New advice on money stashed away before budget creation
I’m stuck. We decided to retire, sell house and move so I was motivated to create a working budget for our monthly expenses - easy and done. And to pay off some smallish balance cards and an RV loan. House was paid off already and the cash that would have gone there has been quietly piling up leaving a fairly substantial amount. Add to that a newly started social security benefit in excess of $3k. Plan is to funnel it directly to RV loan. So, I sat down and realized that I have about $3-5k on the cards. About $30k in a cash brokerage account and a small pile in checking. The problem is too much money and no way to account for it as savings. My assumption was that income left over in any given month was to be zeroed by calling it savings. But because I took 3 months of Soc sec to pay the RV loan and $4k from brokerage account to pay off a student loan that lingered from a kid not paying us that last bit my budget is insanely messed up for obvious reasons. So I’m thinking to zero the Checking by pretending to add as income what was already there. Does that make sense? It’s not real income just another way of looking at it. I can’t move it physically because I’ve nowhere to put it for four weeks. Ideas welcome. In the end our income will be reduced from about $160k to about 50k and I’ve cut out so much superfluous crap am chiseling away at the debt fast. However I don’t want to have no cash, either. Just want to make it balance, not look like I’m way over budget because I spent saved money to pay debt while using earned income to pay monthly expenses.
No. Never create a transaction that did not occur in the real world. The one exception is a reconciliation transaction, but I actually try to avoid even those. I find the error in my register and fix it so that I'm not left accounting for random amounts of money.
Here's how to bring your budget back in balance:
1. Make sure that all your accounts reconcile. Compare the cleared balance in YNAB to the cleared balances at the bank. My personal preference is to find the error if the cleared balances don't match. I've never found it takes me more than 30 minutes or so. If you really can't find it, and it's not a large discrepancy, you can have YNAB enter an automatic reconciliation adjustment for you.
2. Make sure that there is nothing budgeted in next month.
3. Adjust the rest of the budget as you see fit. Move money to next month if you want to be a month ahead (this would be my recommendation of what to do with excess money before anything else) and create savings categories to represent the jobs of all excess money you have. Budget until all categories are green or gray, and until TBB is zero in this month and any future months.
Hi Hot Pink Banjo !
I agree with WordTenor, you always want your budget to reflect reality, even though it sounds like this time in your life it's all quite up in the air! 😊
I would start with making sure all your accounts (debt and otherwise) are added to your budget, and that the transfers/payments reflect the ones you made in real life from there. If all of those transfers/payments/inflows were from before you started YNAB (or rather, from before the date of your Starting Balance transaction), then you don't need to do anything! Just make sure your accounts are reconciled, and then you'll likely need to move things around in your budget too.
I hope the helps!
Since I did not want to start all over my solution was this:
I used the bank website to create a transfer from the brokerage account to pay off the student loan directly. I don’t track the brokerage account. I let my broker manage the ins and outs of my investments. I just pulled some cash out from that account after dumping a particularly obnoxious stock whose corporate policies are at odds with my values. The amounts nearly matched leaving about $10 owed on the loan as it stands but it’ll be less when the interest is recalculated. It never touched my checking account. Whatever comes back to me will enter my checking as a tiny amount of one time only income.
For the RV loan, the actual three months of Soc Sec benefits “lived” in my checking account but were not reflected in last month or this month’s budget. That money sat there until I transferred it from the deposit account to the loan account at the same bank. Again, a total wash transaction but one that spanned the three months prior to creating the budget. For Nov, that inflow will show as income as soon as it clears the bank as a deposit, and will immediately be transferred to the RV loan. The idea was to have it paid off by year end but I’m about two months short.
I think my error was to start my budget at zero cash, add in month’s income sources as anticipated and limit spending to actual outflows from the current month, and leave the retained cash hidden.
The good news is I got rid of +$10,000 in debt in 10 minutes. I’m probably never going to see that again. Plus a massive bonus. I get to stop arguing with the student whose loan it was about how much was owed us. I forgave 4000 of a 20,000 loan.
And the final bonus. The RV balance is now at a point where when we sell our current residence we can retire that loan. The credit card balances were all due to unexpected medical insurance deductibles and copays. I want them gone before the Fed starts extorting Medicare from our Soc Sec checks.
And in in other news. Since it all matters. Ditched a $200 extended service plan on RV. A never ever used landline phone for $30. Siriusxm on husbands car (came free for one year, then charged more....way more to the tune of $150 a year. Cancelled Pandora. Cancelled audible and got a library card. Keeping Amazon prime though since I would literally spend more on gas to travel to purchase all the household needs (we call them inedible groceries) like laundry soap, paper towels, toilet paper — not fancy stuff, but bare necessities. Our water bill tripled during the drought (fake) so I started using more disposable items to save water. Amazon is great for that stuff. I don’t buy food from them though.
And Idumped my Netflix stock, it’s not a “Keeper” and dumped their service. Saved $275 a month.
Cost of living in rural Calif is horrendous. Miles from stores, gas is exorbitantly taxed and gives horrible fuel economy, food costs are soaring due to transportation costs (I guess) so that’s why we want to sell and move. And get out of debt.