PayPal Messing With My System...
I've been on a bit of a mission to sell off some stuff I don't need any more -- part of my declutter initiative for this year, as well as a bit of extra money. I've been doing this entirely through PayPal, taking in payments and covering the shipping costs. The balance of money is left sitting in my PayPal cash account. In an effort to keep things as uncomplicated as possible, my PayPal account is not on my budget, rather my intention was to move over the PayPal cash balance to my checking account at the end of each quarter, and thus bring it into my TBB. I thought this would be easier than moving over various, sometimes small, amounts of money every time I sell something. Seemed like a great plan.
I have a handful of recurring payments set up through PayPal -- a few are annual subscription payments (i.e. Microsoft, domain hosting) and a few are monthly payments (i.e. Spotify, Netflix). These are set-up to use my checking account as the funding source. I also use my PayPal account to pay for online purchases from eBay and merchants I don't shop with on a regular basis. I prefer this over giving everyone and their brother my account numbers. When I make a purchase through PayPal, I am given the option of which funding source to use (i.e. my checking account, credit card, or the cash balance in PayPal). I always choose my checking account or credit card, which then keeps the purchase in my budget even though the PayPal account is not on budget. Perfect.
Unfortunately, automatic payments are not handled the same way and even though they are set-up to use my checking account as the funding source, it seems that PayPal will always use your cash balance first, and then get the rest from the preferred funding source if more is needed to cover the transaction. This is maddening, but from what I have been able to determine, based on much reading online, talking with PayPal customer support and tweaking every available setting, there is not a way to change this behavior.
Earlier this week one of my annual payments hit -- it pulled the funds from my PayPal cash balance (about half of what was needed) and then took the rest from my checking account. So now my budget is a bit whacked. I am not sure the best way to record this transaction. I entered the part that came from my checking account against the budgeted expense but the part that was covered by the cash balance in PayPal needs to be accounted for so that this can also be deducted from that expense category. I could just enter a deposit into my checking account for this amount, and then make a debit from there for that part of the payment, but this didn't really happen in my checking account. How would you handle this?
Split transaction. Assuming $100 bill, $60 covered by PayPal, and $40 from checking, record this in checking:
Net (top line): $40
Split 1: $100 outflow categorized as Domain Hosting
Split 2: $60 inflow categorized as TBB. The optional Sub-Payee controls where this shows up in the income report.
(Budget the TBB funds wherever you like.)