Paying credit card and "to be budgeted" increases
I use my credit card for nearly all expenses and pay it off each month with money from my checking account (in YNAB transferring payment from checking to credit card).
When I do this I notice a few things:
1. Often the "available" credit card funds in the budget don't match the credit card bill. Is this due to pending cc payments and dates not perfectly matching?
2. When I make the payment and transfer in YNAB funds are automatically added to "to be budgeted" - this is dangerous as it seems to provide me extra funds to budget to my categories.
3. Available funds in for the credit card in the budget goes red (for example -$1800) but the amount increases in value as I use my credit card the following month.
How can I balance these figures? Particularly #2? Should I be budgeting those additional imaginary dollars to the credit card deficit?
Couple of questions:
1. How is your payment set up? Is it an uncategorized transfer from the bank account ot he credit card account? Or is it a pair of categorized transactions, one in each account?
2. Are you sending more money in the credit card payment than the YNAB credit card category shows as available for making the payment?
3. Did you ever budget any money to cover paying down the starting balance on your credit card?
The available amount in the card category shows you how much of your budget is reserved to pay your card, just like the available in the grocery category shows you how much of your budget is reserved for buying groceries. If you spend more than is in it, just like any other category, it will become overspent.
Unlike other categories, money gets to that category two ways. It gets there when you budget it, just like any other category. But it also gets there when you spend budgeted money from other categories using your card. However, some money won't get there via the second method--any spending you had before you started YNAB, and any overspending you had in this or prior months. You have to budget for that money directly.
If you pay more than is in the card category, you will overspend the category and it will go red, just like any other category. Because of the special nature of the card category, however, it will also send additional money to TBB (You are effectively increasing your ability to take on more debt.) So yes, first, you should budget anything extra back to the card category. But then, you need to remove money from other categories and budget it to the card category so that your balance is covered in full--your card category balance is equal and opposite to the card account balance. From then on, you will need to periodically check that the two numbers match. I find that as someone who rarely does returns or uses cash back, that mine stay in step well, and that if they diverge it's because I have an obvious overspent category. But returns, cash back, and cash advances can muck with the category balance and so you should pay extra attention when you do any of those transactions.