Am I in the right path?

Hello to all the community !
I'm Jean-Francois from France, I'm currently testing YNAB - great software - and I need some advice.
I have a checking account which I leave at the beginning of the month €1700 to ensure my expenses (excluding credit card) until the 21st of the month when I receive my salary.
My credit card is deferred. I am debited on the last day of the month for payments made between the 27th of the last month and the 26th of the current month.
I can spend with this card a maximum of €3000 in the month, which is rather rare. The average is about €1500.
With Money since 1992 and my current software since 2011, I have always considered that my salary received on the 21st of the month is to be charged to the current month. Before 21st, my accound is never exposed. I do not wish to calculate from the 21st of the month to the 21st of the following month, it is impossible. That's why I leave €1700 to start a new month.
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This is how I proceed with YNAB:
- I entered my monthly expenses as I did before.
- But payments from my credit card are deducted right away from these amounts...
- By doing this, my €1700 are too "short" to stay positive, I am in negative because my salary only arrives on the 21st.
To stay positive, I created a negative €3000 budget on the credit card line that turns red.
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Am I in the right path?
In my place, how would you do it?

Thanks a lot for your answers! (Sorry if the translation is not quite accurate)

JF

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  • Jieffe said:
    I have a checking account which I leave at the beginning of the month €1700 to ensure my expenses (excluding credit card) until the 21st of the month when I receive my salary.

    I believe this "excluding credit card" bit is the issue here - YNAB wants you to budget for ALL your purchases including credit card purchases with cash-on-hand.

    What you are doing now is considered "riding the credit card float" - here's an article that explains more: https://www.youneedabudget.com/are-you-riding-the-credit-card-float/

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  • Thanks for the answer and the link of the article.
    I wanted to clarify:
    - I only need €1700 at the beginning of the month, any surplus at the end of the month is put on a savings account.
    - My credit card expenses are always paid on the 31st of the month, I do not accumulate debts.
    - My income is guaranteed, I work for a state agency here in France (Post office).

    I have a perfect command of my credit card!

    JF

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    • Hi JF! Jieffe 

      Since you pay your credit card off each month, your Credit Card account balance should always match the credit card category Available amount. This means enough money in your budget has been set aside to pay off your credit card in full.

      To make sure those amounts match, you'll need to budget for all of the transactions that take place on your credit card.

      When you say you leave €1700 in your account, where do you have those funds budgeted in YNAB? If those are the funds used to pay your credit card, budget them towards your different categories (as you spend, YNAB will move those funds to your credit card category - setting them aside for when the bill comes due).

      To learn more about how credit cards work in YNAB, take a look at our Quick Start Guide to Credit Cards and consider taking our Master Credit Cards with your Budget workshop - I think that will help clear up some of the confusion! :)

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      • Jieffe
      • French geek, lover of numbers
      • jieffe
      • 2 yrs ago
      • Reported - view

      Hi Faness! Thanks for your answer. I had already read the help provided by YNAB but I am still looking for the best solution.

      Faness said:
      When you say you leave €1700 in your account, where do you have those funds budgeted in YNAB?

       These funds are well budgeted because I have some levies on my checking account (2 loans, house bills, taxes, small cash expenses, etc.)

      The solution could be this: I have savings accounts. I have reduced the available budget of this precautionary savings (-1500 € for this month) to cover the expenses of the credit card if anything arrived to me. This category remains "green", no more warning message for the category "credit cards payments"!

      JF

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  • Hi Jieffe !

    I'm so glad you're giving YNAB a try! 😍


    You laid out your steps so far, so I thought it would be good to throw in the steps that we recommend when a user is starting YNAB! Here's a short video that explains these three main steps:

    1. Record your income (or add your primary accounts with the balances as of today.)
    2. Give those dollars a job. Ask yourself, “What does this money need to do before I’m paid again?”. Do you have an Immediate Obligation that needs to be taken care of before your next payday? Budget money there. If you added a credit card with a balance (that you typically pay off), you’ll need to budget for it in the Credit Card Payments category. Here’s a video explaining how this works. If you have extra, budget towards your True Expenses.
    3. Spend. Don’t forget to check your category balances first! :)

    Wash, rinse, and repeat! Once you get into that rhythm, you’ll notice how it’s not about the calendar or the pay period or having multiple accounts to handle different things. You’ll see that it comes right back down to those three steps, and that one very important question: “What does this money need to do before I’m paid again?”.

     

    It may take some getting used to (especially since you've been budgeting with other tools for quite some time!), but YNAB is a bit different in that it doesn't matter when you get paid, what you do when you’re paid is more important!  With this in mind, the YNAB Method will work with any pay schedule. If you have a few minutes (five, to be exact!), watch this Whiteboard Wednesday episode for more info.

     

    I hope that helps! 

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  • Hi  Jannelle and many thanks for your help.

    I followed the concepts of YNAB well and I think I understood the "philosophy" wanted by its creators.
    I will watch the videos carefully. Thank you.
    Despite having extensive experience in personal finance software, I recognize that YNAB is quite new when it comes to software like Money or Quicken. I left a blank sheet and I followed the starter guide.
    I really enjoy going out of a long routine. I will miss a lot of things, including more sophisticated statistics, but it does not matter.
    I was looking to manage my accounts online and I wanted to have a beautiful application on smartphone to have access everywhere, I think I found the best software that can suit me. I feel there is a great team behind and it's very important to trust. We have no equivalent here in France.
    JF

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