Handling cash-out from refinancing

Hi there,

I've just finished a cash-out refinancing of the mortgage on my New York City  (Brooklyn) apartment.  [Skip rest of paragraph if your time is limited]. I did the refi to pay off credit card debt, which I know some YNABers (and others) may frown on, as it's considered unwise to roll unsecured debt into secured debt, or to permanently link all the stupid things one bought on credit to the roof over one's head. I understand and respect these opinions. It has seemed like the right course of action for my particular circumstances (limited current income, and an apartment purchased over 20 years ago that has appreciated tremendously in value - I know I'm privileged and that most people don't have the option of handling their debt this way), although I might have chosen a different path if I had stumbled on YNAB earlier. I probably could have skipped explaining myself, since the folks who post on these forums don't seem judgmental in the least. But I tend to project my own self-criticism onto everyone else, making it hard to resist giving the whole song and dance.

TL;DR: I've got four checks from a cash-out refinancing and want to know the best way to record them in YNAB. Three checks are made out directly to the credit card companies - I'm going to mail them in as payments. The fourth is made out directly to me is already deposited in my checking account.

Obviously the check to me is Inflow: To be budgeted. I'm not sure about the checks to the card issuers - since they're not made out to me and won't spend much time in my hands, I don't really want them to look like income. I thought I saw a post on here somewhere about credit card payoffs coming from a third party, but I can't find it now. Do I need to link these checks to my new mortgage, which, of course, is in YNAB as a linked tracking account?  Can I just treat them as if they're from a random outside source? Should I create a temporary unlinked account from which I transfer the money? This may not matter as much as I'm thinking it does, but as a relatively new YNABer, I'm really excited to have set up a budget that works (for now) and I hate the thought of doing anything to "break" it and having to do a Fresh Start at this point. YNAB has given my only hope of learning to live within my means so that I don't re-indebt myself and waste the break I've been given.

Anyway, sorry for the length, but would appreciate any tips on how to handle this stuff without wrecking my beautiful budget. 😌

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  • Think I've got this actually. I realized the cash-out comes from a temporary trust, so I set up an unlinked tracking account for the total of the checks. Not hard at all - we'll see how actually entering the credit card payments goes. : )

    Reply Like
    • Hey Olive Branch !

      Absolutely no need to apologize, we're happy to have you in the forums! :)

      When you say you set up the unlinked tracking account for the total of the checks, do you mean you created a Tracking account with a positive balance to match the total of the checks? If so, when you transfer the funds from the Tracking account to each credit card (to pay off the balance), the Tracking account will be left with a $0 balance. 

      The alternative (if you want the Tracking account to match the newly owed amount), is to create a Tracking account with a $0 balance. When you transfer funds (to all three credit card accounts and your checking account), the new account balance will be negative - the amount you're to pay back. You can then adjust the Tracking account for any processing fees or charges.

      If you have any questions about that, please don't hesitate to ask! :)

      Reply Like 1
      • Olive Branch
      • Librarian/Info Pro
      • olive_branch
      • 9 mths ago
      • 1
      • Reported - view

      Faness Thanks, I think I'll stick with the first approach and hide the tracking account once it's down to 0. : )

      Reply Like 1
    • Olive Branch That works, too! :)

      If you decide you want to track the new mortgage, you can add it as a separate account - (or not)

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