Started a Budget before I had money to use

I know there is no "perfect" day to start a budget (other than "yesterday") but I found myself last month looking at what I had money wise ($0.00) only a day or two after my paycheque came in and resolving that yes I needed to start a budget.  I found YNAB and started working on it.  However I still had a few weeks before I got paid, so I had to use credit to get by.  Now up to this point I had been making sure I had the minimum amount in my Chequing account to cover fee's, rent, and my retirement payment which is automatically taken out the day after my paycheque.  The rest of my money would be moved to my credit card and I would live off the credit card until I got paid again.  Granted I rarely lived within my means and so I would spend like 120% or more of my income and do it again each paycheque.

I resolved to change this a little under two weeks ago and as I said started a YNAB Budget. But I had to get groceries and as I always do it came off the credit card. Now I have a YNAB budget that is kind of messed up... my amount to be budgeted is in the negatives... even though I got paid today... I am wondering if I should just start a fresh budget, as the credit transactions prior to being paid have pulled numbers down... prior to even having real money to use.  I am trying to get on the right track but this doesn't seem right for a budget I literally just started.

Just FYI Yes I have moved off all potential payments that would use my credit card number to a debit card instead, locked the credit card and looking at focusing on paying that debt down... but that's a strategy for general budgeting. I am more trying to fix the YNAB budget I have in front of me, so the numbers make sense... because right now they don't, which confuses me.

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  • JSunsurn said:
    potential payments that would use my credit card number to a debit card instead, locked the credit card and looking at focusing on paying that debt down...

     Actually, if you can manage the self-confidence to not overuse the credit card, using the credit card float to your advantage can allow you to use categories for spending guidance instead. 

    To do this, put all possible spending on the card. That way, when you do get paid, you'll have *budgeted* spending giving you money to make a payment. ETA: However, floating debt is different to carrying debt. If you're carrying debt, those purchases start costing you interest immediately. You'll need to make the best decision for you. 

    In your situation, where you're actually living off credit, I might suggest looking into this thread about living with overdraft. The difference is that credit card debt is WAY more expensive than the non-US style overdraft account, so you'll likely want to be more conservative.

    Again, you can get into a lot of trouble if you keep thinking of your credit limit as money to spend. In your situation, I'd probably do a compromise and give myself a category called Credit to Enable Basics to get to the first paycheck. 

    1. Figure out how much you'll need to spend between now and your next paycheck. Ensure it's feasible on your credit card.

    2. Negative budget that amount in the Credit to Enable Basics category.

    3. Budget to the necessary categories. 

    4. Work your tail off to get that category back to $0 ASAP, and keep it that way.

    5. Work to get credit debt paid. 

    6. Work to get off the credit card float. 


    There may be people who think I'm giving you fire to play with, but I agree with you, if you have to spend money between now and the next paycheck, you need a plan. 

    "Keep the red as low as possible without further guidance." Is not my idea of a helpful plan. 

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  • Dont budget for the groceries if you don't have the money to cover it.  Leave the category overspent.  Then as you get more money you can budget to pay down the card.

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  • Perhaps I over explained things.  My question was if I needed to start from scratch to make sense of the numbers I was seeing...  I gave far too much information which complicated what I was asking for.

    Either way thanks though.  I actually did start from scratch, and re-inserted the relevant information as if I started my budget this morning with the paycheque I just got.  I was able to then properly set my budgeted amounts, then pay some bills which now properly show up on budget as amounts spent of the budget I assigned to it.  The numbers actually make sense now, and I am able to start things properly.  Yes I have a large VISA Debt, but that is one of the main reasons I now have a budget, so I can track everything and figure out how much I can pay it down every month without adding to it. Thanks!

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    • JSunsurn Great! Make sure you take the credit card class YNAB offers so you know what's going on with those numbers. 

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      • Superbone
      • YNAB convert since 2008
      • Superbone
      • 6 mths ago
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      JSunsurn Sounds like you’re at a good starting point now. In your previous state, the way to handle it would have been to increase your debt on the credit card to give you the funds you need to categorize and make it to your payday. Now you need to categorize all of your paycheck to categories that will allow you to get by to your next paycheck.

      Like you said, now the goal is to try to live within your means and to slowly start paying down the debt. Best of luck!

      Like 1
    • JSunsurn I think a fresh start or two at the beginning of using YNAB is pretty helpful! You learn new things along the way. We're here to help as you work out the kinks!

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