Confused about using Splitwise+YNAB

Hi all,

I am new to YNAB and use Splitwise to share expenses with my roommate. 

I have currently set this up as an unlinked credit card. There is something very confusing about this however. 

I started out with a $370 initial balance and subsequently have to pay $830 to my roomate for this month's rent etc. This brings my current balance to -$1200, which is reflected here in the image attached. 

However, on the budget screen, I had already budgeted $1200 for this and it shows an activity of +$830 (note the positive sign) and says $2030 is available on the far right column (also attached in an image above).

This seems very confusing to me as I had expected the balance to zero out and not get added to the budget itself. Also note that I haven't yet paid my roommate so the money hasn't left my bank account, so a payment has not been recorded either. 

Can someone help me understand this better?

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  • You should be budgeting funds to categories representing your expenses, rather than to the Splitwise Payment. (One notable exception is if you owe your roommate when you started YNAB.)

    I strongly urge you NOT to use a credit account to track reimbursements; you'll see why soon enough.

    The way this is supposed to work is that the account balance tracks the debt -- negative means you owe them. The workflow is as follows:

    When your roommate buys something, you enter a normal transaction for your share, categorized to your spending category (e.g., Groceries) in the Splitwise account. This reduces the account balance, to reflect you owe them (or they owe you less). At the same time, the money in the Grocery category moves over to the Splitwise Payment category, reflecting the fact you have cash reserved to give your roommate. While the account balance is negative, the Payment category Available should cover that (as a positive number).

    When you buy something, you obviously use your credit or debit card card to pay. You should record a split transaction in that account (NOT the Splitwise account in YNAB) with which you paid. The net (top line) is the full purchase amount that will hit your account. Split 1 is an outflow for your portion categorized to your spending category. Split 2 is a transfer to the Splitwise account (in the sub-Payee field). This will increase the Splitwise account (less negative), indicating you owe less.

    Now comes tricky part #1: If you pay with a cash account (e.g., checking), this transfer also reduces the amount in the Splitwise Payment category -- you owe less, so you don't need as much reserved to pay the remainder. This is all well and good.

    However, if you pay with a credit card, two things happen: 1) your CC debt (account balance) increased by the combined amount, but the CC Payment category only increased by your portion. You took on CC debt which reduced your debt to your friend, but you really just transferred it to the CC.

    You're going to have to manually budget your funds to the CC Payment category, but there is no indication you need to do this (especially if your card does not have paid-in-full status). (That lack of indicator is Issue #1.)

    Tricky part #2 with using a credit account to represent Splitwise arises when they owe you. The account balance will be positive, which does... unexpected... things in the budget. (Most people don't expect them, at least.) When the account goes positive, the To Be Budgeted increases and the Splitwise Payment decreases into negative territory. You should immediately budget these seemingly new funds to fix the Payment category. (Issue #2)

    If you have a habit of leaving your own funds in TBB, you should stop that. Rule 1 is to budget until TBB is $0. This only makes it worse, as the weird CC funds mix with your funds, and it's likely you will become confused (just judging from past users). The Payment category Available should be $0 while the account is positive.

    How do you handle straight up (cash) repayments? These are transfers between the Splitwise account and whatever cash account is impacted on your side. If you owe and pay them, though, make sure you have funds reserved to do that in the Splitwise Payment category.)

    Issue #3 arises when they owe you because you paid for something out of checking. Your checking account is out, say, $100 ($50 for your portion and $50 for theirs), but your budget only took a $50 hit (for your portion). The budget is overstated by the amount they owe you. (Issue #3) If your budget is tight, having monopoly money in the budget could be a very bad thing.

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  • I think it's much better to use one of the recommended reconciliation approaches. All you need is a category.

    https://docs.youneedabudget.com/article/183-reimbursements

    There are simply fewer moving parts compared to using a credit account.

    Joint spending you do is a split transaction, your portion against your spending category, their portion against the Reimbursement category.

    Joint spending they do is a net $0 split transaction (since no cash actually changed hands), outflowing against your spending category and inflowing the Reimbursement category.

    (Note the similarity in data entry, regardless of who does the spending. Very easy to remember.)

    Pick one of the approaches in the docs for what to do in the budget. (An easy rule for the Temporary Debt approach is to move funds to the CC Payment category when it turns green.)

    Even easier is if you can arrange for you to owe at the end of the month, since positive categories automatically carry over in the budget.

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  • I promised a while back that I would share an approach to Splitwise that a colleague (Sarah) and I have been working on, so let me give it a shot here, and see what you think.

    Here's the basic idea

    First off, you do not need to add a Splitwise account to your budget.

    Every Splitwise scenario can be represented in YNAB using one of these two transaction types:

    1. “I Pay” transactions are where I actually bought something and a portion of my purchase was for another person, who will pay me back later. These transactions are represented in YNAB with a regular old split, and documented in our Reimbursement help article.

    2. "Settle up" transactions are also real transactions. Using a simple Settle Up Template, you can settle up with anyone in Splitwise by only entering a real transaction. Here's what that looks like, for example:

    As you can see here, the outflow (67.40) represents the actual amount you're sending Deb, and the split transaction makes sure that the outflow affects your budget categories correctly. (Splitting: Deb is the category you use for reimbursable transactions for Deb.)

    The outflow lines are the amount you are paying toward the phone bill and birthday gift, and the inflow line (40.60+7) is the implicit reimbursement from Deb for your past expenses that's taking place a part of this settling up.

    Whether the settling up involves someone paying you, you paying someone else, or a net-zero transaction, you can model it the same way using a split transaction.

    If you use this method, I'd recommend settling up as often as possible, because any time you have an outstanding Splitwise balance to settle up, your budget is out of date.

    Happy to dive into this further. I think this is one of those things that's brain-melting when you first look at it—I had to sleep on it before I really understood what was going on. But once you get it, it makes handling Splitwise in YNAB really straightforward, even if you have complex splits involving multiple people.

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    • Matthew said:
      I'd recommend settling up as often as possible, because any time you have an outstanding Splitwise balance to settle up, your budget is out of date.

      I prefer to enter transactions immediately, so my categories are not out of date (regardless of whether anything is outstanding in Splitwise or not). In fact, settling up seems like "busy work" when the person who is behind can just buy the next few expenses. (I realize that's not always feasible.)

      Honestly, Splitwise is just a communication mechanism. It's just a reimbursement in YNAB, which should be very intuitive once you grasp split transactions.

      • Joint spending you do is a split transaction, your portion against your spending category, their portion against the Reimbursement category.
      • Joint spending they do is a net $0 split transaction (since no cash actually changed hands), outflowing against your spending category and inflowing the Reimbursement category.
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