Credit card payment not like in tutorial
starting to spend with my credit card (currently 0 debt) Trying to follow the YNAB tutorial but not getting the same results. When I entere two spendings with my credint card I get a different situation. I had a debt, paid it, so balance 0 and then did two spendings, which seem to be reflected perfectly fine to me.
But then, in my budget I get this: And I don't understand why activity is 0. Also, I don't get why the color of available is green, which seems to me like I have money, when reality is I owe it.
In the YouTube tutorial (precisely at this moment
), the guy gets this in the app after spending $100, which seems more reasonable to me too.
Am I doing something wrong?
Many thanks in advance
The Available amount in credit card payment categories tells you how much of your cash you have reserved for future credit card payments.
For the question about Activity, click on the Activity amount and it will tell you the transactions used to come up with the number. But generally it's a net amount covering payments and budgeted spending during the month.
It doesn't look like we're seeing the full picture in these screenshots (the transactions shown don't offset the shown payment; there is a starting balance transaction showing - generally indicating this is a new account without previous transactions). I'm reaching out to you directly in case you'd like for us to take a closer look at your budget.
You are NOT doing anything wrong.
Here is what is happening.
YNAB is based on money you actually have being allocated to various jobs.
when you did the budget for Fun Money and Groceries you were saying you wanted to use this amount of your actual cash to pay for these things. .
But since you paid with your credit card, you still physically have that money in your bank account.
YNAB reduces the budget for Fun Money and Groceries but “moves” allocated cash to cover that charge on the credit card.
the cash is still available to pay that credit card balance.
does that help?
before YNAB I used to make an actual credit card payment EVERY time I used my card. So if I spent $100 on groceries using my visa I would run home, fire up my banking app, and pay $100 to Visa.
YNAB is doing the same thing but not actually processing the bank payment. It’s piling those payments up in the Credit Card Payment category. When you make the payment you either click on pay now on the credit card account screen (web version) or enter an transaction in your bank account using the payee Transfer-credit card (mobile app). That is when you will see the activity and the available will decrease.
OK, thanks a lot! That makes sense, but it's counter intuitive. It's true that I have more money but I'd expect YNAB to reflect somehow that there's a debt, because that extra money is not really mine and eventually I'll have to return it. Actually, in the tutorial video it's much clearer because it shows the debt, and I suspect there's a discrepancy between what the video explains YNAB should do and what is happening in my budget. I made two more payments and here's the result:
It's like I have 82.81€.
1. Where does that 82.81€ come from now? (This is the first month and in this budget and there are no more movements thatn the ones in the screenshots)
2. Shouldn't YNAB somehow tell me I actually owe money to my bank?
Many many thanks
That makes sense, but it's counter intuitive.
That is why people can get confused. But it is actually very elegant. As long as you budget for an expense, you can use your credit card and not worry about slipping back into debt. We use a credit card for almost everything and earn over $1200 a year in cash back. With YNAB handling the credit card allocation I never have to worry about coming up short.
That makes sense, but it's counter intuitive.
It's because you don't understand yet what the budget is for. The budget is your plan for your CASH money you currently have on hand. So not your debts, just your cash. And your plan right now (when looking at the credit card only), is to pay back the starting balance on your card plus any other spending you are putting on the card. To be able to pay your credit card debt, you need some cash earmarked for that job. That's what the credit card payment category is for. It tells you how much cash you have earmarked to pay towards the credit card bill. To know how much you owe on the credit card, that's what the account is for. That's why it's important not to confuse account and category. They aren't the same thing and don't have the same purpose.
To ensure you have enough money earmarked to pay back your credit card, in a "dumb" system, you would have to move money each time you use your credit card. For example, if you used $100 to buy groceries, then you would have to move $100 from groceries to the credit card payment category. Because the purpose of that money has changed from "buying groceries" to "paying the credit card debt".
But, fortunately, YNAB is not a "dumb" system. So YNAB will do that recategorisation for you. It can't do it for you in 2 cases:
- for the starting balance since you weren't using YNAB when the spending happened. For that, you need to assign money to the credit card payment category directly to cover the starting balance (and you don't need to assign a cent more than the starting balance).
- if the transaction used for the category doesn't have enough cash assigned to cover the spending. In that case, YNAB does nothing. It shows the Available in the category for the spending in yellow warning you if you don't add money to that category, you are creating debt. Because you wouldn't be able to pay back the full debt on your credit card with the current plan for your CASH as it stands in YNAB.