Rolling over overspent amounts
Hi, We are wondering if it is possible to roll over the overages in categories vs having it automatically come from To Be Budgeted. Specifically, our electric bill varies greatly month to month, but we budget for it on an annual basis. So we spend $2400 annually on electricity, but some months it is $300 and others it is $75. We historically have just put it in our budget at $200/month, and we carry over the excess or negative and it all comes out at the end of the year. But each month that it is higher than $200, it is then zeroed out the next month. However, when it is under, it carries over, thus throwing off our budget.
I would budget the current higher amount needed now to pay each month, and I would implement the $200 average budgeted amount when the cycle dips below the most expensive months. By doing it that way, you will build up a nice plump category that enables you to continue budgeting the annual monthly average of $200 even though your bills increase by this time next year. Also, understand that in carrying a negative in one category means that your positive in another category is just an illusion. +$100 -$100 = zero.
I want the build-up in my seasonally-affected categories to be in place in time to supplement paying for the more expensive months, rather than going into the red and carrying the negative forward in my budget until I can catch up in the least expensive month. If you make it your goal to build the category up so that it is ready for next year's expensive season, you'll have moved the break-even date to the end of the expensive season and resolved this issue.
I would also encourage you to always eliminate any red in your budget rather than pretend you have +$100 in vacations and -$100 in utilities when you really just have just a zero in both.Reply
I second what HappyDance said. That's what I do, too. I budget the same amount every month. On the months where the bill is less, I leave that money in that category so that it will accrue to cover the next large bill. This way I always budget the same amount every month; there's either some left over (waiting for that big bill) or it gets spent (almost all -there's usually a few bucks leftover) on those high bill months. The tricky part is initially setting up if you are close to one those "high spending months" and I did basically what HappyDance said above.Reply
I do as HappyDance suggests, with a variation. I have determined that March usage, which arrives as a bill due in April, is the last of the potentially high winter Gas & Electric bills. So in my budget for April, I true up the Gas & Electric category to exactly the amount of the bill. It has never been more than amount in the category, so this has always meant salvaging some excess money that can be used to fund other categories - vacation, home repair, investing, whatever needs it most. Then from April usage/May budget till the next winter, my bills are under $200 each and money builds up. It gets drawn down during the winter when bills are above $200, and I true it up again the next April. At that point, I re-evaluate whether $200 per month is likely to still be enough.
This allows me to:
1) Budget the same amount to Gas&Electric every month, except for the April true-up;
2) Have the money in the category when the bill is above average;
3) Avoid using RG&E's budget estimate, which could be inaccurate in the direction of "I need to have a pile of money when RG&E does its true-up."
Disclaimer: Psychologically, I do better budgeting a bit more than I need and salvaging excess for use in other categories than I do budgeting close to the edge and sometimes having to scramble to find money to take from other categories. Other people may find that they do better budgeting as closely to accurate as possible.Reply
Thank you for all of the feedback. We find that budgeting for the higher amounts monthly and building a surplus works for water and electric, since those are low in the winter and we build a surplus by the time they spike. The gas starts high and then has the surplus later, throwing things off. Our money management is a little complicated, as my husband co-owns a business, so he gets a small biweekly salary, then random dividends paid out as business is good. Those checks go into a savings account and we move the same amount over to checking monthly, to subsidize our income needs. After just over a year using YNAB, we have found that we actually do a great job staying on budget. We find that what info we do find useful, is being able to look at blocks of time, in various categories, to see if we generally overspent or underspent, in order to adjust budget or spending. We are trying to just be very mindful of where the money is going, so when it goes from one category to another, it throws off our number juju. :) I guess it is a good problem to finally have!Reply
Slate Gray Lion said:
We find that budgeting for the higher amounts monthly and building a surplus works for water and electric, since those are low in the winter and we build a surplus by the time they spike. The gas starts high and then has the surplus later, throwing things off.
The situation you have with water & electric sounds like it's actually nearly identical to the situation you're having with gas - the key difference is that with water & electric, it sounds like whenever you *started* budgeting, the monthly average was higher than the true spend, allowing you to easily build the surplus, rather than the other way around. Whereas if you'd started your budgeting six months later, you'd likely be in the opposite situation - having a nice surplus available for the high gas months, while having water & electric come up short :)
I think what HappyDance is saying is the key to breaking yourself out of this cycle - if you can allow yourself to *temporarily* budget an extra chunk into your gas category, just enough to fund the "extra" to get you though the rest of the high months, then you should place yourself in a position where you're then starting to build up surplus during the following lean months, so that by the time the *next* high months come along, you've got the surplus ready to go!
This temporary extra chunk can be done as a one-time lump sum if you're able to pull a bit of extra $$ from somewhere to fund this, so that you can go back to budgeting your monthly average amount right away. This would just allow you to break free of this frustrating "catch up" cycle you're finding yourself in now, which seems like it might be totally worth that one time pinch! :)Reply
YNAB used to work like this (allowing an overage to be deducted from the next month's budget). I've just started using YNAB again after taking about a year off and I hate the change. Now it's a lot more work to manage each category and clean up all the little categories that are over by a few dollars.
For instance, we spend about $1,000 each month on groceries and we were able to set the account to rollover any positive or negative balance to the next month. So if we spent $1,010 on groceries in Feb, then YNAB would automatically pull $10 from the available Groceries balance in March, giving us $990 to spend.
This was perfect. I didn't ever worry about a few dollars here or there.
Now, every account that is a few dollars over gets highlighted in yellow and I have to go and choose where to pull that money from - and next month isn't an option.
Maybe I'm missing something, but this change creates more work and goes against the "go with the flow" principle.Reply
Going all the way up to Slate Gray Lion's original post - I agree with him. Dealing with all categories doesn't always work in the current month - for instance, my husband and I only budget a SET amount of "fun" money to each of us, weekly. Sometimes we overdraft that to get something on sale, and we aren't going to budget extra or pull from other categories because the requirement is that THAT PERSON pays it off from the set amount they get weekly for fun money (almost like, an allowance).
The new YNAB makes that a total mess and so complicated. You guys NEED to reintroduce the ability to roll over negative balances BY CATEGORY - pretty please. The change going to the YNAB, between this problem and a few other little ones I've noticed, makes my budgeting take at least 1.5x as long. UgggghReply