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