Carrying a negative balance
Last month, I overspent on two budget categories with the knowledge that I would be able to budget more dollars to them this month and next to essentially pay them off. I thought the overdrawn budget balances would carry forward to this month just as a surplus does but this didn't happen. Question 1) why didn't they carry forward? Question 2) Can they be carried forward if I enter them differently? Question 3) If they can't be carried forward, how do I achieve my end goal of spreading a current expense over multiple months?
did you overspend with credit? if so, it just carries over as debt.
if you overspent with cash (eg. used overdraft or a cheque that hasn't yet gone through, or if you have dollars in other categories you aren't going to move/WAM to cover this overspending) then it will subtract from what you have available to budget the next month.
YNAB has some Rules because it is an allocation budget system, and the software is designed to support those Rules. These Rules are a structure for living below your means. Trying to carry negatives over time is a mind game to convince yourself you have more money than you really do.
Rule 1 is to give every dollar a job. That also means don't give jobs to dollars you don't have, and it means don't give more than one job to the same dollar. When you have a category that has gone negative, you have in fact given your dollars more than one job, because you have more money assigned to your positive categories than you have in your accounts.
That's where Rule 3 comes in. Roll with the Punches. Sometimes you decide you want to spend more money than you have in a category. Priorities change. Your budget isn't static, and is meant to reflect your priorities. As a result, you should move money from other categories into the overspent category to bring it back to zero. This allows you to continue following Rule 1 as I described in the first paragraph.
if you do not correct the overspending by the end of the month on your own, YNAB does it for you. If it was cash overspending, then it reduces the amount of money you have available to add to categories in the next month. If it was credit card overspending, this will be reflected in the fact that no money is reserved for paying the part of the credit card balance that was caused by the overspending, and you will then increase your debt on the card.
This all makes sense. I understand the rules and appreciate #3 as I'm ok allocation future dollars to today when I have visibility on supplemental income, for example. In theory, I also understand how YNAB either reduces the available cash or increases the debt in the next month (I used my credit card in this case), but I've yet to attempt to reconcile that it is actually taking place. My preference would be to see that my budget for clothing, for example, is negative $200 because I overspent last month and so I can allocate $200 this month and bring it back to zero without actually buying any clothes in the current month. Make sense?
I really don’t like this new feature. I understand the reasoning, but if I’d like to carry a negative balance in a category, I’d like to have that option. I have several categories I call “annual expenses”, and I set a goal for what I’ll need to pay them by end of year. Some I make semi annual payments on, like auto insurance. It’s a big amount in the middle of the year, so I don’t want my running total to disappear, so I’ll know how much more I need by end of year. I really liked the arrow thing. I used it on some accounts when I wanted to, knowing I had the funds in my savings.
I fully understand the rationale behind not carrying over negative balances for the primary target audience of YNAB - but, there is one use-case where having this option would make my life so much easier: Tracking "reverse debt", i.e. money that others owe to me.
I am not rich but I have enough savings to last a couple of years without an income and I have no debt besides a very low interest mortgage. I use credit cards for convenience and bonuses but I always pay the full amount every month to avoid paying any interest.
The reason I use YNAB is to be in full control of my money. For example to make sure that I don't forget about unnecessary subscriptions or have any erroneous or fraudulent transactions on my accounts, and to keep me disciplined to have a surplus (almost) every month. YNAB is an excellent tool for this, very powerful in its simplicity.
Every now and then I help out friends and family by paying for something that they will pay me back "tomorrow", "next month" or "in August". Interest free of course. In YNAB4 I had a category group dedicated to tracking this, which I treated differently from the other categories (a negative balance means someone owes me money, a positive balance means I owe them). Job expenses to be reimbursed on a later salary also belonged here. It was a great system, it worked really well. It is the only feature I miss from YNAB4 but I do miss it immensely.
Please give us back the option to carry over negative balances for individual categories!
I agree also. I used YNAB 4 and loved it! this new version, I'm not loving. We all use YNAB for different reasons, whether we are trying to pay down debt or to just keep track of our spending but I think we should have the options of how we want to use YNAB for our own use. I think we all understand the rules set up by YNAB but let us have the way to customize it,
Same here. Was a YNAB 4 user, and used negative carryforward all the time, primarily for expenses that will be reimbursed.
I have read through the comments and discussion - the proposed workarounds do 'work', but not for me. I do not like co-mingling 'pass-through' negative balances with my own occasional overspends. Part of the draw of YNAB for me is the ability to separate a large credit card bill into meaningful information. Folding an 'overspend' into a debt balance destroys information rather than creating it.
I fully acknowledge this is more of an accrual-based accounting that is not the main focus of YNAB, but if this feature is not to be re-enabled I'll be moving on, as I certainly won't pay $80/year for software that takes away features I like and use.
Can anyone from the YNAB team confirm that this is NOT being turned back on?
When I spend something on a personal card that will be reimbursed, I don't want it to show up in my monthly reports since it makes it difficult to accurately gauge my actual personal spending. In some months, my cash flow is actually dominated by reimbursements (for those concerned about my being taken advantage, I own >30% of said business).
After some more digging, I found a solution that works for me. Fair warning, I would not do this if you are at all at risk for overdrafting. Instead of a different category, I create a different account (specifically, an un-linked credit line).
Now when I spend something that will be reimbursed (which is almost always on a credit card), I re-categorize it as a transfer to to the credit line (which is named 'receivable' or 'reimbursements'). This will show up as a positive value in the credit line. Note that my net worth hasn't changed at all, no spending has been logged in my report, and by credit card balance is still accurate!
Later, when I deposit the check from the reimbursement, I do the same thing - flag it a transfer from the credit line account. The final step in the new YNAB is to budget that amount towards paying the original credit card in the month I'll be paying it (almost always, the next month). While this is a manual step, it should only happen once per month. At the start of a new month, I reconcile the total in my 'credit line' against the expense report I am submitting to the company's accountant, and as long as it matches, enter this amount as budgeted for paying down the credit card it originated from. (Obviously, this gets more complicated for multiple credit cards involved, but I don't have this problem since I always put my reimbursements on the same card - the one with the good rewards 🙂).
Your mileage may vary, use at your own risk.
I find the new ynab aggravating due to no flexibility. I loved the red arrows because they were just easier to understand. Also have to enter the budgeted amounts every month. They don’t automatically fill in like they used to, unless I’m doing that wrong. I really did like the original ynab. This one, not enough. I don’t think I will be renewing next time, unfortunately.
The easiest, most effective solution I've found is simply to MANUALLY carry over negative balances each month: when I set up a new month's budget I immediately manually withdraw from relevant categories (for me this is rarely more than one or two, so it's cope-able) to immediately re-make them red. To reduce the negative balance I simply withdraw less than the old balance (in YNAB4 I'd budget a little towards it).
This lets me record and track 'debts to myself' where I've KNOWINGLY dipped into savings and want to carefully monitor that I am restoring those savings by making the 'borrowing' clearly visible each month.
It gives me constant, prominent visibility that I spent FROM MY OWN SAVINGS on a spontaneous luxury or unexpected expense and shows me how far off I am from 'breaking even' again AGAINST MY OWN SAVINGS.
It also allows me to go back through previous months to easily trace when (and on what) the original spend occurred.
I have ample funds to cover this, and it avoids risking me ACCIDENTALLY chewing into savings by transferring funds from my savings to cover the relevant spend category but then FORGETTING because next month everything is green and good and on track, when in fact I want to restore those savings.
It also reminds me while I'm still 'repaying' a big spend and so encourages discipline in not making another big spend too soon. This is all hidden when everything is green, and there is no psychological pressure not to continue using savings to cover further spend.
Basically IT ALLOWS ME TO SAVE MORE EFFECTIVELY.
(This MIGHT show up in the Net Worth report, but a dip could just as easily be a big planned spend.)
Like many other others I am exasperated by YNAB's pig-headedness in refusing even to acknowledge any legitimate motivation for wanting to carry over negative balances and their refusal to try to design a genuine solution. Instead I have this frustrating administrative overhead; but this works really well for me (far better than 'lines of credit' or 'holding budgets' or 'non-budget account transfers' or all the other various solutions - of which I've tried MANY!!!) and I like the rest of YNAB, so...
Hope this helps.
Orchid Pegasus said:
I've come to realize that YNAB is only for people living on the margin and those who are trying to get out of debt. Once you have a significant buffer of savings and just want to make sure that you are not overspending on average over a longer period of time, YNAB 5 just gets in the way by intentional design. For example, you can't easily track temporary reimbursements, loans and lendings unless you create extra "checking accounts" for each person/company you lend to or from.
It's true that YNAB does not play well with other budget methodologies. Those who want to stick to a set monthly formula and carry category overspends into future months find it really frustrating. Others who want to forecast into the future, ditto. It is a zero-based allocation budget method. Period. In some cases, an alternate budget theory appears to play well or work in tandem, but it usually requires a whole lot more work than is really unnecessary: budgeting by account for example.
I had already moved to an allocation budget before finding YNAB, but I was using it with a paper budget and a budget by account cashflow system. You want to talk unnecessarily complicated, that's a whole other discussion.
My current cash liquidity is roughly equivalent to an entire year's income, and I have no debt, so I do not agree that YNAB is only for people living on the margin. I value the clarity and control YNAB gives me to manage my assets and my spending and display any tendency to lifestyle creep. It also helps me in keeping track of what I am owed by various plans and people.
I think the reimbursements, loans, and lendings comment fairly hits the bulls-eye. However, it's really not a difficulty unique to YNAB if you think about it. Everybody I work with, regardless of the budget method they use and whether they use a budget or not, seem to have issues with keeping track of their claimable expenses or laying hands on any of their own numbers. I say this as the person who co-ordinates the paperwork for my office team of 30. I had issues incorporating reimbursables into every budget method I tried, and that was true with YNAB too. I tried a couple of different methods of tracking reimbursements. I now use the preseeded category method and tracking accounts. It's the method that requires the least amount of mental energy and mental math.
I've come to really appreciate the YNAB app and being able to see exactly where I am in the moment rather than counting on the inflow of future funds. The method combined with the YNAB interface helped me succeed in ways that no other budget method did. I currently have $200 in claimable health expenses, $75 in claimable office expenses, and $12,000 owed to me by a sibling, and those dollars are not in my budget. My tracking accounts tell me they may come back. I prefer the conservative approach of backing all my expenses with my own cash, and using tracking account(s) to keep it all straight. YNAB is pretty good at keeping track of it all for me.
2. Borrow from another category, such as your emergency fund or a fun-money category, and pay it back over time. (This is what you actually did; you just couldn't bring yourself to tell YNAB about it.)
And now as a company, YNAB has decided that they are not going to make that one-click simple anymore. They know they can't stop someone from shooting themselves in the foot, but they're not going to hand them a loaded gun and hold the foot down anymore either.
Pink Stallion said:
Later, when I deposit the check from the reimbursement, I do the same thing - flag it a transfer from the credit line account. The final step in the new YNAB is to budget that amount towards paying the original credit card in the month I'll be paying it (almost always, the next month). While this is a manual step, it should only happen once per month.
Hi. I would like to try this method. I've created an unlinked Line of Credit account that appears under Budget, named HSA Reimbursements. I've done a Transfer To of items that I paid for via Credit Card mostly, but one was Checking. That acct shows a Positive Balance, as you say. When I receive a reimbursement though, I'm a bit fuzzy on the steps. I set it as a Transfer FROM the HSA Reimbursement account. But the item still needs tracking, right? So can you explain what you do when you write "The final step in the nYnab is to budget that amount towards paying the orig cc in the month I'll be paying it." Where exactly do you "budget" this amount. Fuzzy on this step. tks for yr help.
I would also like this capability to keep track of work expenses and reimbursements. I don't want my work expenses rolled over into "my debt". I want to maintain an negative balance in that category so that when I get reimbursed (as income) from my work, they will balance out and I have a zero balance showing that I'm fully reimbursed and then that money is already allocated to the expenses currently sitting on my credit card. When my "work expense" category gets zeroed out, I now don't know how to categorize the reimbursement income that comes into my checking account! Very frustrating. There should be a way to allow a negative balance on some accounts. I'm not "fooling myself" with a negative balance. I'm realizing that some expenses truly happen before I have money to allocate for them. But I do have full confidence and assurance from my company that the expenses will be reimbursed, just not necessarily before he 1st of the next month!
I would like to give a few of my dollars a special "reserve" job. The job involves being a stand-in for any category that happens to go over budget. When a reserve dollar has been deployed for use in a specific category, I would like some indication when I look at that category that lets me know that I need to do something to relieve it. Relief could involve moving money from another category and/or reducing my spending in that category and waiting until normal budgeting corrects the problem over time. A red/negative balance is a perfect way to do this because by default every dollar that is added to it in the future goes toward relieving those reserve dollars so they can go to work somewhere else. If I run out of reserve dollars, then the program should force me to repurpose dollars from other categories much like it already does.
This actually supports the rules of YNAB more than what they currently allow. It also supports various use cases that so many customers want to use:
- Loaning money to outside parties
- Work reimbursements
- Holding family members accountable for their own overspending
To me, this is a no-brainer. It does not violate any of the YNAB rules, and it provides a lot of functionality that so many customers want.
As I see it, the "difference" should be made up from the LEAST important thing in the entire budget
Trying to get back on topic, I have a reserve category. Everyone in the family knows this is the least important category. It gets $100 each month, not $100 + whatever was taken out last month.
My views are colored by a similar topic, time management. When you are scheduling things, you build in reserve/buffers so a slip by one party doesn't negatively impact everyone else. You wouldn't make the person that slipped into that contingency block "pay it back" unless it impacted the critical path (i.e., the highest priority).