Line of Credit & Transfers
I am so confused at the way my available balance shows up for credit cards, including my line of credit, which is in this section.
- I owed 501.46 at the beginning of the month, and paid it in full, bringing my balance to 0.
- Then I transferred $1000 from my line of credit to my checking account. The line of credit (under accounts) accurately shows that my current balance is $1000.
- However, my budget still shows my activity as only $501.46 and does show the $1000 I now need to pay back.
Help, please! I don't get how to deal with credit using YNAB.
Pink Cobra said:
However, my budget still shows my activity as only $501.46 and does show the $1000 I now need to pay back.
The categories and the accounts are not linked. That might help you understand. It's a start. https://www.youneedabudget.com/the-relationship-between-your-budget-your-accounts-its-complicated/
The easiest way would be to set it up as a tracking account (or you don't even need to have the account in YNAB at all). You can still link it. You would use a regular category to budget for the pay it back.
I just want to repeat before you change things around that you can only do this IF you aren't spending directly from the LOC.
Two things going on:
- You didn't reserve that $501 for the payment in the budget. In fact, you assigned an entirely different job to that money. The problem, then, is that you sent the LOC money that's earmarked for other uses. You need to move money from green categories in the budget to cover the red LOC Payment category to reflect this reality.
- The cash advance is new debt immediately -- reflected in the account balance, and TBB will have increased by the same amount. This transfer doesn't affect the Activity in the LOC Payment category, because the purpose of that category is to reserve CASH that you'll send to the LOC (paying them back). When you're ready to pay them back, budget to the LOC Payment category and send whatever is in the Available column.
Hi Pink Cobra !
Transfers from a credit card or line of credit account to a cash account in your budget represent a cash advance situation in real life. Here's a video that shows this in action.
To fix the issues you're seeing, you'll need to budget $501.46 towards your BECU Line of Credit category (if you don't change it to a Tracking account as Nolesrule mentioned) and, when you're ready to pay the $1,000 back, you'll need to budget that as well.