I could use help navigating a financial nuance

First month in and struggling with two issues:

First, I pay all bills through a credit card, then pay the balance each month. This isn't a "float," I have the money (5x)  in checking/savings but I earn precious airline miles by doing this method -- so changing isn't an option. I'm having trouble finding a guide which addresses this exact method. Most posts or responses I see offer advice "never float!" but don't help me manage the particular process. I would welcome a link or suggestion on how to setup & manage that particular issue.

Second, and a touch more complex, I have a secondary account for "guilt free spending (hereafter, GFS). Each month, as a paycheck lands, $50 is automatically moved into the GFS account twice a month. This account is designed to be apart from the primary finances. I hope you're following along because here's were it gets, well, messy.

I find that just-so item on Amazon for $75. I use the main credit card (mentioned first, for miles) to purchase the item. Then I log into online banking and move the $75 from the "fun money" account into main checking to "payback" the purchase. I'm a touch confused on how to manage that transaction in YNAB.

When I import the transactions, main checking shows the $75 inflow, which the GFS shows the outflow. Additionally, EACH account asks for a category and that's where I'm confused.

Perhaps I'm missing a concept (since I'm new to YNAB). If so, please share either a link or some advice. I'm interested.

As always, thank you for your time. 

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  • Many people, myself included, use our credit cards in the way you are.  You budget for the purchase before it is charged to the card.  Then when the purchase comes through money is set aside in your payment category so you can pay the bill.  

    When you start using YNAB you will need to budget to the credit card category for any outstanding balance due on the card, but after that you will cover it with budgeted funds in other categories so you won't have to budget to the credit card payments category anymore.

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    • satcook Right, that makes sense. It will take a moment for things to settle and be accounted for in subsequent months. Thanks.

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  • Heyya StruggleBus. (love the name)

     

    If both your main checking and GFS accounts are budget accounts, then you should be able to record such a transaction as a transfer. This is done in the "Payee" field of the register. If you click the down-arrow in the Payee field, a list of past payees will populate. Also in this list will be YNAB accounts that you can transfer to/from.

    If you're a recovering Quicken user, the process is identical, except that in Quicken the transfer to/from accounts are listed under Category.

    Hope this helps.

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  • The GFS purchase will be assigned to the GFS category, at which time the $75 will leave that category and go to the credit card payments category.  

    THen the transfer between account will be entered as a transfer and does not require a category.  You will need to change the payee to a transfer payee.

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    • satcook Right. I see what you're getting at. I was caught trying to sort categories for the same transaction (in/out) but then it mangled budgeted items. Thanks.

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  • To add: 

    When you import transactions from financial institutions, sometimes YNAB will capture a transfer between accounts correctly (by showing it as a transfer). And sometimes it will capture a transfer as an inflow or expense.  I'm not a guru, but I imagine this has to do with the timing by which YNAB is able to import certain transactions from different financial institutions. Anyhow, to correct anything that was imported improperly, just change the Payee to a transfer account as mentioned above.

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    • TedStryker Ah, this makes much more sense. Lemme noodle that, test it out. Thanks for the input.

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  • Thanks for jumping in. Much appreciated.

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  • It could be beneficial to explore the other forum threads and articles that discuss using accounts to define the job of the money contained therein, or the tedious exercise of trying to sync your budget categories with account balances.  Based on the information provided here, your $100/mo GFS deposit could stay in your checking account, and you could simply use a YNAB category to assign those dollars to a job.  When it comes time to pay the monthly credit card bill, use the money already in your checking account instead of transferring money between accounts.

    https://www.youneedabudget.com/the-relationship-between-your-budget-your-accounts-its-complicated/

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  • YNAB can be very helpful for folks who are paying their credit cards in full like you. If you haven't already, I suggest taking the Master Credit Cards with Your Budget workshop—it's quick and will give you a good foundation in how budgeted spending will move from your categories to your Credit Card Payment category so you're always ready for the payment.

    One thing to keep in mind is that you'll need to budget directly to the Credit Card Payment category for your credit card's Starting Balance. That will start you off on the right foot! :)

    When it comes to your GFS, I'll echo Cash here in saying that it sounds like transferring that money to a different account is creating levels of complexity that aren't needed. This is because in YNAB money is given jobs in categories, not in accounts. You could simply keep that GFS money in your checking account and fund a category called GFS every month. Then, cover credit card expenses when you make them by moving money from the GFS category to the spending category when you do spend. 

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