reported - view

      Do note that Step 3 will result in budget entries. When you need to add money to a category in Step 5, make sure you add to the existing entry, either with the built-in calculator (hit the + key first) or the Move Money Tool (click on TBB).

      You might find it easier to zero out categories in last month's area, then make your plan in the current month.

      Like 1
  • Jennifer Anne said:
    I still don't understand how much I'm supposed to put to my cards

    YNAB will automatically put money toward the CC Payment category for BUDGETED purchases. Budgeting for the starting balance or past overspending is on you.

    The end goal is for the Available payment to cover the entire account balance. Every penny you budget to the Payment category narrows the gap. It will be up to you how to fit this debt reduction in with the other demands on your money. Let your priorities guide you -- the more important categories should get money first. 

    If the gap is narrow enough (less than you can consistently make in budgeted purchases each month), you will be able to pay the statement balance and avoid interest. In other words, you are less than a month "behind". This process is called "riding the CC float".

    For a gap of 1x to 2x, that's a gray area as far as avoiding interest. It's possible, but the risk of being unable to pay the cash-only expenses is higher (because you sent much of your cash to the CC). For some, paying interest is the price of simplicity in the budget since you can plan what to do with your cash.

    For a gap greater than 2x normal budgeted spending on the card, you will have to pay interest. Continue to narrow the gap and eventually the interest will stop.

    Like 1
  • I see a lot of people focusing on the CC issue. It's not the main focus I have with this budget but I'll try to explain my confusion. YNAB tells me I should have '1000' of my money set a side to make a payment, when I have a "0" in the amount budgeted. With that in mind, my current, reconciled bank account only has 1500 in it. To add my confusion, YNAB says I only have 700 to budget currently.

    The current budget has been 'active' for 3 months. I set up auto import to make sure I didn't miss any transactions. So even though I stopped checking the app, the app was still getting my spending information. So I don't know where I'm supposed to spend that 700 that YNBA says I can budget.

    It's the middle of the month and Auto payments have already happened for several of my utilities. If I look at my Phone bill, I have a zero in budgeted, -92 in activity and a red number. But... I already paid the bill.. so shouldn't that already be reflected in the amount that I have to-be-budgeted. With that, do I just leave the my budgeted amount at zero and spend the 700 in categories that are coming up soon?

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      • dakinemaui
      • dakinemaui
      • 1 mth ago
      • 1
      • Reported - view

      Jennifer Anne Any red in the budget, categories or TBB, is a sign of missing money or inflated categories (depending on your viewpoint). You should immediately move money from green categories to correct anything red.

      Like 1
  • Jennifer Anne said:
    I see a lot of people focusing on the CC issue

    After WordTenor 's sage advice, that's all that is left to discuss. Of critical importance is Step 5: "Budget the money where you need it, just like always".

    Presumably you know how to budget for rent, groceries, etc. Earlier steps cleared out overspending, which is another place money is needed.  That leaves only the CC Payment category, which is less well understood, but is still a place that money is needed.

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  • Jennifer Anne said:
    But... I already paid the bill.. so shouldn't that already be reflected in the amount that I have to-be-budgeted.

    You paid the bill, but you didn't have money reserved for that bill. That means the money you did sent is/was actually reserved for something else, but is no longer in your possession.

    YNAB warns you of this, and you're supposed to fix it. The money has to come from somewhere, and you're the one who can best make the decision of which other category to cut.

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  • Jennifer Anne said:
    I want to work on getting back in control and back on that wagon

    I strongly urge you to start with the basic material. You have missed or forgotten some basic tenants of using YNAB, and that is at the heart of your struggle.

    Rule 1 is to make TBB $0 (one of your questions). Rule 3 is to fix overspending (also one of your questions).

    https://www.youneedabudget.com/the-rules-are-the-magic/

    Reset things as WordTenor described or do a Fresh Start. Then start again.

    https://www.youneedabudget.com/ultimate-get-started-guide/

    Like 1
  • I figured out how to get my 'April"  TBB to be correct. I had to apply WordTenor advice to the previous 3 months to get the current month to show up correctly.

    dakinemaui Thank you you've been really helpful. I'm sure if i could screen share with you it would make things easier. I do understand the rules and how to they apply to a clean slate. As in when someone is consistently using the app and adding transaction and paying attention to their budget. But I have a harder time applying them when the budget I'm working with has flaws. Right now, I know I am spending in the red. I'm just trying to understand how I work with the budget software to get the right information to be displayed.

    Rolling with the bunches is a great rule, I really admire the YNAB system for it. BUT I feel it is the least rule to be explored in any of the help/advice martial.  I really love Hannah from the YouTube channel, her advice on beginners mistakes and 6 lessons budgeting taught me about life are why I posted here in the first place. I just couldn't find information on how to "repair" my budgets after I've neglected them for so long.

    Like 1
  • Jennifer Anne said:
    I'm just trying to understand how I work with the budget software to get the right information to be displayed

    As long as there is red anywhere, the budget as a whole cannot make sense. It is simply not a feasible plan, so "right" goes out the window.

    Honestly, things will make far more sense if you fix overspending and budget TBB to $0. That's exactly what everyone should be doing (right after getting accounts correct), regardless of whether they touched YNAB yesterday or last year. Everyone has those same flaws in their budget from time to time.

    Wishing you lots of luck!

    Like 4
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