Carrying forward a negative balance -- help spouses get along :)
I tried to use a catchy subject line for a well-worn subject. I've read through dozens of the 'carry forward negative balance' posts in the forum, on reddit, and watched a couple of youtube videos.
I totally get the thinking behind the concept, and at some point I might just stick with the rules and not try to bend YNAB to my will, but for now, I'd like to know what my *options* are for the following scenario.
My wife and I each have our own budget categories. In each category, we have things we like to spend money on. One of mine is 'golf'. (Heh. I don't play golf, but I understand that many people do and they spend a lot of money on it.)
Ok, so my Golf budget is $100 per month. In January, I spent $150. I'd like to know that going into February, so that I set a February budget of $50.
Another slightly different example: we pay home insurance once a year. It's $1200. So we budget $100 a month. When we pay the bill in June (6 months into the year), I'd like to keep a negative balance in that account for July - December, and as we budget $100 per month, that negative balance will get to zero.
I think I can handle this second example over time -- it's an artifact of having just started out with YNAB. So this June, we'll just start saving for next June, and everything will be smooth. Is that the right way to think about it? I get that we basically started doing that last June, even though we weren't using YNAB, when we started saving for the next home insurance payment.
But with that first example -- is there a mental way to think about it the same as the second example? That is, I'm wondering whether at the end of January, when I've spent too much on golf, I should cover that with another of my personal categories (say, beer). That's probably what YNAB would want me to do, right?
Remember Rule 3. It boils down to the fact that the money's gotta come from somewhere.
With the Homeowner's Insurance, you shouldn't be treating it like a negative, or you will always be 6 months behind when you make the payment. This is what YNAB calls a True Expense. You need to be honest with your budget. It's February now, so just prefund the category now so you have $800 in it, and add $100 monthly.
I can't help you with how to deal with "Golf". That's a relationship issue and not a budget issue, and you'll need to come to grips with it and manage your budget accordingly. You should make sure you are being honest about how much you really need on a per-month basis. If $100 isn't going to cut it in the long run, then you will just get farther and farther behind. As to the mechanics, how you deal with the overspend and carryover negative depends on whether the spend is on a credit card or from cash-based accounts, because how that negative gets rectified by the YNAB mechanics differs based on payment method.Reply
Pink Snow said:
I 'm wondering whether at the end of January, when I've spent too much on golf, I should cover that with another of my personal categories
You can do better than that.
BEFORE you go to 'golf', check that category balance. If there's not enough there, reallocate in advance from some other category you feel is less important. If you can't identify such a category, then don't go golfing.
Waiting until the end of the month usually reduces your options, and may require dipping into higher priority funds -- which is silly. The whole point of YNAB is to help you align your spending to your priorities.Reply
Pink Snow said:
When we pay the bill in June (6 months into the year), I'd like to keep a negative balance in that account
That money is gone, and you implicitly stole it from elsewhere in the budget. Now you're making spending decisions on categories that are inflated relative to reality.
The simple truth is you need to put money away before spending it (assuming you don't want to increase CC debt). Budget the remaining amount needed divided by the remaining months you'll budget before the outflow, or set a Available By Date goal if you need help with the math.
Yes, these higher than "nominal" contributions may cause something else in the budget to be delayed. That's life. Shift funds around the budget until whatever gets delayed is the lowest priority.Reply
Pink Snow said:
it felt oddly freeing to say - nope, that category is drained
This is a bit of an iterative thing, because the initial budget entry was a guess. Again, it's all about priorities, and shifting from lower priorities is encouraged (Rule 3).
Additionally, it's often the case that new information arrives that mandates a change in priority/timeline/scope. An easy example is you learn your relative & family is coming for a visit this weekend, and the current Groceries will definitely be insufficient. Not much choice but to shift to groceries and adjust the plan (a.k.a., budget) to compensate.Reply
Yes, these higher than "nominal" contributions may cause something else in the budget to be delayed. That's life. Shift funds around the budget until whatever gets delayed is the lowest priority.
Truth. I've been using YNAB for over three years now and I still have categories that are playing catch-up and others that are delayed. I'm not in debt or anything (aside from my mortgage and car), but way behind on savings for home repairs and it'll still be years before I feel comfortable that I've caught up on those before I can think about saving appreciable amounts for things like home *improvement* or big vacations.
I'm not in bad shape financially; I'm just what we call "YNAB broke", which means you've created a sense of scarcity for yourself which helps you make sure your true expenses are funded in a timely fashion. And it's a good thing.Reply