How to deal with a balance transfer on a credit card
Hi all - I've used YNAB since at least 2013 (Wow! Has it really been that long!?) As the program has gone through it's various stages, so has my lifestyle and budget needs. I'm now encountering something I haven't encountered since my first year on YNAB - what to do with a balance transfer? Note: I haven't carried credit card debt since the first year I started using YNAB.
My situation (using fake, round numbers for ease):
- I had $2,500 budgeted for an educational course and $1,500 budgeted for a vacation
- I put the course on a credit card at a cost of $2,000 and the vacation on the credit card at a cost of $1,000
- I am self employed, and with this Corona situation, my income for this month is looking like almost nothing.
- I opened a new credit card account that would allow me to transfer that $3,000--free of charge--to be paid over the next 15 months at 0% interest. The idea here is that I'd rather leave that $3,000 in my money market account where it can continue to earn interest, and only part with what I must on a monthly basis.
So, those charges were already categorized appropriately on card 1 and then transferred to card 2. I want to count this as money already spent, so that I don't accidentally spend it again, but I also now show my budget as $3,000 less than money that I actually have available.
I'm looking for ideas on how best to handle this. My thoughts were to count Card 2 almost as a loan, and give myself a $3,000+ amount to budget for this month, but something in my gut tells me there's likely a better way to handle this.
I'd love any other ideas.
Hi Coral Panther !
The current pandemic has made things more difficult for so many - I'm sorry you're affected by it, but glad you've found a way to help smooth things over!
Since those purchases were already budgeted and entered on the first credit card, those funds should have been moved from those categories (Educational Course and Vacation, respectively) to your credit card category. You don't have an additional $3,000 to budget with adding the new credit card, you have the same $3,000 sitting in your credit card category that you can now move to other categories without collecting interest (since you no longer need to pay the first credit card off in full to prevent that).
Please note that you'll see a yellow overspending alert in the credit card account register you transferred to. That alert will go away when your budget rolls into a new month.
Please let me know if you have any questions about that! :)