transferring within budget to new category - credit card question

Hi everyone! Thanks for the great forum help so far. Somewhat of a new user, 3 months in so far... LOVE IT!

My question/situation is this... I have my discover card that gets cash back. I use it to pay for everything and anything that I can to earn extra cash for frivolous stuff (music dowloads etc.) 

In my budget, I have categories like this...

      DiscoverCard = 0.00

      Dining-Discover = 50.00

      Groceries-Discover = 150.00

      Cell Phone-Discover = 100.00

So the "-Discover" is an indicator to me and my husband that we use the card to pay for those items. The intent is to budget for them, but pay using the card. Then each month, transfer that balance budgeted into the card line item.

I've been doing this by paying the balance of the card, then when the transaction shows up, shifting funds to cover the overspending... 

The issue is that it's not really overspending, and after I transfer the funds all of the itemized stuff shows that it's short for the monthly goal that was set. 

I use the monthly goal, so that I know what should be budgeted in that item.

 

Is there a better way or more efficient way that I am missing to do this...

I need to budget for each item, but I want to pay for them using the credit card, and I'd like to have it NOT appear as though it was overspending...

Any ideas?

 

Thanks so much in advance for any help!

Chris 

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  • Welcome. I hope that you are taking the free training courses and tutorials offered here. To put it most simply: this is not at all the way to do this.

    If you have added your Discover card as a credit card to your budget, YNAB has already created a category called Credit Card Payments and under that is a line for each credit card in your budget. If you have budgeted $50 to Dining Out and then you go to out for lunch and spend $14 on your card and enter it in your Discover card account register with the category of Dining Out, YNAB automatically reduces the available balance of the Dining Out category (right column) by $14 and increases the the available balance of the Discover credit card payment category by $14. When it comes time to pay the credit card bill, it is simply a transfer between your checking account and Discover amount. However, please be aware that you should only pay up to the amount in green (credit card payment amount available for the Discover).

    Other steps you need to take along the way: When you set up the Discover account, what did you enter as the starting balance? Did it include all the pending charges that happened before you started YNAB but that hadn't cleared yet? If you didn't, the starting balance may need to be adjusted.

    Do you pay your statement balance in full every month with money you had on hand the day the statement closed (ie not waiting for a paycheck before you pay the bill)? If so, then the account balance for the card (left hand panel of your screen should be equal to the amount in the available column for the Discover Credit Card Payment category - except the account balance on the left of the screen is negative and the category available balance is positive. As a paid in full user, any time that these 2 don't match, you know something is wrong (returns, statement credits, cash back require extra hand holding in the budget).

    If your statement closes on the 27th and payment is due on the 24th of the following month and you can only afford to pay the statement in full on the 7th of the following month after you get paid, you are riding the credit card float. Not the worst thing in the world, but worth getting off because you are one minor disaster from accruing credit card debt.

    Like 4
  • Thank you for explaining that to me and taking the time to type it all up.

    I had not added any of my credit card accounts (I have 2 that I use regularly) I typically pay in full each month. This past month, it got away from me and I had a charge that came expectantly, so I will have a balance to work on for the next month. I will take a look again at the videos. I skipped a few as I didn't think they applied to me. But I wasn't planning to have the accounts hooked up.

    I have it hooked up now, so I will work on watching how that works as it came in with a negative balance, and I'll have to try to figure out how to add all of the old transactions to it. - THANKS!

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      • bevocat
      • Sometimes, It Just Sucks to Be You
      • bevocat
      • 1 yr ago
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      Tan Inspector Well, you don't want to be adding old transactions to it. You want to add the actual balance as of today. You will need to budget money directly to the credit card payment category's budgeted column as you allocate money from your budget to pay off this debt. Going forward, any purchases you enter on the card will be categorized against the category of the purchase, and YNAB will take the money out of that category and send it to the CC Payment category so that it is reserved to send to the credit card company.

      Once you get back to a paid in full status, the amount in the Available column of your credit card payment category should exactly match the account balance in the account register, but with the opposite sign. If it doesn't, you need to adjust the amount in the budgeted column of the CC Payment category until it does agree.

      Like 2
    • bevocat bevocat Gotcha now. Thank you for elaborating. I do have the money already budgeted (unless I overspend) but it's just in the seperate line items. I guess once I see those transactions in the Discover Card area, then I can appoint them to be covered from the budgeted areas. 

      Just did my first reconcile too - THAT WAS SO EASY!

      Loving this system so far, it just makes sense!

      Thanks again!

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  • Tan Inspector said:
    But I wasn't planning to have the accounts hooked up.

     Just a quick note - there is no requirement to link any of your accounts to a bank/credit card company. I have (many) many accounts in YNAB, both on budget and tracking, and not a single one is linked to a financial institution. I do 100% manual entry and have done for years.

    Like 4
  • Tan Inspector said:
    I had not added any of my credit card accounts

     You need to add your credit card accounts. Any account you spend from with budgeted money needs to be in your budget for your budget to work.

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