Credit Card Overspent - except I met my budget

Hello,

I'm pretty new to YNAB and still figuring things out. For the last two months I've been absolutely delighted with how stress-free this budgeting software is, except...today I noticed my credit card payment situation.

I've seen a couple of posts that seem similar to my problem but couldn't quite parse the answers, so I'm here with a new post.

I use my credit card to pay almost all of my expenses--groceries, medical bills, pet supplies, etc--all things that I have budgeted for. I don't overspend in any of my budgeted categories. I pay the credit card off each month.

I have no credit card debt, so I haven't budgeted a monthly payment to pay down the debt--just budgeted into my normal categories. If I budget the same amount to pay off my credit card, won't that essentially be double-budgeting? I will have budgeted twice the amount of money I need to spend in a month, just so YNAB doesn't think I've overspent on my credit card.

Someone please help me out. I have so far loved YNAB but this is really perplexing me. 

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  • It sounds like you didn't account for the initial debt. YNAB doesn't assume you will pay that off, so you'll need to budget for that explicitly in the CC Payment category. (You are correct that budgeted purchases will automatically increase the amount reserved for your payment.)

    Budget whatever is needed in order to make the CC Payment Available match the working account balance (as a positive number).

    Like 1
  • If that were the case, wouldn't the negative amount remain the same from month to month? It nearly doubled from February to March. 

    Like
      • WordTenor
      • I have the honor to be your obedient servant
      • WordTenor
      • 5 mths ago
      • 2
      • Reported - view

      LED_53 It depends on how much spending you’ve done and how much you paid the card. Since the statement balance is usually 40-60 days behind when you pay the card, you might do a lot or a little budgeted spending in the meantime. That budgeted spending builds up your capacity to pay the card. If a low spending month follows a high spending month, you’ll have less set aside for a higher bill. 
       

      The key is that after making a payment, the category should still be equal to the account balance. If it isn’t, at some time in the past, something wasn’t budgeted for.  When you first start, that “something” is usually the things you bought before you created your first budget. 
       

      Like 2
  • WordTenor  That makes sense, but I think what's tripping me up is that the CC bucket seems to be showing an overspend because I didn't pre-budget money to pay the card. Like, if I hadn't budgeted any money for groceries, but spent $100 on groceries anyway.

    But I don't want to put an amount into the Budgeted column for my credit card, because the budgeting for those payments is my budget as a whole.
     

    Does that make sense? It's so hard to explain this in writing! :P

    Like
  • LED_53 said:
    if I hadn't budgeted any money for groceries, but spent $100 on groceries anyway

    Which is exactly what happened for the groceries (and whatever else) you bought before starting YNAB -- aka the starting balance. Those are, by definition, unbudgeted purchases until you budget for them.

    Bottom line: if you want this card to have paid-in-full status, you MUST make the amount in the category cover the entire debt.

    Until you do, you are riding the CC float, relying on budgeted purchases made in the roughly 4 weeks between statement generation and due date to sufficiently raise the available payment amount. If you don't raise it enough but pay anyway, the Payment category turns red. This indicates some of the money you sent anyway is still earmarked for other uses (categories).

    Any red in the budget indicates at least one category no longer has the money it says it does. "Monopoly money", an "infeasible plan", "misleading"... call it whatever you like, but it's not a good way to run your finances unless you know exactly what you're doing.

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  • LED_53 said:
    But I don't want to put an amount into the Budgeted column for my credit card, because the budgeting for those payments is my budget as a whole

    Are you saying that if you were to budget enough to achieve PIF status, then you would not be able to budget enough to your other obligations? If so, this is text-book "Riding the CC Float", and you'll have to gradually budget your way out.

    Like 2
  • ...I feel like we're not quite understanding each other. I have no credit card debt. I am caught up to all of my purchases as of two days ago. I just made a payment today. I am still within my budget. There is no debt to pay off.

    The theoretical $100 of groceries would be a credit card purchase. I would assign it to the Groceries bucket of my budget. Then, I would pay off the $100 by paying my credit card bill. 

    The problem is that when I make the credit card payment, YNAB apparently dings me for not having budgeted that $100 for a credit card payment. At least, as far as I can tell.

    Like
      • WordTenor
      • I have the honor to be your obedient servant
      • WordTenor
      • 5 mths ago
      • 4
      • Reported - view

      LED_53 The problem isn't that you didn't budget for this $100 of groceries. The problem is (most likely) that you did not budget for the things you bought before you started YNAB. 

      When you first created your budget, you probably had a balance on the card you were planning to pay off. Say you had $3000 in the bank and $1000 owed on the card. In your mind, you were planning to pay back the card. $1000 of the $3000 already had a purpose: "Pay for the stuff I bought on the card when the bill comes due." 

      Then you built a budget. You looked at the $3000 and gave jobs to all $3000, not understanding that $1000 was spoken for--it needed to be set aside to pay back the credit card company.  So then, yes, you went on spending and staying perfectly within your categories, but your categories were already overstated because in reality you only had $2000 which didn't have jobs when you started your budget.  If you spent the whole $3000, the most the budget could set aside to pay back your card is $3000.  But if you charge $3000 on top of owing $1000, you'll owe $4000, and there's not that much cash in the budget. 

      The $1000 of spending on the card before you started is unbudgeted. You did that spending before you used YNAB, so by definition, there was no budget behind it. Any time you do unbudgeted spending, it has to be covered with cash from the budget. 

      tl;dr--you have to make those two numbers equal, even if it confuses you as to why right now. 

      Like 4
  • Looking back at WordTenor 's post, I think what may have happened is that the processing of the payment didn't line up with the end of the month, and I still had a negative balance on my card at the time. I usually pay my bill in the middle of the month. I guess I'll see what happens at the end of April...

    Like
      • jenmas
      • jenmas
      • 5 mths ago
      • 1
      • Reported - view

      LED_53 waiting until the end of April is not going to work. I understand that you pay your credit card off every month. That has nothing to do with YNAB.

      Let's use some hard numbers. Lets say that you started YNAB on January 1. And on January 1st your credit card had a balance of $1500 which included all charges to date and there were no pending or uncleared charges on your credit card. When you set up YNAB on January 1, you would have needed to budget $1500 to the credit card payment category as a one time only thing. From that point forward, if all of your spending was budgeted, there would be no need to budget any money to the credit card payment category.

      Did you do that when you did your initial budget set up? If not, literally the only way to fix it is to allocate enough money to your credit card payment category to make the amount in the available column (right one) match the balance of your credit card account on the left side of the screen (except the account balance will be negative and the category balance will be positive).

      Like 1
  • If that's the case, though, wouldn't the negative amount on the credit card remain the same month to month--holding steady at $1500? Mine has changed. It's gone from the -$261 I started with, to -$502, and is now, as of today, +$234. I haven't added or subtracted any amount to or from the CC budget bucket but the amount is fluctuating.

    I threw some unbudgeted money at the March balance to zero it out for now, and I'm still broadly happy with the way this system works. I'm just confused about how it's handling my credit card. 
     

    I think I'm just going to stop following this post and see how things shake out. 

    Like
      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 5 mths ago
      • 2
      • Reported - view

      LED_53 Sticking your head in the sand won't fix the problem.

       

      https://www.youneedabudget.com/are-you-riding-the-credit-card-float/

      Like 2
      • jenmas
      • jenmas
      • 5 mths ago
      • Reported - view

      LED_53 why would it stay steady? Every time you make a budgeted transaction your account balance and category balance should change. Yesterday my credit card account was -$X and my credit card payment category was $Y (in my case X=Y but X is negative). But this morning I bought something for $192.25 so now the account balance is -$X+192.25 and my category balance is $Y+192.95

      Like
  • Whoops, forgot to turn off @notifications.

     

    This is incredibly rude. I was managing my finances perfectly well before I started using YNAB. I like it for its ease of use, but my first experience on the forums has been pretty unpleasant.

     

    I'm going to have a friend monitor this post for me and let me know if actual YNAB support chimes in, but please believe I'm not sticking my head in the sand: I have a very clear view of my actual financial standing. I'm just confused about a particular element of the software. 

    Like
      • jenmas
      • jenmas
      • 5 mths ago
      • 3
      • Reported - view

      LED_53 Good luck. Support is going to tell you the same thing we are - you need to budget for the initial balance on the card when you started YNAB.

      Like 3
      • WordTenor
      • I have the honor to be your obedient servant
      • WordTenor
      • 5 mths ago
      • 4
      • Reported - view

      LED_53 I don’t think your head is in the sand. But I do think you’re so convinced the problem can’t be what we're telling you it is that you’re having trouble understanding what we’re telling you it is. 

      It really is that you didn’t budget for the opening balance. Everything you are seeing is absolutely the result of that, even if you can’t quite understand yet why it would be. 

      Like 4
  • LED_53 said:
    the processing of the payment didn't line up with the end of the month

    When you pay has nothing to do with the month boundaries. The money needs to be in the CC Payment category before you pay, whenever that happens to be. YNAB moves money to the payment category only for budgeted purchases while using YNAB. It is on you to reserve money -- i.e., budget -- to pay off the balance on the card when you started YNAB.

    Like 2
  • Hi LED_53 !

    I hope this message makes it to you!

    I wanted to post a quick link to a video explaining how paid in full credit cards work. 

    If that isn't the issue, we'd be more than happy to take a closer look at things! If you’re up for it, go ahead and enable Support Access for your account. Once you’ve done that, let me know and I can follow up with you via email! :)

    Like
      • LED_53
      • Alice_Blue_Boa.9
      • 5 mths ago
      • 1
      • Reported - view

      Faness Hi! Thank you so much. I found what I THINK caused this problem--I accidentally miscategorized two transfers between checking accounts as payments. And I also recently closed a checking account on YNAB before its balance was in agreement with the zero balance in my bank account.

       

      I couldn't figure out how to...re-cateogrize them, so ended up deleting them because they don't appear in my  bank account statement. It seemed like that fixed the problem, but now I have a checking account balance that doesn't match what's in my bank. 'm very mixed up and will definitely enable support access! Thanks again.

      Like 1
      • LED_53
      • Alice_Blue_Boa.9
      • 5 mths ago
      • 1
      • Reported - view

       Faness  Hi again! I think I've actually fixed my problems on my own--it was all caused by this checking account I had closed, and a couple miscategorized transfers between accounts. Thank you so much for offering to help, though!

      Like 1
      • dakinemaui
      • dakinemaui
      • 5 mths ago
      • 1
      • Reported - view

      LED_53 Does your CC Payment category cover the entire working CC account balance now?

      Like 1
    • Glad to hear it, LED_53 ! Nice job with those transfers. Making sure the transactions are correct is an important step.  Just to make sure everything is lined up, I went ahead and sent you a quick email!

      Like
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