One-time expense which includes payments that will be partially returned

Hi Everyone,

I'm learning about YNAB, and while setting up my account, I'm running into a difficult one.

Next month I'm organising my brother's bachelor weekend, I'm paying for all the flight tickets, the hotels and activities, after the event, the 4 friends that are going along will start to (slowly or quickly) pay me back for the flights, hotels and activities.

How would you budget this? Since it's a 

  • One time expense
  • An expense that will be partially payed back.
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  • This is what I would do, based on dakinemaui 's explanation that's buried in this thread.

    1. Make a category for the weekend.  Budget the entire amount needed if you can.  If you can't, budget your portion and make a note of any extra you budget throughout the process.

    2. Make a tracking account for the weekend: Asset, I believe. 

    3. When you enter transactions from your CC or checking for the weekend, split the transaction for how many people (including you) will be paying you back, put the payee as a transfer to the tracking account, category as the weekend category, memo as their name and item (flight/hotel, company if you like...).

    4. When someone pays you back, record it as a transfer from Weekend Tracking Account to your checking, with their name in the memo.  Because their name is in the memo, you can easily filter in the tracking account to find owed balances or mark all transactions related to them as cleared and reconciled.

    5. If you didn't have enough to cover everything upfront in your budget category for the weekend, and it went negative, and then it reset at the month before people paid you back, then you need to keep an eye on the available amount in that category.  If it goes green, move the money to your credit card payment.  As long as everyone pays you back before the statement with these purchases is due (and you pay the CC with their money or extra budgeted money from you, before then, too), you won't have incurred interest from them.

    6. If you ever had to pay for something in the weekend with cash/checking, move money that's already available to pay your CC to cover that category.  Then, use #5 to pay back your CC when you're reimbursed.

    7.  Since you included yourself in the workflow, you don't have to repay yourself, but you do need to make sure you budgeted to that Weekend category for your own portion, which will get moved to your CC with the other reimbursed amounts.  If you budgeted extra to make sure you didn't pay CC interest, then after they all pay you back, you can move that money back to TBB and enjoy it somewhere else (that's why there's a note at the beginning).

    Did I get it right or forget anything, Dakinemaui?

    Like 1
    • Move Light Sound Life Sounds about right. Complicated to say the least, but that's what's necessary if you can't float reimbursements out of your own cash. It also sounds more complicated than it actually is in practice.

      In #1, I would either budget the entire amount or your portion, but not anything in between. This means either your cash or your CC is covering your friends, which will simplify things somewhat.

      TBH, I would use a dedicated category for your friends (related to #1 and #7). Often, one-offs can be lumped into a generic category (e.g., Travel or Vacation); however, feel free to create a single-use category for your portion and HIDE it afterward. Keeping your spending separate makes it clear what you must cover with a budget entry.

      In #6 (cash spending to be reimbursed), I would cover that by reallocating from the CC Payment category. This converts the cash spending to new debt (aka credit spending), so the credit-based workflow then applies. This does assume sufficient money in the CC category from other normal, budgeted purchases.

      Lastly, in #7, you mention budgeting extra to make sure you don't pay CC interest, but that doesn't necessarily follow. I'd say the main reason to budget is to avoid manual movement to the CC category later. If you're reimbursed before you have to pay off those purchases (4-7 weeks later), obviously no interest (and you didn't budget extra). Additionally, riding the CC float avoids interest indefinitely without having to budget extra, assuming the pending reimbursement amount is under the amount you normally charge in budgeted purchases each month. The whole "avoiding interest" thing can be complicated. Certainly budgeting extra will make sure you don't pay CC interest, but it's not the only way to make that happen.

      Like 2
    • dakinemaui Admittedly, navigating the seas of interest avoidance is new for me.  My past experience comes from staying on the shore of not closely approaching interest or traveling directly across the sea of debt paydown.

      Thanks for clarifying your own idea that I applied!  Hope you don't mind...

    • Move Light Sound Life The more people that know the better!

      I think reimbursements must be the least understood area of YNAB usage -- not the least of reasons is that there are multiple approaches, each with its own pros & cons. 

      • Pilfton
      • Orchid_Drill.1
      • 1 yr ago
      • 1
      • Reported - view

      Move Light Sound Life Thanks for your time! This all still sounds very complicated to me, I guess I'll watch some more beginner video's on Youtube first, The thing is I do have the money in a savings account, I don't need to "budget" for it, since it's already happening next month. Does this simplify things?

      Like 1
    • Pilfton The physical location of money (account) is completely independent of the purpose (category) you've attributed to it. Read this:

      I'm sure all of this must seen like drinking from a fire hose, but you do need to budget at least for your portion. It doesn't matter that money is in your savings account if it is earmarked for some other purpose.

      Yes, it does simplify things if you also budget for your friends' portions. You can move those funds elsewhere in the budget *after* you are paid back.

      Like 1
    • Pilfton You're welcome. Admittedly, this is a pretty complex workflow for even non-beginners. Go for it if you feel comfortable, but if it doesn't work exactly optimally, don't worry about it too much. Just do what you were going to do to keep track of the bachelor weekend (outside of YNAB) and make YNAB match reality. YNAB is too good of a tool to let this situation get in the way of you learning how to use it. 

      Easy way: budget all the money you need to take care of the bachelor weekend to a category of the same name (or vacation/relationships/whatever you want), and categorize relevant transactions there. Keep track of how much who owes you on paper or excel, and count the reimbursements as inflows to that category (not TBB, which causes messy reports). After payback time, move the money to another category you want to fund.

      Like in the article dakinemaui mentioned, when you set up your budget, you'll have money in your checking (say $1000) and money in your savings (say $5000). They should all be on your budget, and you'll start with $6000 in TBB. If you already had a savings structure before YNAB, the way to apply that structure in YNAB is to put the $3000 (or so) that you intended for the weekend in the bachelor category, the $500 you intended for maintenance in its category, and the $1500 you intended for an emergency fund in a category with that name. Then, you budget the $1000 to your bills and other priorities.  TBB should always equal 0 (until you get more income. Then you budget your income until it's 0 again.) You may find that you need to rethink your priorities because money can only sit in one category (do one job), but that's part of the power of YNAB.

      Obviously, the numbers, categories, and priorities are my examples. You make them fit your needs.

      Like 1
  • If you can budget for all expenses up front (e.g., reallocate from an emergency or other long-term category), things are simplified somewhat. The budget isn't really a concern in that case (except for possibly putting money back when the dust settles). The transfers to the tracking account Move Light Sound Life mentioned are still useful, because it gives easy insight into the pending amounts.

    One tip: when someone settles up completely, mark all the relevant inflow & outflow transactions for that person cleared in that tracking account (they should total to $0), and Reconcile the account to a $0 balance. By hiding reconciled transactions, only pending reimbursements will be visible.

    Like 1
  • I would just  create a  category, budget your portion, charge the expense to the category,  any overage will show as credit card debt(assuming you are using a card for at least some of those items.   If i get the money  back from the friends within the same month I would budget it to the bachelor party category, if it is after the month has ended, budget it to the credit card payment.  This is what is actually happening.

    • Herman Don't know about your friends, but mine need prodding before the money comes back. My memory is bad enough that I need a record of where things stand in order to be able to do that. 🙂

      I agree with you as far as the budget -- the only thing I'd do is tack on the transfer info in the transactions to serve as the reference, rather than putting it somewhere else.

      It's also a sure bet this won't be the last reimbursement tracking OP has to do. The next go-around will conveniently already have the Tracking account in place.

      • Herman
      • herman
      • 1 yr ago
      • Reported - view

      dakinemaui I have no problem with the tracking account option either.  For me the existing function works,  if I have to pay the credit card before the funds arrive, I am spending money from other categories so i will move that money to cover it and replenish when reimbursement is received.  Very similar to other suggestions on here.  I just find the CC function actually works in this case for me.  My CC accounts are all PIF but I kept the standard CC function because it makes sense to me and this is one of those instances where I think it tells me what I need to know.

  • Move Light Sound Life said:
    categorize relevant transactions there. Keep track of how much who owes you on paper or excel

    OP, hopefully it's obvious you'll have to enter the transactions (since they impact your account balance). All that's being added in the process is to tack on the transfer information to avoid writing things down on paper.

    All the messing around in the budget is just bookkeeping. IMHO, the easiest way is not to fund the category (which is possible since you're not using cash) and just move money from the Friend's Reimbursement category to the CC Payment category when the dust settles. (Yes, I know I said things were simpler if you fund the category up front, but that is overkill since you're using credit and will be paid back before you have to pay the CC for those charges -- right?)

  • Move Light Sound Life said:
    Admittedly, this is a pretty complex workflow for even non-beginners

    I don't view it as complex, as there is very little being added to "normal" YNAB. It only sounds complicated because it's describing several possible approaches at once (all interleaved in the description). I count at least 4 when various contingencies are considered! Assuming credit-only transactions, it can be as simple as:

    0. Setup: Create a Reimbursement tracking account and category 

    1. Enter categorized outflow transactions (normal YNAB usage) and tack on the transfer information (reimbursement-specific)

    2. Enter categorized inflow transactions (normal YNAB usage) and tack on the transfer information (reimbursement-specific)

    3. If the Reimbursement category ever turns green, move that money to the CC Payment category (reimbursement-specific, but movement is obviously normal YNAB usage)

    Like 2
    • dakinemaui  said "It only sounds complicated because it's describing several possible approaches at once (all interleaved in the description). I count at least 4 when various contingencies are considered!"

      This is a very good point. It's not really that complicated when you already know how YNAB works.  We just gave all the "If-Thens" at the same time.

      Like 1
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