
OVER EXPENSES ON CREDIT CARDS
I NOTICE THAT WHEN THE NEXT MONTH STARTS THAT I CANNOT SEE THE UNDER FUNDED SPENDING CATEGORY GOES AWAY AND GOES TO 0. IS THERE AN EASIER WAY TO KEEP TRACK OF THIS EXPENSE. FOR EXAMPLE I HAVE A DEBT OF 80 FOR GOING OUT TO EAT BUT WHEN I GET PAID ON THE 3RD WHEN I GOT TO BUDGET FOR THAT EXPENSE, IT GOES TO NEW MONTH ( NOVEMBER) MY ONLY GUESS IS BEFORE THE MONTH ENDS, GO TO THE GOING OUT TO EAT CATEGORY AND USE COVER THIS SPENDING WITH WHATEVER CREDIT CARD I USED.. IS THIS RIGHT?
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So, you are using your credit card to float expenses when you don't have money for it in the budget? You should take money out of a different category in your budget, which you can then replenish when new income arrives. This reflects that you can only spend money you have, which is the point of YNAB's methodology.
Relying on the credit card float to cover expenses can be precarious and you really should only cover from the credit card payment category if you are planning to actually take on new debt.
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That's right Magenta Moose !
Only positive amounts in your categories will roll over into the next month. Negative amounts will not. What happens to those overspending amounts depends on whether the overspending was with cash or credit.
- If cash, that amount will be deducted from To be Budgeted in the new month.
- If credit, the overspent amount will be represented as an increased balance on your credit card account.
You'll also notice all your Budgeted values will be $0, well, because it's a new month! And if you overspent that category by credit, you'll want to budget more money to the Credit Card Payment category in the new month so you don't go into any more debt! If you want to learn more, you can always check out this article about what happens when the month rolls over.
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Dan at YNAB what do you mean by "If credit, the overspent amount will be represented as an increased balance on your credit card account."
I am looking all over and don't see where that number is represented. In my credit card account it shows me my cleared, uncleared and working balances but nowhere do I see the total overspent in the previous month and a reminder to clean it up.
This is a typical thing that happens for us. End of month on the 31st I clean things up that may need it, move money around till all categories are zero and then setup next months budget. Then in a day or two something will clear that was dated for the previous month and we forgot to enter. NOW the previous month has a negative but we've moved on to the new month and are using those balances. If I don't remember to manually go back to the previous month, I'd have no way to be alerted to the problem while looking at this month's budget.
I guess I don't understand the reason things are not treated the same (credit or cash) for overspending. From a philosophical perspective, our credit card is the same as cash - its money we want to immediately be accountable to have. So turning that overspending yellow and not deducting it from To Be Budgeted instead of red and reducing my available dollars makes it more "ok" to float. I don't want to float. I want my credit card usage to hurt just like cash usage. Its just a form of payment in our minds. Does that make sense?
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Dan at YNAB I may simply have missed something from the video you posted, but here's my problem - I'm working on my debt, like everyone else, but sometimes spending from a credit card without any intention of covering that spending from my budget is absolutely necessary.
Let's say I have $0 left in my budget, with no wiggle room at all, but I absolutely have to buy gas to get to work. I'll use a credit card to cover that purchase, with the full knowledge that this is adding to my overall debt. But YNAB doesn't like that. It wants me to cover that debt immediately, either with money from other categories or money budgeted directly for the credit card. The problem is that I don't know how to get YNAB to just accept the fact that I had to add more debt to my account.As I said, I get that this isn't a good practice, but times are hard, and it's occasionally necessary. Although it doesn't happen often, it throws my budget completely off, because I'm simply not sure how to handle this within the software.
If it wasn't for the way YNAB handles credit cards (and YNAB4 wasn't much better at this), the whole program would be cake. I feel like YNAB massively overcomplicates the way debt is represented, and I find myself procrastinating on dealing with my budget for no other reason than wanting to avoid the mind-bending mechanics of YNAB's credit card system.