New to YNAB, with an existing credit card balance, when I pay it, my credit card shows that I overspent. How can I fix?
I have 2 accounts, a checking, and a credit card.
I get paid once per month, and I want to budget monthly (of course 🙂). I make purchases with only my credit card and pay it off every month.
Here is the scenario:
My current credit card bill includes purchases that I made between 12/21/2018 and 1/19/2019, to keep it easy let's say I owe $2000. And I need to make a payment on 2/14/2019.
My February budget, of course, shows purchases that I have made only in February, none of those are on my current credit card bill.
When I add my payment for $2000 to the credit card register, my February budget shows that I overspent my credit card budget now.
Is there a way to prevent this overspending flag, or am I seeing this because, in YNAB's perspective, I am a month behind and working with money I don't yet have?
I would really appreciate some insight from you experienced YNABers.
Hi Andy! aprice42
If you have an outstanding balance on a credit card when you set it up in YNAB, and you plan to pay that in full, you’ll need to budget for it in the Credit Card Payments category. That’s what lets the budget know you plan to take some of the money you have and use it to pay off that existing balance. Here’s a video explaining how this works.
Since you owed $2,000 on the credit card for those December purchases, $2,000 needs to be entered int he Budgeted column of the credit card category. You don't have to do this for February purchases as long as you budgeted for them in your different spending categories.
If you aren’t able to budget for the full starting balance of your credit card and all of your current month's expenses, you might be riding the credit card float.
Take a look at those links and let me know what you think! :)
In YNAB's perspective -- and the reality of the situation -- is that money you sent to the CC company was already spoken for in the plan (a.k.a., "budget"), but is no longer in your possession. You obviously cannot spend that money now, so YNAB wants you to update the plan to align with that reality.
In the future, you should move money from a lower priority category with money before spending more than is Available in the relevant category. If you can't identify a lower priority category from which to reallocate, it makes it much easier to say "no" to whatever purchase you're considering.
The above is true for ANY red in the budget (categories or TBB). Correct that ASAP.