Problem with recording Reimbursements
Hi! I can't figure out what I'm doing wrong regarding reimbursements. I am in month 2 and things are getting ~spooky~ with rolling over and reimbursements!
I watched this video:
...which I understand. I am using Option #1: paying for expenses upfront, but then I need to count on getting reimbursed before the next billing cycle (or budgeting cycle, first of the month).
I know I am doing something wrong because YNAB is telling me that I've overspent my budget by over $2000. I think tangling the reimbursements and the Split Categories function is causing this; but perhaps I really am over-budgeted? I can't tell.
I have a number of items that I need to be reimbursable:
1. (Screenshot #1, Mom-1) My mom, sister, and partner are all on my Amazon account, and use my card and the pay me back so I get points. (It's very nice of them)
For instance, my mom used my Amazon card at Whole Foods ($69.46). Then she helped me with a grad school payment that I paid for initially ($156). So, she then Apple paid me $225.46 (combined). I'm confused why YNAB is handling the two payments differently. I split up the transactions (see Screenshot #2, mom-2), so I think that might have something to do with it?
2. I have subletters in my current apartment, but charge them more than my rent ($1345) because they pay all the utilities together. And, they paid me a for having a dog plus utilities, total $1715 this month (will be $1590 next month).
I want to make their payments a reimbursable expense, because I pay my landlord at the same time they pay me. So I don't "cover" them for that long (just the time it takes for the money to clear my account).
My rent is $1345, and they pay $1715. I paid my landlord $150 on their behalf because of a dog fee, and need to use the rest, $220 (profit), as To be Budgeted. (Screenshot #3, Ben1).
I took the income ($1715, to be budgeted) and split the category. (Screenshot #4, Ben2). I should still have $1715 - $1345 (the rent I pay my landlord)- $150 (money I am "loaning" my subletter) = $220 To be Budgeted. I understand why the activity is $0 (I had +$1345, and then -$1345).
But I don't really get how YNAB handles this! The $150 should be taken out of the $370, and I should have $220 to play with (profit, to be budgeted). Again, it feels like the split categories is messing this up.
I'm just looking at the Mom one for now. It looks correct to me:
You (well, Mom, but it's your card) paid $69.46 to Whole Foods in the Mom category. Mom paid you back $69.46, so now that category is back to the $225.46 that you budgeted.
Mom also paid you $156, also categorized as Mom, which added $156 to the category, so now the balance in that category is $381.46 ($156 + $225.46).
You don't need to use a split transaction for this; you can just write both reimbursements in the memo field on one transaction, but it doesn't look like the split transaction broke anything, either, unless I'm missing something.
Is there reimbursement money you need to move back to To Be Budgeted? I don't see overspending, just more money budgeted than you actually have.
As for the activity column in the Mom category, she paid you $156. In addition, you paid her $69 and then she paid you back the same amount, which cancels out.
^ that's what I'm not sure of. I want Mom to be:
Budgeted = $225.46 (This is the spending I'm covering in advance, per option #1 in the reimbursements video)
Activity = $225.46 (The money that she's already paid me back. Instead it now says $156; the is for some reason handled differently.)
Available = $0. (I fronted her the money; she paid me back.)
^ But now, I'm wondering if the Available isn't behaving the way I want because of how I split the transactions / how they were charged originally:
She used my Amazon credit card for Whole Foods, $69.46; she Apple paid me $156 for my student fee that came from and went back to my checking account. So perhaps YNAB should be telling me I should have $69.46 for my credit card payment? In that case, I would want the Reimbursements: Mom to be $0; and the Credit Card Category to be $69.46 Available for payment.
Right? but that's not the case...
Hi Gray Rain !
Sorry for the confusion! That video you linked is for a previous version of the software, YNAB 4, so that will work a little differently in the current version. How to handle reimbursements is an important topic, so a section of our Help Docs is dedicated to it.
Here's a quick summary, and you can follow the link above to learn more. There are two ways you can handle reimbursements in YNAB:
- Budget for the initial expense, then treat the reimbursement as income.
- Temporarily overspend, then use the reimbursement to cover it.
Budgeting for all your spending, even if it will eventually be reimbursed, is the best way to handle reimbursements. If that reimbursement is late (or never comes), you're covered.
Temporary overspending is only recommended when the reimbursable expense occurred on a credit card, since money hasn't been immediately removed from your bank. Our Help Docs explain how to handle the reimbursement based on whether you receive it in the same month or a future month.
Hi Gray Rain ,
Thanks for asking me to take a look. I skimmed the responses & see answers pretty similar to what I'd give. I'm not sure I could explain it any better, it'd probably just lead to maths overload for your brain.
I think the key concepts already stated are what you should digest on, and it should start to make sense (this is really what helped me in my issue...taking the "I know it should be this" and letting the proof fill itself in):
- Total net activity should be $0 after all is said and done. Meaning if a=budget, b=spending, & c=reimbursement, a and c will match.
Start with a being whatever you feel like...$0, $exact, $500 (!)...As in my issue where you commented, one tactic may simply feel "better" to you over another even if the exact same activity is occurring. In my case, I don't know when or how much I'll be loaning out (this is an area of improvement, I'm sure), and I have enough buffer to be OK with that. So I budget $0 for reimbursements and know that if it's negative, I'm still owed. If it felt better or I needed to watch cash flow more, I could budget $500 and just watch to make sure that it eventually equaled $500 again whenever I got repaid. I simply don't like budgeting $500 and having that be reflected as over-budgeted once I've entered the rest of the month's allocations.
I confused the heck out of myself (hence the meandering post you found!) until I realized that one way felt more intuitive. If it didn't confuse me, I'd really prefer to budget the debt. I could set a reimbursement "ceiling" and my Available would carry every month, reminding me what's owed. As it stands, anything below 0 gets wiped out at end of the month, so my way Available goes from negative to 0 and I have to go back in time to look up what's owed. It's a catch-22 for me...do I appear constantly over-budgeted and have to remind myself "no it's ok, x owes me y", or do I set to $0 and have to go back to dig up old debts?