Negative balances from overspent categories disappearing in next month

I just shared this as a tweet as well: https://twitter.com/justinhaaheim/status/1004875527058964480

 

This seems to be a significant bug. Right now money that is overspent in a previous month just seems to disappear -- it is not subtracted from next month TBB, nor is it a negative balance on the CC. Here's a screencast demonstrating it: https://www.youtube.com/watch?v=P4y2DpDvmT0&feature=youtu.be

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  • Welcome to the forum!
     

    This isn't a bug, just:

    -- a misunderstanding about how credit card overspending works

    -- perhaps the "overspending" number at the top of the page isn't clear (I believe it shows the total for cash/checking based overspending that would affect the "To Be Budgeted" number, and isn't counting new debt that was created on the card as overspending). I suspect it sees credit card debt and "overspending" as two different concepts. Faness and the YNAB team may need to clarify directly on that point (and if you don't get a response from YNAB here, [email protected] is the best way to get in touch for this sort of more in-depth question).
     

    In regards to the overspending itself, the system is working as designed:

    -- When you make budgeted purchases, YNAB moves the money you had budgeted for that purchase from the original category to the credit card payment category, where it sits until you make the eventual payment. The amount available to pay off the card increases as you make budgeted purchases, and decreases when you make payments.

    -- When you make unbudgeted/partially purchases, YNAB can't move the full amount from the original category to the payment category. At the end of the month, that category resets to zero, and any credit card-based overspending (negative orange label) becomes additional debt on the card.

    -- Any credit card debt that you are carrying is represented by the difference between the card's total account balance and the amount you have set aside for payment.

    -- Assuming you have no debt and regularly budget for all your purchases, the amount set aside for payment to the card and the card's balance should always match up. If you owe -$500, you should have +$500 set aside for payment.

    -- You can also see this number in the inspector when you select the credit card category in your budget. It will tell you something like: "If you pay [amount available for payment] your account balance will be $X". Ideally, you always want X to be zero, indicating you would have no debt after the payment.

    -- If you check your credit card account in a month where you currently have overspending, you'll also see an overspending warning in the top right corner.
     

    It may be worth taking a look at the help article on the topic: https://docs.youneedabudget.com/article/944-credit-overspending , or taking one of the short classes YNAB offers on credit cards, especially the one on credit card overspending: https://www.youneedabudget.com/classes/

    The solution, really, is to make spending decisions based on your budget. Stick to your budget, and you won't overspend. Or, since that isn't always realistic and life sometimes gets in the way, correct any overspending as soon as you can in the same month that the overspending happens.

    Like 1
  • In May try creating a credit card transaction for your rent and then you will see the difference between your credit card account balance and your credit card available amount. For it to say -$5 in June, you would have to actually make a payment of $5 to the card that wasn’t budgeted. The June budget is telling you the truth: You have $0 available to pay your credit card. 

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  • Hi Green Boa ,

    Ben and Jen have great responses here. I wanted to check in and make sure you're feeling good about what you're seeing in terms of how YNAB functions.

    It might also help to check out our Master Credit Cards with your Budget workshop. You'll learn how to use your YNAB budget to get out of debt and keep you from going back! You'll find it helpful even if you pay in full each month.

    You can also check out the Credit Cards area of this Forum for other tips, tricks and discussions!

    Let me know if you have any more questions!

    -Elena

    Like
  • Hi Elena,

    I do understand what is happening now, and see that it is not a bug. 

    I would, however, like to share some feedback and encourage you to share it and act on it as appropriate. The heart of the feedback is: this seems like a bad idea.

    One of the things I have appreciated and come to depend on YNAB for is helping me keep a crystal clear picture of where each dollar is going. Unlike other budgeting software where you are not giving every dollar a job, YNAB promotes a level of consciousness about your money that I think is really important. In general, the design of the YNAB software has supported this consciousness, with a user interface that paints a literal clear picture of which dollars are going where, where a budgeter is overspent, etc.

    This particular way of handling overspending on credit cards makes accruing credit card debt the invisible default, which is the exact opposite of what I want, and seems to run counter to YNAB's whole ethos. (I know, after all, how Jesse feels about debt in the first place.) Indeed, in our case my wife and I had overspent on some categories in the previous month. I wasn't sure how much, but I was trusting that YNAB would treat our money as a closed system -- that if we were over in one place, it would show us that we are under in another and we could roll with the punches.

    It doesn't do that, and (as you're now aware) it took me days to actually figure out what was happening with our money. I'm a savvy guy. I've used YNAB for 6+ years. I've been a software engineer since I was a kid. If I can't figure out what the heck is going on, I'd bet others will have the same difficulty. 

    Once I did figure out what was going on, it STILL is not clear exactly what to do to budget in a way that is effective and sustainable. This, I think, is such a shame. YNAB is such a great tool precisely because it helps people make good, clear decisions about their money by default. Now, after discovering that we had budgeted all our income for June to other things and are thousands of dollars short for our credit card payment, I'm having to go in and manually count up the credit card overages to know how much we need to get back where we were. (We pay off the statement balance on our CC each month, which means that simply comparing the CC account balance with the CC payments category isn't all that helpful.)

    The current state of the YNAB software allows people to go into debt and not even know it. I honestly had no idea how much we had spent over our May budgeted amounts. I checked the budget around May 27th, and then the next time I checked it we were in June. *Nothing* about the June budget indicates that we were way over in May, except if you're specifically looking for it (ie looking at the CC balance, subtracting the CC payment category, and comparing that with where you were the previous month).

    I understand why YNAB has evolved to the way it currently handles credit cards. It makes sense to me when I think it through. But I think the much more important metric than "does it make sense" is "does it support people to do good budgeting." Right now, I think it's lacking there.

    One thing that would've helped my wife and I is if in June there were some sort of indicator of the overage. As I think about it, one of the most important things I would want my budget to tell me clearly and simply is: "Heads up. You accrued $1,320 in credit card debt." Perhaps that could be indicated at the top of the budgeting page, underneath the lines "$xxx funds for Jun; $xxx overspent in May; etc....".

    Will you share this feedback with the YNAB product team?

    Justin

    Like 6
      • Tan Welder
      • Tan_Welder.2
      • 2 yrs ago
      • Reported - view

      Green Boa Well said! I wish we could have back the decision to decide what to do with our overspent categories. YNAB 4 you just simply clicked on the overspent category and chose whether to subtract it from next month's To Be Budgeted or from next month's category balance. Simple enough and you knew that in the mean time it was covered with credit card if there wasn't enough green in other categories. Either way you chose it still limited you since some of your money was already spent in that category or in that month. Now, every month is fresh and new and everything looks cool when in reality any overspent categories went on the credit card. Because there is no negative balance on each category it is easy to spend the same amount as budgeted and not pay back the credit card. 

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    • Hi Tan Welder !

      You should see a similar behavior in the web version of YNAB. Cash overspending is automatically subtracted from your To Be Budgeted when the month rolls over, so you're still seeing that limit. Credit overspending is moved to the credit card, but the Available amount for the credit card category will be lower than the account balance, meaning the full amount can't be paid (we're working on a way to make this part clearer). :)

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  • Green Boa said:
    (We pay off the statement balance on our CC each month, which means that simply comparing the CC account balance with the CC payments category isn't all that helpful.)

    NB: this may be part of the confusion. Regardless of whether you pay your card to zero or only pay the statement balance, if you are a paid in full card user, the card balance and the payment category should always match. If they don't, you are relying on the credit card float to fund the positive numbers in your budget,  You should always be able to pay he card to zero, whether you choose to do that or not.

    Like 1
  • Hi Green Boa ,

    I hear you on the feedback here. I wanted to make sure to follow-up on one element specifically because I think it'll help as you continue with your budget:

    If you're paying your statement balance rather than your current balance, then you're riding the credit card float. Check out that article for more clarification there. Basically, you will want to have in your Payment field what you need for the payment, period. Whether it's the current balance or the statement, just make sure you have available whatever you're intending to pay :) 

    Check out that float article and let us know if you have any other questions about that! 

    Since this isn't a bug, I'm going to move this conversation over to the Credit Cards section of the Forum. I think you'll find lots of great advice and perspective among YNABers there! :-)

    -Elena

    Like
      • jenmas
      • jenmas
      • 2 yrs ago
      • 5
      • Reported - view

      Elena that's not necessarily true to say that if you only pay the statement balance you are on the float. If you can only afford to pay your credit card statement balance and not the full balance, then you are riding the float. In my situation on the other hand, I pay my statement balance instead of my full current balance because that's what I choose to do. If I wanted to, I could pay my full current balance (the money is there in my credit card payment category), but why should I when a) that money could be sitting in my accounts earning interest until such time as it is due and b) the credit card company hasn't sent me a bill (my rule is that until you present me with a proper and accurate invoice, I'm not paying you)?

      Like 5
      • LarryinLA
      • Larryinla.1
      • 2 yrs ago
      • 4
      • Reported - view

      Elena 

      Elena said:
      If you're paying your statement balance rather than your current balance, then you're riding the credit card float.

      This is just flat out wrong.  If you are only budgeting to pay the statement balance, then yes, you are riding the float.  However, if you have the current balance budgeted [i.e. the category and account balances match] but choose to pay only the statement balance (the correct way to manage a CC) you are not riding the float.  I've seen this for a long time with YNAB, the idea that if you budget to pay-in-full, then you must actually pay off the current balance.  I don't understand it.

      Like 4
  • I've seen this discussion multiple times that ynab is "silently accruing debt".   I can't really understand it at all.  Ynab is telling you the truth. If you overspend a category, you don't have money to pay that card. There is nothing silent about it to me.   However, if you would like a little more of an indication here is a suggestion, add a goal to the credit card payment category.  Set a "pay off balance by date" goal, set the goal a year out or so just so you dont have to maintain it every month.  Now if your payment available amount becomes less than the balance on the card, the category will turn yellow.  

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      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 2 yrs ago
      • 1
      • Reported - view

      Herman It's silent because you have to understand the behavior in order to recognize what's going on.

      Like 1
      • Patzer
      • Retired at age 60. Thank you, YNAB!
      • Patzer
      • 2 yrs ago
      • 4
      • Reported - view

      Herman 

      Herman said:
      If you overspend a category, you don't have money to pay that card.

       That is not necessarily true.  Suppose I have no money in the Charity category, and I see a cause I want to give $10 to.  Suppose further that I have no transactions in Charity this month.  If I write a check, Charity shows as overspent, and I can WAM to cover it.  Taking funds from a credit card payment category for the WAM would be very low on my priority list.

      OTOH, if I give $10 with a credit card, YNAB automatically assumes that I want to WAM the charity category by taking money from the card payment category and does it for me with no warning that I've overspent Charity.   All other details can be identical, and the treatment is different depending on what payment method I use.  I need to be aware that YNAB does this before it happens in order to know what's going on.

      This is poor program design.  It assumes that creation of debt is a routine budget event that can be automated.  A better assumption would be that creation of debt is an unfortunate consequence of bad things happening, and that the user should explicitly acknowledge (or at least be explicitly warned about) debt creation each time it happens.

      Yes, it is better practice to not overspend a category.  It is better practice to do the WAM before you spend.  Either of those avoids the problem.  But that's no excuse for counter-intuitive program functions with a bias toward degrading the user's financial position when the user does not precisely follow the best budgeting practice.

      Babysitting program functions to correct stuff like this is not a value-added activity.  Less of it should be required.

      Like 4
      • Herman
      • herman
      • 2 yrs ago
      • Reported - view

      Patzer if you wam, then you are resolving the overspend and the credit card category will be correct.  The described behavior is only an issue if you move into the next month without resolving it.  I've read all the discussions and I think we just disagree on this. 

      Like
      • Patzer
      • Retired at age 60. Thank you, YNAB!
      • Patzer
      • 2 yrs ago
      • 2
      • Reported - view

      Herman I totally agree that this is not an issue if the user takes any of several available actions to resolve it.

      I disagree with the premise that, because user action is available to resolve the issue, a poor programming design should be left in place.

      Like 2
      • WordTenor
      • I have the honor to be your obedient servant
      • WordTenor
      • 2 yrs ago
      • Reported - view

      Patzer I  know we’ve been over this before and I know you don’t agree,  but I think the native behavior in 4 led to more accidental debt creation than anything the web version could do.  Overspend a category, see that there’s a red negative ATB next month,  turn arrow to the right so you don’t have that problem, and boom you’re floating debt.  And you sort of just have to know that, there isn’t anything in the software that really tells you that you shouldn’t do that. You think of turning the arrow as a deliberate action the user must take to knowledge that they are creating debt,  but in my experience, most people who did that had no idea what its consequences were.  And forget about negative budgeting the PYD category.  Almost no new users understood *that*.  

       Maybe neither way is better.  They’re two sides of the same really complicated coin. 

      Like
      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 2 yrs ago
      • 1
      • Reported - view

      WordTenor It doesn't matter whether you two agree or not. The onboarding process teaches the user just enough to have an incomplete knowledge of how to successfully use the software without the most important part... learning and understanding the allocation budget methodology and the purpose of the bits of functionality within the software. Unfortunately, the onboarding is not a replacement for the getting Started video series in whatever form it currently takes.

      Like 1
      • WordTenor
      • I have the honor to be your obedient servant
      • WordTenor
      • 2 yrs ago
      • Reported - view

      nolesrule  my point is that I don’t think anything about that has changed.  Understanding debt handling/overspending on a credit card has pretty much always required that the person go outside the software.  I happen to think that the explanations that are native to the software in the web version are much clearer than they were in version 4.  But the need to read additional material or take the classes hasn’t changed. 

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      • Patzer
      • Retired at age 60. Thank you, YNAB!
      • Patzer
      • 2 yrs ago
      • 4
      • Reported - view

      WordTenor 

      I think the new card handling has a basic structure that is better for a card user who is on the float.  That having been said, the assumption of adding debt for overspent categories is a poor assumption.  I can justify adding debt for purchase of a gift card; that looks a lot like deliberately taking a cash advance, and it's pretty easy to explain to the gift card purchaser that they ran into a feature designed for a different situation.

      It's impossible to explain why taking on debt for an overspent category should be the default assumption.  Every defense of that boils down to, the user can fix it.

      And yes, I'm aware of the fact that carrying debt or living on float with a card that is still used is very complex to manage.  Unfortunately, the very people who are in these situations are the least likely people to be able to deal with complexity.

      And for the record:  I was opposed to the creation of the red arrow in the first place, I have never used it, and I do not advocate putting it into web YNAB.  I see the red arrow as a totally separate programming issue from credit cards, and one that has all the dangers you cite.

      Like 4
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