Question: Paying credit card debt down using true expenses

Hi! I have some money in my true expenses categories that is earmarked for paying down debt related to those categories (medical and automotive).

How do I use those funds to pay my credit card bill without simply WAMing the money, which would show a negative correlation to my budgeting goal in those specific categories?

For example, with a regular purchase for a prescription, I would have a transaction in my medical category to go along with the expense.

Since these expenses happened in a previous month, they're credit card debt that I want to pay down. Do I apply my available funds to the month in which they happened (November, in this case), even though that month has passed?

16replies Oldest first
  • Oldest first
  • Newest first
  • Active threads
  • Popular
  • WAM, pay the cards, adjust your goal to take that into account if you feel it's necessary. However you pay it, the money is coming out of those categories, right?

    Like 1
      • Krys
      • I like bacon and sarcasm
      • Krys
      • 2 mths ago
      • Reported - view

      Habanero Salsa Sure, but when you look at reports in the future, it's not trackable as having come from those accounts. That's what my hangup is all about.

      Like
      • Habanero Salsa
      • Second generation user
      • Aquamarine_Pony.8
      • 2 mths ago
      • 1
      • Reported - view

      Krys What accounts? If you’re paying expenses incurred before you started YNAB, the only way you’re going to show the spending as coming from those categories is to work backwards and enter those transactions with those categories. Otherwise, it’s just a debt payment transfer with no category. 

      Like 1
  • Don't get caught up trying to satisfy goals. If you feel it's important to pay down debt, reallocate from any lower priority category. You can do this in any month you like.

    The fact a Goal is leading you away from following the methodology (Rule 3, specifically) is a design problem. You can either ignore the warning or re-establish the goal in the following month's area (turning it off for the month of the WAMming).

    Like 1
      • Krys
      • I like bacon and sarcasm
      • Krys
      • 2 mths ago
      • Reported - view

      dakinemaui Thanks. The spending (overspending and resulting debt) happened before I joined YNAB, so it's not covered and there is not a previous month to "correct". I'll just WAM from the categories that "own" the debt, and make notes against the goals.

      Like
      • dakinemaui
      • dakinemaui
      • 2 mths ago
      • Reported - view

      Krys I would recommend WAMming from the lowest priority in your budget that still has funds. If that turns out to be the medical or auto category, then so be it. In my experience, overspending usually happens in categories that are important to me (otherwise I'd simply avoid the overspending in the first place).

      For example, with Auto, if you don't expect to incur another expense for a while, then that reduces the priority of that category and perhaps it's fine to WAM from Auto. However, if it's likely there will be additional expense/maintenance soon, then it might be more important to leave funds in there and pick on some other category for the debt reduction.

      Look at it from the other side -- if the medical category is NOT the lowest priority and you reallocate from it, by definition some lower priority has money while something more important doesn't. That's exactly backwards from how I want my budget to work.

      Like
      • Krys
      • I like bacon and sarcasm
      • Krys
      • 2 mths ago
      • Reported - view

      dakinemaui Your feedback makes sense, perhaps moreso for someone who is WAMing within a YNAB budget that has existed longer than mine (only since beginning of November).

      I'm already at the bare minimum in all categories, and the point of funding both the medical and auto categories this month was to pay down some of the debt incurred. I just didn't want to WAM from them since that doesn't allow me to track that spending as auto and medical (since my YNAB account was opened AFTER these expenses were incurred).

      Perhaps I'm getting caught up on minutiae, but I want to know that this money was spent on auto expenses, or on medical expenses, so that when I look at reports in the future, I have this information to guide how much I should be budgeting on a monthly basis so that I'm not left out in the cold ever again on these things.

      Like
      • jenmas
      • jenmas
      • 2 mths ago
      • 3
      • Reported - view

      Krys if this is pre-existing medical debt on your credit card that you are also using for buying gas, then YNAB would just have you budget directly to the credit card line item, because as far as your budget is concerned, you are paying down credit card debt.

      Like 3
  • Krys said:
    with a regular purchase for a prescription, I would have a transaction in my medical category to go along with the expense

    Ideally, the medical category would have had money Available at the time of the spending. This will result in money moving automatically to the CC Payment category.

    I can't tell if your spending last month resulted in overspending. If it did not, then there is no need to WAM.

    If it did, then WAM in any month you like, either into the Medical category (in the month of the overspending or earlier) or into the CC Payment category (in any month after the overspending).

    Like
      • Krys
      • I like bacon and sarcasm
      • Krys
      • 2 mths ago
      • Reported - view

      dakinemaui Yes, that's the absolute ideal, and that's what is driving my question. I want to make sure that in the future, I have DATA to look back on that paints this picture, but I won't have data that says "you spent X on auto repairs in 2019" because my YNAB budget is so new.

      It's possible that I can't make this work, and that's OK, but if it's possible I really want to sort it out.

      Thanks for your responses and for trying to help me!

      Like
      • Habanero Salsa
      • Second generation user
      • Aquamarine_Pony.8
      • 2 mths ago
      • 1
      • Reported - view

      Krys If you want to know in YNAB how much you spent on auto repair in 2019, you’d need to categorize all that spending in YNAB. That’s probably not a good approach. It would probably be better, if you have the data, just to refer to that when the info is necessary rather than relying on a partial year in YNAB. 

      Like 1
  • Krys said:
    you spent X on auto repairs in 2019" because my YNAB budget is so new.

     It's December 2019 so I would just not worry about it. You'll have you maintenance records for the car and that usually includes the prices right?

    Like 1
      • Krys
      • I like bacon and sarcasm
      • Krys
      • 2 mths ago
      • Reported - view

      jenmas LOL, maintenance records, LOL.

      Not so much, but I DO have the notes field in YNAB, and I will make good use of it here.

      Like
  • Krys said:
    I want to know that this money was spent on auto expenses, or on medical expenses, so that when I look at reports in the future, I have this information

    Reports are based on transactions since they capture all spending. Currently, that spending of interest is wrapped up in the CC starting balance. It's recommended to just move forward from today, but you could conceivably split your opening balance transaction to explicitly categorize to Auto, Medical, and TBB (for the rest).

    Like
      • Krys
      • I like bacon and sarcasm
      • Krys
      • 2 mths ago
      • 1
      • Reported - view

      dakinemaui This makes sense. Now that I'm a YNABber, I want to TRACK ALL THE THINGS, but I get what you're saying. It makes sense. Thanks.

      Like 1
  • Thanks to all for your help - I understand why I should just WAM the debt. I think I'm looking to get some kind of psychological "credit" for the payments, but the reality is that it's just debt, and I need to repay it from somewhere. The categories where I've allocated the funds to cover it from don't matter.

    Like 1
Like Follow
  • 2 mths agoLast active
  • 16Replies
  • 172Views
  • 5 Following