How to handle LARGE and LENGTHY reimbursable expenses

I want to switch from YNAB4 to nYNAB. At least, I think I do. But I haven't yet because I can't wrap my mind around how  debt and reimbursable expenses work in nYNAB.

Here's my situation: I have thousands of dollars of healthcare expenses and reimbursements that I have to float for up to 8 months, involving both a checking account and a credit card. It gets overwhelming and discouraging when nYNAB just lumps it all into a big, angry debt monster instead of the way YNAB4 kept it in the healthcare category where I knew what it was and that it would be reimbursed eventually. I don't have enough extra money to budget for the healthcare expenses until I get reimbursed without completely strangling all my other categories. I need my reports to accurately reflect my copayments (that I do budget for because that portion is not reimbursable) and the amounts of the reimbursable portions and the actual reimbursements. 

This is my reality. It is super frustrating to feel as though nYNAB is trying to force me into a rigid structure that doesn't fit a reality that I have no control over. I'm hoping there is a way to handle it and that I just haven't found it yet.

I have registered for the credit card webinar class, but I'm not sure that is where my answers are. I need some encouragement and additional ideas. Please post links to help docs or (?) that can offer insights into the situation.

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    • Jen
    • Budget Expert
    • Jen_c
    • 1 yr ago
    • 1
    • Reported - view

    Hi JGM -- what a tough situation! Let's see if we can make it easy.

    How to handle reimbursements is an important topic, so a section of our Help Docs is dedicated to it. Here's a quick summary, and you can follow the link to learn more.

    There are two ways you can handle reimbursements in YNAB:

     1. Budget for the initial expense, then treat the reimbursement as income.

     2. Temporarily overspend, then use the reimbursement to cover it.

    Budgeting for all your spending, even if it will eventually be reimbursed, is the best way to handle reimbursements. If that reimbursement is late (or never comes), you're covered.

    Temporary overspending is only recommended when the reimbursable expense occurred on a credit card, since money hasn't been immediately removed from your bank. Our Help Docs explain how to handle the reimbursement based on whether you receive it in the same month or a future month.

    To keep track of what you're owed over time, you'll want to create a Tracking Account. Here's a quick video on how to do that. The balance of the Tracking Account will be what you're owed.    

    I’m going to mark this as answered, but please feel free to tag me in a reply if I can tie up any more loose ends for you!

    Reply Like 1
    • Jen Hello!

      YNAB newb and having a hard time tracking the right way to do this. I often have $5-7k/month reimbursable travel expenses in on my credit card. I can’t budget for them as option 1 suggests, so that leaves overspending. I’m going to look into HappyDance ‘s tutorial, but meanwhile the video you posted above has expired. Can you re-share please? Thanks!

      Reply Like
      • dakinemaui
      • dakinemaui
      • 4 days ago
      • 1
      • Reported - view

      Slate Blue Tugboat Categorize both expenses and the reimbursement to the same category to keep reports accurate. No matter when they occur. (There's an error in the YNAB docs about this.)

      If the reimbursement category ever turns green (positive), move those funds manually to the CC Payment category.

      That's really it. Ensure you're reimbursed within 30 days and you'll always have sufficient funds to pay those purchases off when the CC payment is due.

      Reply Like 1
    • dakinemaui Thank you! Makes sense. But question; I'm just getting started so my starting balance has all kinds of "hidden" work and personal expenses, meaning there's no transaction history to show how that starting balance came to be. So now I've received about $9,000 reimbursement and my reimbursement category is very much in the green, but it's still less than the total due on my cards because I've since incurred another $6k in expenses that I haven't been reimbursed for. I guess my point is, I feel the need to add more transactions prior to my starting balance so I can categorize them, but realize that going back one month will end me in the same place...I'll always want to go back for more data. I think I can figure this out day-to-day, but I don't know how to get over this new-to-YNAB catch 22.

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      • dakinemaui
      • dakinemaui
      • 20 hrs ago
      • 1
      • Reported - view

      Slate Blue Tugboat if the original category is TBB (as is the case with the starting balance), then categorize the reimbursement to TBB. You still need to move/budget the same amount to the CC Payment category.

      You can't pay that $6k off yet, unless you user your own money. However, you have a minimum of 4 weeks after every purchase before that amount is due. Hopefully work reimburses you before that part is due. If not then you have 2 choices: either incur interest or reallocate/borrow from elsewhere to enable the proper payment & reallocate the reimbursement back to the category that you robbed. 

      You should also budget some of your money toward the personal portion of the starting CC balance.

      Reply Like 1
    • dakinemaui Thanks again. I think I'm tracking. I will get reimbursed in time. Now there's the issue with current vs statement balance. I made a dedicated post about that. Anyway, I really appreciate your guidance.

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      • dakinemaui
      • dakinemaui
      • 12 hrs ago
      • Reported - view

      I misspoke regarding your 2 options and there is a subtlety. The two options are either reallocate/borrow to increase the Payment category or don't reallocate. However, it's not certain you would incur interest if you don't reallocate. The reason for that is that normal budgeted purchases also increase the CC Payment category. If they increase it enough to cover the statement balance before the due date, then you wouldn't incur interest. (This is how riding the CC float works.)

      Although, $6k is a relatively large amount that would be beyond what most people can normally make up in budgeted purchases every month. Still, it's a possibility for some.

      Reply Like
    • HappyDance
    • YNABing consistently since 2014
    • HappyDance
    • 1 yr ago
    • 4
    • Reported - view

    Hi, JGM

    I pretty much do exactly what YNAB recommends as pointed out in the links @jen_c  posted as resources.

    If you are like me, you need to see it in action to be convinced.  I suggest you open a new budget called Test to try out a few concepts before committing. I pretty much have to try things out to completely understand them.  I've created a step-by-step example for you to test to see if it would work for you.

    1. Create a test budget.

    2. Create three accounts

    • Chequing
    • Credit Card
    • Medical Claim (make this one an 'other asset' type account, so it shows up as a tracking account)
    • you can add some funds to your chequing account to complete the test - I would date the inflow in the previous month so you can see how the month transition affects the budget display.

    3. Create a Medical Master category with at least 2 subcategories:

    • Medical reimbursable
    • Medical co-pays

     

    Here is how I would enter a prescription renewal for $150 where $50 is my responsibility and $100 is claimable. (Again, date this in the previous month, so you can see how it affects the following month.)

     Entering it this way will separate the two portions of the expense, and it will increase your Medical Claim account by the amount eligible to be claimed.

     

    And this is how it will appear on your budget screen. Notice that I budgeted $50 for my portion, and that I did not budget anything to the reimbursable portion. YNAB moves $50 to cc payment and shows the overspend in the other category in orange.

     

     

     

    When you receive funds from a claim you record it as a transfer from Medical Claim to Chequing and categorize it as Income to be budgeted, then budget it to your credit card.

    I'm sorry to hear about your health troubles.  Hope this helps.

    Reply Like 4
      • JGM
      • JGM
      • 1 yr ago
      • Reported - view

      Thank you   HappyDance  ! That was super helpful, especially all the pics!

      Reply Like
    • JGM
    • JGM
    • 1 yr ago
    • Reported - view

    WordTenor  I've seen your work answering other questions. Do you have any additional insights for me here? THANKS! 

    Reply Like
  • HappyDance - Thank you so much for all the good info! This thread is one of the only ones I could find online about this topic. Here's my question: 

    You wrote, "When you receive funds from a claim you record it as a transfer from Medical Claim to Chequing and categorize it as Income to be budgeted, then budget it to your credit card." However, whenever I tried to transfer money to a budget account (i.e. my checking account), I was not allowed to assign a category. 

    Any suggestions on a fix for this?

    Thank you!

    Reply Like
      • HappyDance
      • YNABing consistently since 2014
      • HappyDance
      • 9 mths ago
      • 1
      • Reported - view

      Powder Blue Motherboard 

      When transfering between a tracking account and an on-budget account, work in the on-budget account. A tracking account doesn't interact with the budget. That's why a category can't be entered there.  But you will be able to enter the category in the on-budget account whether the funds are inflowing or outflowing. If you already created the transfer in the tracking account, you don't need to delete it, just double click on the corresponding entry in the on-budget account and revise it to add the category.  The category will only appear in the on-budget half of the transfer.

      Here's one of my recent transfers.  The first view is in my tracking account register.  Note: no category.

       The second view is in my on-budget chequing account, where I chose to inflow the reimbursement directly to my Loony Fund (the category I use for office expenses).

       

      Does this help?

      Reply Like 1
    • HappyDance yes! Thank you so much. 

      Reply Like 1
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