Getting the hang of things

Today I received my first paycheck since starting to use YNAB last week. Naturally there are a few things I am still uncertain about.  First off, after noticing that it was taking my bank a day or 2 extra to post transactions, I decided to unlink and manually do it. I figured (at least at the beginning) that it will help me stay on top of things...

-My first hang up is involving my natural gas utility. I averaged out the last year and decided $80 would be my goal. For November I only owe $45, so I cant figure out how I should handle the difference.

-My second hang up involves my mortgage and car payments (my 2 highest payments), which I always set $ half aside biweekly, because it helped me ensure I saved enough.  If the first half of the payment is rolling over from my last check, this paycheck makes the payment whole, so to speak. However, when I try to budget it in YNAB, its showing me that I'm actually short that amount because it doesn't know that half was carrying over. Hope this makes sense.

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  • nic_lic06 said:
    For November I only owe $45, so I cant figure out how I should handle the difference.

    Budget $80. There will be money left in reserve after the $45 payment. As long as bills are below average, a surplus builds in the category. When bills are above average, the surplus dwindles.

    The main issue is that you might need to budget more than $80 to prevent overspending for a bill that exceeds the Available at that time.

    Summary: budget the average at a minimum, preventing overspending when necessary.

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  • Natural gas - This is a great one to use the spending goal. You can set the goal for $80 every month. You then start the first time with giving it $80. Then you pay the bill. In this case, $45. You will have a balance available of $35. When the month rolls over, you will only need to put $35 in to get you to the full $80 goal. It enables you to have enough money over time. 

    Mortgage - it should roll over any amount that was already budgeted into it. You would add that amount required in the next month.

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      • dakinemaui
      • dakinemaui
      • 2 mths ago
      • Reported - view

      Navy Blue Pegasus A spending goal for $80 will leave the OP short in the higher-than-average months, forcing them to cut funding elsewhere at that time. 

      I think a better option is to strive for a consistent budget to minimize the work elsewhere in the budget. It's basically a roll-your-own "budget billing" approach. (There's a reason those type of programs are so popular when available from the utility company.) It's easy to do that in YNAB, and I apply it to lots of things that vary seasonally: utilities obviously, but also auto fuel (summer roadtrips), kids activities, and so forth.

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    • dakinemaui It could if your average is significantly under the high months. For me, I used this method and I have been under the average for the past year (not sure how). Maybe because I did not use the right average amount but rather it turned out to be the highest since we are only finished two years in the house and I didn't verify properly. In the end for us, we still end up with a consistent budgeted amount available. It is the amount I have to budget each month that is different. 

      If you budget a set amount, is that a category that you then sweep at the end of the month? I have not really worked on sweeping categories regularly as it doesn't seem to work as well for me in how I have laid out our budgets. Perhaps if I used this method it would. 

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      • dakinemaui
      • dakinemaui
      • 2 mths ago
      • Reported - view

      Navy Blue Pegasus  At least one month will be more than the average (assuming they're not all identical). In my experience, it's usually a few months that are WAY above average that balance out a large number that are only somewhat lower than average. Since the desire is to accumulate a surplus in the below-average months, it should not be swept at the end of the month (to $0 balance).

      The potential issue is actually on the other end -- you might end up with too much saved (e.g., if you change your habits to use the air conditioner less). However, a cap is also easy to compute. A conservative estimate is the total of the amounts in excess of the average. For instance, if the high bills are above the average by $120, $300, and $250, the month-ending balance probably doesn't ever need to be above $670.

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      • nic_lic06
      • nic_lic06
      • 2 mths ago
      • Reported - view

      dakinemaui Obviously this is going to be tricky as this is the beginning of the higher usage stretch for upstate NY where I live. Looking back on last year, only 2 months were over the $80 threshold ($87 and $82). My average for the year was actually just under $60, so my thought was to budget close to the max. Should I reconsider?

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      • dakinemaui
      • dakinemaui
      • 2 mths ago
      • Reported - view

      nic_lic06 Since you're starting on the upswing, you don't have much choice. You have to at least cover the bill amount, and the $80 will probably be fine. When bills drop below $60/the average, set the Available to $60 (move any extra elsewhere) and just switch to budgeting $60 thereafter.

      Since you have previous bills, it's an interesting exercise to figure out the optimal budget strategy that won't leave you short nor tie up too much money. If you're interested, there's more discussion in this thread, including a spreadsheet at the very bottom that may help.

      It's not an easy problem to do in your head, which is why I had hoped YNAB would step up and make a Goal to do this sort of thing. If you agree, you might make a feature request (link on the right side of the main support page).

      If you're just looking for a bottom line right now, you could post the last 12 bills and how much you have in the category now (before paying this month's bill). I'd be happy to run the numbers for you.

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      • nic_lic06
      • nic_lic06
      • 2 mths ago
      • Reported - view

      dakinemaui 

      10/2020             46.41
      09/2020             35.54
      08/2020             32.61
      07/2020             33.23
      06/2020             40.65
      05/2020             61.26
      04/2020             66.17
      03/2020             82.10
      02/2020             77.96
      01/2020             86.97
      12/2019             79.12
      11/2019             66.51
      Total           = 708.53
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      • dakinemaui
      • dakinemaui
      • 2 mths ago
      • 1
      • Reported - view

      nic_lic06 The critical month in the startup phase is March, just due to the amounts and timing. Assuming you don't have anything carrying over from October, you'd budget $78.53 until March, then follow the bills down in April & May (budget $66.17 in April, 61.26 in May).

      The steady-state cycle starts in June (budget the average $59 in June and thereafter). This also assumes history repeats itself, but it's a good stab at normalizing the variation in budget entry required.

      So yeah, $80 until March works. 🙂

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

      Forgot to mention a useful possibility -- using startup capital to jumpstart the category. A larger contribution up front can put you "on-track" to where you would have been if you'd starting contributing for this last June.

      In your case, if you budget $166 now (November), then you can switch to budgeting the steady-state amount (the $59 average) in December onward. 

      The advantage is you don't have to muck about changing other categories because this one has a variable budget entry. (You might be changing things for other reasons, but the fewer plates you're juggling the better.)

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  • Re: the large payments... you actually are short for the month. It's irrelevant that you happen to have enough to cover the outflow in that month.

    If it really bothers you, you could budget your last check in next month's area. Personally, I dislike splitting up my budgeting across multiple screens, but some people do it.

    The option I like best is to put anything meant for next month's budget in a holding category (in this month's area). When next month arrives, I release those funds and budget in the (new) current month.

    The cool part about this is that you can grow that Next Month category like any category, by putting in more than you take out. At some point, it will cover the entirety of the (new) current month upon release, opening the door to more efficient workflows.

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  • Aha, this sounds like my cue to speak up for the underappreciated Monthly Savings Builder goal type. I think it's the perfect goal for variable bills like gas, heating oil, and electricity, because it's the one that lets you convert a variable bill into a steady monthly bill in the way dakinemaui described.

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      • nic_lic06
      • nic_lic06
      • 2 mths ago
      • Reported - view

      Matthew in the case of setting as a Need For Spending, you would potentially have reserve built up from a surplus. If its set as a Monthly Savings Builder, couldn't you potentially have too much of a surplus?

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      • Bruce
      • Software Engineer
      • Bruce
      • 2 mths ago
      • Reported - view

      nic_lic06 If you set the Monthly Savings Builder goal to the yearly AVERAGE, then no, you shouldn't have too much of a surplus.  Unless as dak said above, you change your habits and use less energy, (or of course if the price of gas/electricity/whatever goes down) then over the course of a year, you will gain a largish reserve, and eventually come back down to near $0.00 and work your way back up as the cycle repeats.

      The Need For Spending goal will most likely provide you with a shortage (unless all your annual bills are very close to each other, thus being very close to the average), because you're only topping it off to the amount set, not going over.  So when the above average months come, you'll realize that you should have saved more.

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      • dakinemaui
      • dakinemaui
      • 2 mths ago
      • 1
      • Reported - view

      Bruce Speaking of the Spending goal, a fair few number of people have one set for the max (repeating monthly), likely solving the problem of being caught short. Unfortunately, I think most don't realize it's also creating more work for themselves, since the amount available for other categories changes every month.

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      • dakinemaui
      • dakinemaui
      • 2 mths ago
      • Reported - view
      nic_lic06 said:
      in the case of setting as a Need For Spending, you would potentially have reserve built up from a surplus.

      One has to be specific when talking about the Needed For Spending goal, as it can be configured various ways. Once you hit the steady-state phase, you can use a Spending goal configured to repeat yearly for the yearly total. This would be identical to a Monthly Savings goal as long as you contribute what they suggest every month.

      Yes, you can use startup capital to eliminate the startup phase. (I probably should have mentioned that earlier, so I'll reply to my other post.) I think that is what you mean when you say, "surplus". Again, after that either Spending/Yearly or Savings/Monthly works. 

      I mentioned elsewhere about using a Spending/Monthly Repeat. It's just not appropriate for this situation, IMHO.

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  • Here's another wall I've run into -- I decided to start manually posting transactions with my paycheck yesterday. I logged into my bank today to post the transactions made up until now. My statement online is showing purchases that were pending from the weekend as posted yesterday. Should I be creating transactions/activity for those in this paychecks budget?

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      • dakinemaui
      • dakinemaui
      • 2 mths ago
      • Reported - view

      nic_lic06 Depends on your starting transaction date/amount in that account. The point is you had $X at that point in time. If those transactions you're talking about are clearing the bank after that point, then yes they need to be in the YNAB account. They need to be in the YNAB account because they will be subtracted off that $X in the real world. From this point on, everything that happens to that account in the real world needs to be in YNAB as well.

      They also need to be accounted for in the budget, even if you have to do that in retrospect. One aspect of Rule 3 is to cover overspent categories (negative Available amount).

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