Credit Card - Moving Principal Category Money to Credit Card Payment then my goal is underfunded

Hi,

Maybe I'm not using YNAB correctly. Here's what's happening.

I have a category for  "credit card principal" money.

I created a "needed for spending goal" for this category to force me to set aside a certain amount each month by the 15th of the month just for the principal payment.

I then move money from this category to the "Credit Card Payment" Category before I actually make the payment using my bank.

But when I do that, the goal goes back to telling me I haven't funded it. Which I did, but moved the money to the "Credit Card Payment" category.

I can see why mechanically it's doing this, as technically when you move money out of a category with a goal...the goal still needs more funds to go back to green.

But, I did meet my goal if you know what I mean.

The only thing I can think of is to turn off the goal, but that's how I estimate how much I need to set aside every month.

Is there something different I should be doing?

 

thanks

Anton

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  • Slate Blue Wildebeest said:
    Is there something different I should be doing?

    Yes. Budget directly to the CC Payment category. Make the goal on that if you wish.

    Like 2
  • I'm actually trying to keep principal payments and interest separate so i can track them separately. I have an "interest due" category, and have goals set up there too. When the interest transaction comes into YNAB, I just categorize it as "Interest Due" and YNAB somehow knows what's going on, moves it to my payment and doesn't tell me my goal is not funded. That's sort of what I'm trying to do with the prinicpal payment category.

    Would this work for my principal category? e.g. When my principal payment comes into YNAB in my credit card account....categorize it as "Credit Card Principal"...and YNAB does the rest without resetting my goal?

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      • dakinemaui
      • dakinemaui
      • 7 mths ago
      • 3
      • Reported - view

      Slate Blue Wildebeest The Payment category effectively principal reduction when interest is budgeted for elsewhere. TBH, you're unnecessarily complicating things by trying to distinguish interest and principle. The interest is like any other purchase on the card -- you simply bought more time. The entire balance is debt to be paid, and the reason you originally incurred the debt is immaterial.

      Again, drop the Credit Card Principal category and budget to the CC Payment category to enable a larger payment (over and above that automatically reserved for recent purchases).

      Your payment -- the entire amount -- should be recorded as a transfer between the checking and CC accounts. No category is used, because paying off this debt is not spending. By definition, "spending" is money leaving the budget, and you'll note the CC is part of your budget. The "spending" occurred when you swiped the card, resulting in a transaction with a category. Even the old (pre-YNAB) debt has a transaction (the starting balance).

      Like 3
  • Hi, Anton! 

    Your Interest category is working differently than your Credit Card Principal category because new interest transactions are considered Budgeted Spending, which moves to your Credit Card Payment category when entered in your register.

    Your Credit Card Principal isn't Budgeted Spending, it's debt that has already been incurred. So, right now you're simply assigning money to that category, then moving money from to another category at a certain time of month. This workflow will always result in your goal not having been met once you move that money.

    I understand that you'd like to track the payments you're making toward the principal balance so you know you're making progress. Have you considered creating a Pay Off Balance by Date goal directly in your Credit Card Payment category? This goal type will calculate a monthly amount to budget in order to pay off your credit card debt by a certain date. And, the goal automatically adjusts if you send a bigger/smaller payment than planned.

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  • Hi, I'll remove my principal category and give the goal within the Credit Card Payment Category a try.

    "Pay a Specific Amount Each Month" looks like a better option for me as I have minimal funds to meet the " Pay by Date" goals recommendations unless I pick a year far surpassing 2069....YNAB only goes up to 2069.

    Typing that out loud sounds terrible doesn't it?

    Just one question though. When the Interest transactions category amounts (budgeted "buying time" spending) are automatically moved to the Credit Card Payment Category, does that amount count toward the goal? For example if I wanted to plan for paying interest PLUS $100 every month extra, should my goal be [estimated interest] + $100 = [monthly goal amount]?

    I think where I was originally tripped up was that my credit cards are not interest only....there is always a minimum payment that adds a small principal amount to the interest. So in YNAB it felt like I was only paying interest, and wouldn't really know what the "extra" amount should be unless I kept logging into my bank to check.

    Of course it's not helpful to pay only the minimum amount, but some months...that's the reality. That's where the principal category came from. I'd budget for minimum, and add extra funds when available...and budget for the interest the normal way you do in YNAB.

    I think I was looking for a YNAB button to select "budget for minimum payment" or something. [interest] + [principal]= [minimum required payment]. Not as a good idea, but as something that has to be done until more funds are available. I felt like I was only budgeting for interest, not my actual minimum payment required by the credit card. Kind of like a "make minimum payment" button I have at my bank.

     

    [edited update]: Just read this forum post: https://support.youneedabudget.com/t/60h8jws/credit-card-interest-more-than-minimum-payment-how-to-enter-this-in-ynab

    Perhaps I could just use the Interest Due category only by just budgeting for the entire minimum payment there [interest] + [bank required principal] = [Interest Due]. Kind of like just lumping in that bit of principal payment as interest, even though it's not interest. Then anything extra above that would be a true principal amount...which I would add to the Credit Card Payment category itself. Not sure though.

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  • Slate Blue Wildebeest said:
    When the Interest transactions category amounts (budgeted "buying time" spending) are automatically moved to the Credit Card Payment Category, does that amount count toward the goal? For example if I wanted to plan for paying interest PLUS $100 every month extra, should my goal be [estimated interest] + $100 = [monthly goal amount]?

    The interest does not count toward the goal on the Payment category. As I mentioned, when all other outflows are budgeted elsewhere, everything you budget toward the Payment category IS progress (principal reduction if you want to look at it that way). Set your goal for $100/mo.

    Slate Blue Wildebeest said:
    just budgeting for the entire minimum payment there [interest] + [bank required principal]

    If you only want to budget a lump sum, do it in the CC Payment category, not the Interest category. (That one just stays yellow/overspent.) It's not obvious at a glance what your net progress is this way, but it is an option.

    Regardless of which you do, just make sure the Available amount is at least as much as the minimum payment amount.

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  • thanks for your help. I understand it better now.

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  • 7 mths agoLast active
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