Intentional Debt

Does anyone know how to set up an intentional debt? For instance, I am using a 24 month, same as cash option. It is not for a large amount of money and it will in fact be paid off in 2-3 months. How do I show this in my budget?

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  • Easiest is just to set up a category for it, unless the purchase generated a credit card that you can use later (like a store card). Just budget each month for your payment and record the outflow to the category. 

    Like 1
  • You could consider setting up a line of credit account 

  • Hey Turquoise Memory ! I'm just going to move this topic over to our Q&A section under the Debt category :) 

  • So, it is on a credit card that I already have, but rarely use. This gift was on sale by hundreds of dollars. I know about not spending money you don't have, but since it is a 24 month same as cash, and my budget category will be complete by 12/15, I chose to grab the sale price.  I have an account for the card, but had closed it. Should I re-open it or just make the payment out of the Christmas category? If i do it by category, then do I need to worry about the account? I usually don't have trouble with credit cards, but how to add a balance to a zero balance existing account has me puzzled. Thanks!

  • What do you mean, you went into debt even if you can afford the thing you went into debt for?

    I do have bills that, because of auto-pay, are spread over 8 pay periods per year. I guess that is something like an intentional debt - although the company/government does this even tho I can pay the whole amount at once.

  • I went into debt because I don't have the money TODAY, but I will before Christmas and put it on the credit card. The card isn't really closed, it's closed in YNAB.

    • Hi Turquoise Memory ! 


      Since that account was never actually closed, you can re-open it in YNAB! If you're using the web app, hover over the name of the account and click on the edit icon. You'll be given the option to re-open that account.


      Once it's open again, you can add the transaction for the item you bought and categorize it like normal. Since you plan to pay it off over the next couple of months, you'll budget for your payments directly in that credit card's category and enter the transfers (payments) when the time comes. This will keep your account history accurate and you can re-close that account once it has been paid off! :)

  • This right here. This is where I'm lost. I know that I can re-open it, in fact, I already have. The issue is that, if I add the transaction it puts me in the red because I don't have it budgeted. Is there a way that I can make it show up as owing money but not showing as overspent, where it takes away my from my next paycheck? Maybe I am really misunderstanding this, but I just don't get it.

    • Turquoise Memory 


      Since the spending is taking place on your credit card, it should put you in the yellow. When an account has a yellow negative amount, it means it was credit card spending that wasn't budgeted for - which is correct here -  and won't take the amount from your To Be Budgeted. When the month rolls over, that amount will roll into your card balance and you'll budget for the payments in your Credit Card category as you pay it off over time.

      If it's showing in red, the account may have been entered under the wrong account type (a checking or savings, instead of a credit card or line of credit). If that's the case, let us know and we can go over how to fix that! :)

      Like 1
  • Okay, here is the scenario (I'm sorry to be so obtuse!). Let's say I currently have budgeted $400 for Christmas. My purchase was $900. I will be putting an additional $1000 to the Christmas category before Christmas, making my planned spending at $1,300. I want to use the  $400 that I currently have and is not for this one gift ($900) on other gifts prior to having the rest of the money available for my other gift recipients as I shop before having the additional $1000. 

    When I put this transaction in, it moved all of the $400 into my cc as available to pay, which then takes it out of my Christmas category, leaving that category in the yellow, indicating the negative balance. When I move over to December, my Christmas category is down to zero, which is what I don't want.

    I guess the best solution is as Tan Major said earlier then, is to use the category. If I use the scenario where I have $400 in my category.  My bill for the cc is due next week, so I can pay $100 and leave myself $300 for shopping, then, as I budget the additional $1,000, pay down the cc and use the rest for my other shopping. I think!

      • WordTenor
      • Can we agree that goals are dumb and immature? Sure.
      • WordTenor
      • 4 yrs ago
      • Reported - view

      Turquoise Memory (20e8230556a4) If it's an on-budget CC, you can't use the category method. But you *can* take the money back out of your CC payment line. Just use the MMT to move the $300 back to Christmas. 

      That said, I'd be in favor of throwing the whole $400 at the card now, and just overspending Christmas more as you need to. So I actually wouldn't do what I just described, because putting the whole $400 toward the card now results in less interest. As you get more money earmarked for paying back that $900 purchase, budget it to the payment category for that card until you're back in PIF status. 

  • I'm sorry, what is MMT? I feel like I should know this!

  • Never mind, I think I figured it out! I think that worked!

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