Debt Snowball in YNAB

So, I am working on my (Dave Ramsey) Debt snowball and throwing every extra penny at my debt to pay it off as soon as I can. My current smallest one is a $1300 student loan. I am trying to figure out how to incorporate that into YNAB. I plan to have it paid off by March '18, so my thinking is I can create a goal for that in my debt/student loans category. However, I will be making payments towards it regularly, so how does that work with the YNAB software. If I am not storing the money to pay it all off as one payment in March, but instead sending all extra money to be budgeted each pay period to that category to pay it off early? ( I am brand new to YNAB so am not sure how it plays out). I will budget money towards it each month, and make payments, but does that carry over once a payment is made in the "goal". [the more I try to explain my confusion the more confused I get- lol]

In addition I will also be paying regular payments to all other debts ( one medical CC and two other Student Loans) should each of those be separate categories? 

16replies Oldest first
  • Oldest first
  • Newest first
  • Active threads
  • Popular
  • I would add all debt accounts as separate tracking accounts in YNAB. Then, make a master category called Debt and subcategories called Student Loan $1,300 (or similar), Medical CC, and Student Loan # 2 / #3. Then, put a monthly funding goal for each category (instead of a total balance by date). When you make your payments, the categories will be “Debt: Student Loan $1,300” and you’ll transfer the money to the tracking account. That way you can watch the balance move toward $0. 

    Like 4
  • For installment loans (non credit card loans), it's usually better to just have a category. If you're new to YNAB I also would not recommend creating a tracking account. They can be confusing when you're still trying to just get a grip on the software, because you have to account for the principal +interest and the fact that the amount you transfer to the tracking account does not reduce your principal by the full amount you sent, and often the interest is not a separate transaction as it is on a CC account. 

    Budget as much to that category as you are able to each month; then send the amount in "available" to the loan. You might create a master category for the installment debts you are snowballing and put the current minimum amount of your snowball in the master date name (For instance, "Snowballed debts --$100"). 

    Like 2
    • Tan Major (faac422e1003) its funny you say the tracking accounts can be confusing when first starting YNAB. I actually found that to be the easiest. My most confusing part with YNAB is using different accounts (i've started over 5 times in 45 days!). I know they recommend you have one but I still think that mixing my savings amounts with my checking amounts will cause me angst. 

      Like
      • Daniel Hopkins
      • Software Engineer
      • hoppities
      • 2 yrs ago
      • Reported - view

      Tan Major (faac422e1003) I totally agree with this. We always just have categories and fund them. Sure, it messes with your net worth a bit, but hey, my net worth is already off because I have an HSA account in YNAB, and I don't really consider that part of my net worth.

      Like
      • ClimbingOutOfDebt
      • I think I can I think I can
      • ClimbingOutOfdebt
      • 2 yrs ago
      • Reported - view

      Cadet Blue Trombone (1e5200ebb6f8) It never occurred to me to track my HSA in YNAB, but managing ours + family with complex medical needs + deductible is a nightmare. Do you just categorize all the money as medical?

      Like
      • Daniel Hopkins
      • Software Engineer
      • hoppities
      • 2 yrs ago
      • Reported - view

      Khaki Koala (3a49af38372f) That's exactly what we do :) So everything gets dumped into the medical category and, for us, all of the expenses come from our HSA account. It's nice to see the balance without logging into our HSA online banking.

      Like
      • ClimbingOutOfDebt
      • I think I can I think I can
      • ClimbingOutOfdebt
      • 2 yrs ago
      • 1
      • Reported - view

      Cadet Blue Trombone (1e5200ebb6f8) It's so simple I can't believe that never occurred to me before. Thanks!

      Like 1
  • I just have a student loan category and put it like any other expense, like "grocery store" ... i put a monthly goal in there but don't have the amount of debt in my YNAB

    Like
  • I set up a "snowball" category and budget the amount I'm able to commit to paying of debt each month: all of my minimum payments (I have a lot of student loans!), plus extra. All of the loans are tracked in YNAB. I don't put the amount I owe into my budget, just the amount I pay, and watch the balance in the tracked account fall.

    Like 1
  • I budget our regular student loan payments in a regular category and then our overpayments in a category I call "Freedom". I have close-enough balances as tracking accounts and update those every few months.

    Like someone said above, it's tricky to account for interest and principal with big loans, so I don't both categorizing it as a transfer. Same for my IRA--I record it as an outflow and then update my tracking account with a reconciliation adjustment every quarter or so. 

    Like 1
      • ClimbingOutOfDebt
      • I think I can I think I can
      • ClimbingOutOfdebt
      • 2 yrs ago
      • Reported - view

      Powder Blue Saxophone (80e507419d66) Can you connect an investment account in YNAB to your bank? I can't figure out how to do it. Or do you just track it manually and then reconcile?

      Like
  • Greetings! I too am working on my Debt Snowball. In the past year and a half have gotten rid of about 20,000 in debt. All I have now is mine and my wife's student loans. YNAB has been a great tool to help with the snowball. I like to keep things simple so I just created categories for each debt and then budgeted the amount that I was paying for each. I ordered them with the one on top being the one I was throwing everything extra to. Once it was gone, I would hide the category. I tried to play with the goal setting function but found it to be cumbersome at best.  The goal setting works well for sinking fund saving. For example, we pay 85 every three months for pest control. I use the goal function to set a goal of saving 85.00 into that category. The way it changes to orange helps me to remember if I need to put some money there or not. Hope this helps. God Bless!

    Like 3
  • First step in out of debt is to cut all your cards and disposal. Then you can start DR's snowball plan. 

    Like
  • I like having it as a tracked account because I get to just move the money into there and see the balance go down toward zero- as for the "goals" and how to budget for it- set a monthly funding goal so you see that it's yellow when you haven't funded it enough. When you use your checking out (or whatever account) to "transfer to: insert tracked debt here" it will ask for the category, because you are not just moving it around your "budget accounts" 

    Like
  • Anyone have a visual example they could post up a link to for the snowball setup?  Being totally new I just am having a hard time grasping this via text still and haven't found the right YouTube video showing it all setup (tracking or otherwise...)

    Like
  • I too am brand new to YNAB.  I just switched over from DR's online app last month.  I am loving YNAB so much more because I can see both my accounts and my budget all in one screen! 

    My situation is a bit wonky at the moment.  I ended up with no income for 45 days while sitting on the edge of disaster with a couple of loans.

    1) The debt that all extra money is being thrown at this month (until paid off)

    2) 2 loans I am behind on.  When I pay the arrears I budget here.  Then, when I make the payment to the loan I actually track it against the Actual Loan category as a transfer to my Tracking account so I can just delete these 2 entries when done. 

    3) All the accounts that get the monthly minimum payment.

    4) Tracking accounts with the actual balances.  Requires me to go to each loan once a month to hand enter the interest, fees, penalties, etc.  While I am there, I adjust the Arrears category title to reflect what I owe in arrears as of today.

    In essence, I have set up my snowball to pay the lowest amount remaining (to give me more $ and really start the snowball), get my past due loans caught up, pay off my unsecured loan, then my back taxes and finally the 2 vehicles.

    I set monthly funding goals for all of my minimum payments.  Between my tracking account and the category title, I fund the first couple of categories by hand (for now).

    NOTE:  If you are wondering why I have CREDIT categories, I use a PIF (Paid In Full) Credit Card for monthly expenses.  The rewards program attached to that one and only CC we have is worth the squeeze.  (Quote:  Is the juice worth the squeeze?)

    Like
Like1 Follow
  • 1 Likes
  • 2 yrs agoLast active
  • 16Replies
  • 2759Views
  • 15 Following