Separate accounts in same budget chaos

We have our mortgage offset account for all the bills, while everyday spending comes out of our regular chequing account. Plus a "buffer" account and some savings accounts for us and the kids. A few months back I decided to move my personal savings into the offset account, as I wasn't earning much interest anyway and figured having more in the offset would be great to save on our mortgage interest. And as a YNABer, it shouldn't matter where my money is, right?  I have always had my budget set up so that the overall available in the categories matches what's in the accounts, and I can't wrap my head around not having it set up that way. It's worked that way for years.

The problem is we ran into a period with irregular income and had to draw down our savings "buffer" and then had to start dipping into the offset account to cover everyday spending. This was during a period where I just wasn't able to keep up with regular budgeting either, so I got behind on budgeting and things got very confusing in YNAB. A lot of those transactions were categorised in YNAB as "groceries" or "fuel" or other everyday categories that would normally come out of our chequing account, so then my Everyday Spending category, the balance of which normally matched the balance of our chequing account, was thrown off...and I have no idea how much of my personal savings we've ended up using either, but either way, the amount in the offset account is much lower than it should be to cover upcoming bills (which means my personal savings will get eaten into even more).

I decided to make a fresh start in YNAB. How can I avoid this budgeting chaos again? If we do need to spend money in the offset account that would normally be an everyday spending, how should I categorise this?

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  • To give a specific example of some of the confusion - the actual amount in the offset account is say, $277.29 higher than what it should be according to YNAB. This correlates exactly to a grocery purchase which is categorised as "groceries", which would have normally come out of the chequing account but came out of the offset account instead. How do I make fix this?

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    • Swiss Maple Are your account registers in YNAB correct? If that's the problem, make a transfer/reconcile to make them correct. 

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  • Marisa , Here's some forum history for you. 

    There are at least two threads that I've seen in the last couple years that address this issue, and they're linked to each other.

    I don't remember the name or wording of the original post, but the following searches are literally yielding no results, so I guess the forum search is down:

    European Overdraft Offset Account

    Offset Account

     Dakinemaui Offset Account

     Mortgage Offset Account

     

    I know they're there - with detailed how-to plus discussion of both YNAB technical methodology/financial prudence. I also know the terms offset account is used in both threads! 

    I believe it's the more recent one that discusses Australian-style mortgages specifically.

    Perhaps the search will work for you.

    EDIT: Got it.

    https://support.youneedabudget.com/t/q5wlp8

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    • Move Light Sound Life Thanks for doing the work to dig up that thread! dakinemaui really thoroughly shows the best way to set up and use offset accounts in YNAB.

      Swiss Maple I'll reach out to you directly via email to gather a few more details regarding your account structure so we can help you get your budget set up and running well. It sounds like the Overdraft Limit account and Overdraft Reserve category are the pieces that may be missing from your budget. 

      First and foremost, though, we recommend depositing your cash into cash positive accounts and using YNAB as usual. Using offset accounts in YNAB is complex and that complexity isn't always worth the meager savings in interest. 

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  • Another month has gone by with a gazillion roadblocks to regularly accessing my budget. I cannot wrap my head around this new YNAB and I'm getting really frustrated despite having used YNAB for years.

    The main issue seems to be the fact that I have categories assigned to specific accounts, so when spending occurs that normally occurs from Account A but was paid for by Account B, this throws things off.  This is no longer unique to the offset account, so comments specific to offset accounts are not applicable. The comments about overdraft do not seem applicable to my situation either.

    On another note, the new credit card payment thing is throwing things off as well, as we have had several big purchases that we will be reimbursed for, but in the meantime, we have to carry that debt. So then according to YNAB, I have negative dollars to spend, which, ok, makes some sense because we've got debt, but the money in the spending account is for the groceries and other everyday spending. The account balance isn't negative but the total of all those everyday spending categories (which previously matched the account balance) is now negative.

    So do I just need to pull out the calculator each and every time to add up all the positive spending categories, to make sure they match my account balances??

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    • Swiss Maple That does sound frustrating! I have some suggestions that may help, but I've also replied to the previous message Marisa sent so we can talk one-on-one via email if it works better or I've missed the mark here.

      First, let's talk about those categories assigned to specific accounts you mentioned. In YNAB, there is nothing that inherently ties any account to any category/categories. This Helpdoc is a helpful explanation of how this works, but the Cliff's Note is that when you try to force YNAB to match accounts and categories, it can get frustrating fast due to the need for you to manually force the app to do something it doesn't. Is there a way you can organize your accounts and categories to simplify and have more of a buffer to avoid overdraft? This article is a helpful perspective on that and how to ensure you always have enough in checking.

      I also understand you have credit card purchases that are pending reimbursement. When you see that yellow negative number with the exclaiming credit card in the Available column, YNAB is telling you that you have credit card overspending—which, in this case you do! Credit card overspending is when you spent on a credit card and didn't immediately cover it with cash to plan for the payment. If you don't cover the expense in the same month, that's ok. The overspending notice will go away when the month rolls over and you'll assign money directly to the Credit Card Payment category in a future month to pay down the balance.

      YNAB will always cover cash spending first when you have a mix of cash and credit spending in a category. So, if you find that confusion is being caused by that mixture in the category, you might move the credit card purchases that are pending reimbursement to a new category called "To Be Reimbursed" so they can hang out there until you receive payment. This article on reimbursements might be helpful, too.

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  • Swiss Maple said:
    The account balance isn't negative but the total of all those everyday spending categories (which previously matched the account balance) is now negative.

    If you knowingly want to put something as debt on the credit card, you can leave the category overspent with the result you are seeing.

    Or you can move money from the credit card payment category to cover the overspending. Then, when the reimbursement comes in, move the money back to the credit card category. One of the issue in doing it that way is that nothing in your budget alerts you you have money you should move to the credit card category, unless you use the Reimbursement approach Dela has linked to. When using a reimbursement category without funding it, if the category available is green, it means you need to move that money to the credit card category. But if the spending was done from a category that is normally funded every month, then when the category is green you don't know if it's normal funding or reimbursement. You can use flags/memos on transaction to identify reimbursement transactions where you will need to move the money back to the credit card payment category. But it can become messy.

     

    You probably know that but the way you want to use YNAB is against one of the assumption on which YNAB is built. That assumption is that money is fungible and hence account location is different from the purpose of the money. You want to budget both by account and by category so it is creating a slew of difficulties for you as Dela said. On the forum we rarely hear from people who successfully pull this off. Usually, people end up having to let go of budgeting by account in order to use YNAB without headaches.

    One way I can think of to pull this off. Let's say you have Account A to cover groceries and Account B to cover clothing. Then you need to buy groceries from Account B. You could either:

    1. You enter the transaction in Account B, categorised as groceries. Then you go to the budget and move money from clothing to groceries to reflect the fact you now have less money available for shoes (since Account B balance went down) and still the same money available for groceries (since Account A balance hasn't changed). This requires you to go between transactions and budget every time such a transaction is entered. It keeps your reports accurate: the total spent on groceries or shoes will be accurate
    2. You enter the transaction as a split transaction in Account B. The total line is the amount you just spent on groceries. Then there is a line with the amount being spent on groceries, a line with the amount being inflow into groceries and a line with the same amount being spent on shoes. The lines 2 and 3 are equivalent to the budget moves above but on the transaction side instead of budget. In this case, your reports will be a giant mess and can't be used. But you do all the work on the account register without having to flip between pages all the time

    Probably the easiest to use is the first method. You can add the use of memos or flags. When you enter transactions you can use flags or memo to mark transactions that come from the "wrong" account. Once you are done with entering the transactions, you can search for the flag or memo and select those new transactions. This will give you a total of the money that was spent from the "wrong" account. Then you can go to the budget side and move that amount of money between your Account B categories and Account A categories. Once you have moved the money, I would return to the account register and remove the flags/memos so the next search only gives you the transactions that haven't been processed. Note: if you buy groceries from Account B instead of A, you don't need to move the money into the groceries category on the budget side. Move the money to whatever category is covered by Account A where you think you may need more money in.

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