Overpaid credit card and now everything is broke

Ok so I have linked my amazon credit card to YNAB. Had a balance of $173.20 coming due so i set up a bill pay through my bank to pay the full amount. Then I bought more stuff before the bill was due and forgot about the original bill pay and set up another bill pay for the new balance full amount. These payments both went through on 8/3. Making the extra payment isn't an issue for me, I can cover those funds. I originally didn't think it was a big deal, googled and saw that YNAB treats and overpayment like extra cash and indeed I had that additional money in my ready to assign. Google/Reddit said to assign it to the credit card category, which I think I did. Everything seemed fine.

 

Rather than wait on the bank to send me a refund check, I needed more stuff from amazon(don't we all lol) so I purchased stuff for close to what my credit was. I wasn't really trying to be precise. if i went over a little no big deal and in fact I went over and now have a balance of -$6.41 on the card.

 

I didn't notice(because the category I assigned the purchases to requires me to scroll to see it and I had no need to at the time) till a couple weeks later when i went to budget my next paycheck into september I noticed it shows I had a negative balance in read to be assigned for september. So i go back to August and sure enough the category i assigned the most recent amazon charges to is red and not red like I over spent with credit, red as in the category is underfunded, because it was, why fund it when the credit on the card will cover it(maybe a mistake in thinking). So then i tried moving funds to that category to cover it, but, and I'm not sure if this is because YNAB sees the credit available on the card, it will not pull funds from that category to cover the cost of the new purchases.

 

Long story i know, but heres where I am at. YNAB thankfully has done wonders and gotten me to a place where I can easily cover issues like this. All I need to know is the proper way to make YNAB think everything is ok and paid for and no red underfunded or negative ready to assign for september. I am happy to provide screenshots of whatever you need to see if it helps.

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  • If I can't find a more correct solution. I am thinking if I just delete the extra payment transaction and instead assign those funds(plus the extra $6.41 I spent) to the category i spent from I feel like that will fix everything, but will probably cause some issues with reporting and I'm not sure what else. So I would prefer not to do this, but I am stuck on how to fix it. Also posted a similar post on the YNAB sub on reddit and got help but not a solution. Thanks!

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  • You've got it and seem to understand the points at which things got off. 

    Since we're still in August do two things:

    1. Cover any category overspending.

    2. Make the CC Payment category's available equal the absolute value (positive equivalent) of your up to date working balance by assigning money directly to the category.

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    • Move Light Sound Life 

      I think I tried that previously, and while I think that does fix it, it feels like I am losing money somewhere. The funds I use to cover the overspending are used really just to make that category not red any more. The overspending should in effect be covered by the overpayment/credit available on the card. So how do I get the "missing" money back?

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    • Move Light Sound Life 

      Link to screenshots(hopefully links are allowed) to my current situation, which I hope followed what you said

      https://imgur.com/BZeCxzD

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    • KrypticPhish The pic looks right to me. What about it seems wrong?

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  • Sorry for the multiple replies, don't see a way to edit my original post. But when i say everything is broke now, even that extra $6.41 I spent, won't pull those funds from the category to the credit card. So it shows I have an overspend on the credit card account and the only way I see to fix that is to assign the $6.41 directly to the card category

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  • KrypticPhish said:
    But when i say everything is broke now, even that extra $6.41 I spent, won't pull those funds from the category to the credit card. So it shows I have an overspend on the credit card account and the only way I see to fix that is to assign the $6.41 directly to the card category

     You're correct. 

    The 6.41 was treated as cash spending because the card had a positive balance, so it wasn't sent to the card category. You still have to budget to the original category for cash spending.

    A separate, but simultaneous issue was the overpayment to the card that also unfunded. Move money to the card itself to fix it, as you said.

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  • KrypticPhish said:
    The overspending should in effect be covered by the overpayment/credit available on the card.

     Incorrect. You still have to budget/assign money in a spending category to fund cash spending.

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    • I Move Light Sound Life 

      I suppose that does make sense, but where does that leave me. Make the full payment to the credit card and just wait for the bank to send me a refund for the overpayment amount?

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  • KrypticPhish said:
    where does that leave me

     Don't you have a negative credit card balance now? So, you'll just wait until the statement is due, using the card normally, and pay the statement balance on the due date?

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    • Move Light Sound Life 

      I do have a negative credit card balance now, but I guess I don't understand why. So I overpaid the credit card so balance is positive, then I bought stuff and balance went negative, but because YNAB requires those purchases to be funded you just told me to fund that category i made the purchases from right?

       

      I'm probably just confused but my brain says I had free money on the card that I spent by buying things, but then when you made me fund that category I basically paid for those things twice???

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    • The next time the card goes positive, though (actually, please don't do that - why pay the thing to zero anyways?), You have two options:

      1. Ask for the refund and wait for it. 

      2. Just wait until you buy more on Amazon. Any purchase must be funded in its original category. No negatives are allowed in the budget. 🙂

      It's like if you had a wallet account or gift card account, or a second checking account on your YNAB budget. That $50 visa gift card is not extra money because it's sitting somewhere in my categories. Money is fungible. The budget defines purpose. The accounts define location 

      When using YNAB with multiple accounts, you have two questions before you buy something:

      1. Is there enough in the category? 

      2. Can I use this method of payment?

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    • Move Light Sound Life 

      Ok maybe this is my confusion. I funded the overspent category, but where exactly did that money go? It didn't go toward the credit card so its not like I'm making another overpayment. I have enough funds to pay what is owed on the credit card.

       

      Had I waited for the bank to refund the overpayment I would have budgeted that check and used that money to make my recent purchases.

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    • KrypticPhish 

      KrypticPhish said:
      Had I waited for the bank to refund the overpayment I would have budgeted that check and used that money to make my recent purchases.

       Exactly. You initially had to pull 6.41 from somewhere to cover the card overpayment. 

      If you received a refund from the cc, it would have been a transfer with no category and would not have been available to be allocated anywhere besides the credit card payment category.

      Any spending would have to come from already funded categories.

      As it happens, you didn't need to do the rigmarole of the transfer. The money was just was sitting on the card, waiting to be used from a payment method perspective, but not a purpose perspective. Any purchase would still need to be funded in their original categories. 

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  • KrypticPhish said:
    basically paid for those things twice???

    No.  When the card went positive, you overspent the payment category doing so, and you needed to fund it in the budget. 

     

    KrypticPhish said:
    my brain says I had free money on the card

     It wasn't free money, though (see above explanation about fungibility and multiple accounts).

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    • Move Light Sound Life 

       

      Oh I see, back when this originally happened I covered the overpyament to the credit card, but then with the multiple ways I tried to fix this I must have undone that action and forgotten about it. That is where my confusion was. So at this point I think where I am at is that I made an extra credit card payment that i did not fund, then spent more money on that credit card(while amazone may treat those purchases as already paid for based on the credit on the card) YNAB still needed to me to fund those purchases since i never originally funded the extra payment? I think that clears up my confusion.

      As i stated when this originally happened i did move funds to cover the extra payment

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    • KrypticPhish 

      KrypticPhish said:
      As i stated when this originally happened i did move funds to cover the extra payment

       Yep, and if you didn't have other overspending, your story would have stopped there. 

      Congratulations. You really seem to have understood all of the salient points. I think fungibility was your only hole. 

      That, and why pay the card to zero? 

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    • Move Light Sound Life 

       

      You mentioned that earlier, what do you mean by why pay the card to zero? Why carry a balance if I don't need to? Am I misunderstanding this point again?

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    • KrypticPhish So the way credit cards work is as follows:

      1. You buy a thing on credit. Let's pretend it was Aug 10th for $50. Then on Aug 20th, you buy another thing for another $50. You are currently in debt for $100.  

      2. On Sept 6th, the bank sends you a statement saying owe them $100, and it's due on Sept 28th (I'm totally making these dates up - you'll need to find out your own statement cycle).

      They also say you don't have to pay the whole $100 - you could just pay a minimum of $25 and they'll keep you in good standing... You'll just have to pay interest on the other $75. That's how people get in trouble with credit cards.

      3. On Sept 12th, you spend $30 on credit. Now, your total debt is $130, but only $100 is due on the 28th of Sept. That other $30 will be due on the 28th of October, because it will appear on the Sept statement.

      4. You can use YNAB to have the whole $130 set aside to pay the card, but on Sept 28th, you'd only make a payment of $100. That's fine. It's available. No overspending, woohoo.

      Rinse and repeat.

      Does that make sense?

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    • Here's where I learned the same thing, if you would like to read. 

      https://support.youneedabudget.com/t/m2s6zw/funny-fifteen-cents

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  • Hey KrypticPhish ! I agree with Move Light Sound Life that the best way to avoid these budgeting gymnastics is to pay your statement balance, all the while ensuring that your Credit Card Payment category is a green and positive match of the amount you owe on the card. If you instead pay in FULL, and include any pending charges without entering those in YNAB, that can cause your credit card to go into positive territory in the app. In these cases you'll always need to move money to your Credit Card Payment category from Ready to Assign. You aren't losing money or double budgeting either way, but you are losing time and brain power (which I prefer to conserve 😅)

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