starting out, few basic questions that I still have
Ok, so I got the job during covid. I'm not making much but I'm good and very lucky. I need to start paying down credit cards. I have many many credit cards( another story...), Monthly, I put as much toward them as I can. Some months are more than others so I don't understand how to reflect that? I really did not see where to put my % in on the credit. cards as well. I did not direct connect. How do I budget how much to spend at places? Do I take a few past months and then average it? For example, my dog needed to go to the vet this month, which is rare but it something I do not understand how to reflect in YNAB. I'm sorry if I am way off base but I think these little things are tripping me up. I see all my payments to my credit cards that need to be allotted to budget areas* and Im not sure how to do that.
Ivory Keyboard said:
I see all my payments to my credit cards that need to be allotted to budget areas* and Im not sure how to do that.
So you don't exactly do that. If you have existing credit card debt that you want to pay down, then you budget funds to your Credit Card Payment category. You will have reached the point of no credit card debt on a particular card when the amount in the available column for the credit card payment category (right column) is a positive number equal to the working balance of your credit card (the amount displayed on the left hand side of your screen) with the category available being positive and the working balance being negative.
For things like the upcoming vet visit, you budget to your Pet Care category (or whatever you choose to call it). By "budget" I mean assign money from your TBB to the Pet Care category line by entering a number into the left hand column. When you spend money at the vet, you go into the appropriate account register and enter the transaction (Payee = Vet name, category = Pet Care, etc). YNAB will then move the money out of the Pet Care category and into the credit card payment category for you.
Reminders = Allocate funds to your various categories until TBB = 0. Once it is 0, stop budgeting!
Before paying your credit card, make sure that you are not sending them more than is in the credit card payment category's available column. If you want to send them more money than is available in the budget, you have to reallocate funds from another category into the credit card payment category.
Ivory Keyboard said:
I see all my payments to my credit cards that need to be allotted to budget areas
It's the other way around. The budget is the plan for your cash, which you should allot to various categories in advance of spending. If you then pay with a cc, the cash you would have used is automatically shifted toward paying off the debt incurred for that purchase.
If you wish to pay off debt over and above that incurred for the recent, budgeted purchases (i.e., the old, pre-YNAB debt), you need to reserve money for the larger payment by budgeting directly to the CC Payment category.
Ivory Keyboard said:
How do I budget how much to spend at places? Do I take a few past months and then average it? For example, my dog needed to go to the vet this month, which is rare but it something I do not understand how to reflect in YNAB.
Yes, you figure out how often you take your dog to the vet, and how much that normally costs. If it's annually, and it costs $200, then you set a goal to save up $200 by next January (2022). It will tell you (if you start funding it this month) that you need to budget $16.66 per month. If you're not able to start funding it until next month, it will tell you to budget $18.18 per month (200 / 11).
Do that with all non monthly expenses. Car insurance every 6 months? budget 1/6 of total into car insurance category, and it'll be there when you need it. Of course if you don't start right at the beginning of the cycle, you'll have to budget more per month, until the next payment, and then the average you have to budget will be lower for the next 6 month bill.
Something that I did not understand when I started but now makes sense is to also use the Stuff I forgot to budget for (SIFTBF) When you are first starting out, there will be categories that you didn't realize you needed. An example could be something that happens once a year. If you have money that isn't dedicated to any categories, you can put it in SIFTBF. When the unexpected expense happens, you categorize the expense to the appropriate category (or create a new one if necessary). Then, you move the needed amount from SIFTBF to that category. There should be nothing expensed in SIFTBF. It is a kind of holding spot to cover those new things that you hadn't accounted for yet.
The budget should be an expression of your priorities. Make categories for all the stuff you want to buy/do. When you get money in the To Be Budgeted area at the top (TBB), find the most important thing that needs money before you get paid again. For example, a roof over your head is pretty important for most people, so allocate for that. Repeat with the second most important thing that needs money, etc. Stop when TBB is $0.
Note, it might be important to partially fund a category. Splitting non-monthly expenses across months is one example others have mentioned. Splitting large monthly expenses across paychecks is also common when paid multiple times per month. For example, half of Rent from each of the two checks when paid semi-monthly.
You'll probably iterate on things, because some things will be more flexible than others. Starting to save now for a $6000 resort vacation in December requires $500/mo. If that doesn't leave enough in TBB for other stuff that matters, you might adjust plans for something cheaper instead. This lowers the required contributions allowing other things to be funded. Pushing back timelines has a similar impact.