Credit Card Payment amount inaccurate
I've been using YNAB for 9 years and have never quite adapted to nYNAB. I even went as far as utilizing a different product for a few months in 2018/19 to see if there was anything out there similar to the old YNAB. The product I found was similar enough, but missing a few key items like account reconciliation that caused me to reconsider YNAB. I've been back using YNAB full time for about 7 months.
My inability to understand the 'new' way of managing CC's in nYNAB is the issue. I've read many posts and articles trying to understand how it all works behind the scenes and it still boggles my mind.
I do not pay my credit card off each month. I cover all spending and interest charges (unless there is an emergency like a large vet bill), and budget an amount directly to the CC category to pay down debt when I can. I have not been paying my bill based on what YNAB says I have available for a credit card payment because I don't trust it. It was correct for the first couple of months since I started back using YNAB and then things went off track somehow. It never seems to be the right amount, currently way too high. If I add up all my category balances and then factor in the cc payment amount, I'd be in overdraft if I paid it. I'm not sure when or how this happened or how to fix it. Can you help?
I don't use that feature of YNAB but I can tell you how it works. (I make my CCs checking accounts so they work the same as all previous YNABs.)
- When you initially set up a credit card, you need to budget to the payment category what you plan to pay on the card as of that moment.
- Every time you make a CC purchase, that amount will be subtracted from the category you purchased from and added to your CC Payment category.
- When it's time to make your payment, you can be confident that the amount in your Payment category is available for payment and make a transfer of that much from your checking account to your CC account.
I hope that helps. Just keep asking questions until you get it and it makes sense to you.
Your first point, 'budget to the payment category' - currently I don't budget anything to the payment category unless I'm wanting to pay down some of my debt. When paying the credit card, I categorize it as a 'Payment from: checking' and no category is required. Am I doing this correctly?
I guess if I'm doing that part correctly, I just need to know how a credit card payment balance would grow so large that it's impossible I actually have that money in my account to use towards payment. There must be something I did wrong a while ago, or something I'm not doing right.
If I add up all my category balances and then factor in the cc payment amount, I'd be in overdraft if I paid it.
1. Your CC Payment is already included in the sum of your category balances. If you don't have any overspending, that sum is given by "Total Available" shown on the right when no categories are selected.
2. If you have multiple cash-based accounts (e.g., a savings account), those funds are included in the budget as well.
3. Don't forget about any funds budgeted in next month's area.
The easiest "proof" is to scroll all the way forward as far as you can. In that future-most budget area, this will be true:
To Be Budgeted + Total Available = Total Cash in Accounts
Bottom line is if the cleared balances in YNAB accounts equal the balances in the real-world and there is no red showing in the budget, then you really have every penny in the budget.
When paying the credit card, I categorize it as a 'Payment from: checking' and no category is required. Am I doing this correctly?
Assuming you mean the Payee is "Payment from: checking", yes that's correct. There should also be a little sideways arrow to show it's a transfer.
One more thing. Most people don't realise this but if you don't want to make a payment to the credit card as large as the amount in the Available in the CC payment category, that's ok. And you can move money out of that category to repurpose it for something else. By doing so, you are simply saying you are happy to keep the debt longer and prefer to fund something else with it.
The important thing to remember is to not make a bigger payment to the CC company than there is in the CC payment category available. If you do, that's cash overspending and you would need to move money to that category from elsewhere. Same as for any cash overspending.