Dealing with Credit Cards

bennybucketheadbennybuckethead Posts: 15Member
edited June 2012 in YNAB 4
I've been having trouble understanding how to deal with credit cards for a couple months now. The original thread is here: how-f73/credit-card-transfer-t15263.html

I'm going to start a new one since it's starting to get off-topic.

My latest problem is this:

Until now my inflows and outflows to the credit card were simple - just interest (outflows) and payments (inflows) being applied. However, last month I did purchase 3 things with the card, and returned 2 of them so I received a refund for those 2 items. I again had the problem that my account balance on the left side was correct, but the account balance in the "balance" column in the budget was wrong. I clicked on the "outflows" and realized the problem.

The outflows only takes into account items that are categorized as Credit Card and transfers (payments) made from one of my other accounts. This creates a problem, because I want to categorize the outflows as "Clothes" and I want the refund amount to be the same category. This creates an imbalance with the account, so to correct it I had to change my "budgeted" column to reflect: payments - interest - purchases + refunds. This means my budgeted column now has to be $44.08 instead of my actual budgeted payment amount of $96. I used the notes to record the real $96 payment, but still something is not quite right here. Now I have an extra $51.92 in my "Available to Budget" buffer, even though I don't - I already spent that money as payment on the card. I know I'm doing something wrong. Is there a tutorial or something that explains how to handle credit cards within YNAB?

P.S. YNAB 4 is awesome!!
Post edited by Unknown User on

Comments

  • JoelJoel Posts: 9,528Member, Beta Tester, Beta Moderator
    When you make purchases on a credit card that has pre-ynab debt, you categorize them how you want. In essense you are budgeting for those purchases.

    When it comes to make your pre-ynab debt category balance. You should budget as much to this category as your budget will allow. In this case, if your budgeted amount is $96, and your budget allows, do that.

    In order to figure out how much to pay to your credit card, you want to look at your credit card's actual balance and subtract the pre-ynab debt category balance. The difference is the amount you should pay. It includes your budgeted amount to the pre-ynab category, as well as any purchases that you categorized elsewhere.

    With Pre-YNAB debt you have to force your balance to match if you are still using the card for purchases. I would however recommend not using this card for purchases anymore. Get a new credit card that you pay in full every month and use that for purchases. You won't be charged interest from the day you make the purchase to the day you pay it off, like you currently are paying for since you have old debt on this card.

    Does that make sense?
  • bennybucketheadbennybuckethead Posts: 15Member
    Joel wrote:
    When it comes to make your pre-ynab debt category balance. You should budget as much to this category as your budget will allow. In this case, if your budgeted amount is $96, and your budget allows, do that.
    In other words, I should being putting all extra "buffer" money into this account to pay it off as soon as possible?
    Joel wrote:
    In order to figure out how much to pay to your credit card, you want to look at your credit card's actual balance and subtract the pre-ynab debt category balance. The difference is the amount you should pay. It includes your budgeted amount to the pre-ynab category, as well as any purchases that you categorized elsewhere.
    Yes! That makes sense. I did it the hard way by doing payments - interest - purchases + refunds.

    I think what's throwing me off is that "budgeted" does not mean "amount paid" even though that's how I'm using it. I paid $96, then bought some things and got some refunds. Now it's as if I've only paid $44.08, since I spent more than I got in refunds.
  • JoelJoel Posts: 9,528Member, Beta Tester, Beta Moderator
    You really should have a seperate credit card for purchases.

    You are getting charged interest that you would not be paying if you put purchases and paid them in full on a different card.

    That would simplify things as well.
  • JoelJoel Posts: 9,528Member, Beta Tester, Beta Moderator
    Joel wrote:
    When it comes to make your pre-ynab debt category balance. You should budget as much to this category as your budget will allow. In this case, if your budgeted amount is $96, and your budget allows, do that.
    In other words, I should being putting all extra "buffer" money into this account to pay it off as soon as possible?

    Not necessarily. I would not recommend putting any extra dollar at paying off debt. Budget as much to this category as your budget will allow. If your priority with your Available to Budget is to build up rainy day funds, do that. If you want to build up a buffer first, do that. You do then have to at least make sure you budget for the minimum payment. In your case, you could have actually freed up the 50 or so dollars to be used elsewhere by getting a refund credited to your credit card.
    Joel wrote:
    In order to figure out how much to pay to your credit card, you want to look at your credit card's actual balance and subtract the pre-ynab debt category balance. The difference is the amount you should pay. It includes your budgeted amount to the pre-ynab category, as well as any purchases that you categorized elsewhere.
    Yes! That makes sense. I did it the hard way by doing payments - interest - purchases + refunds.

    I think what's throwing me off is that "budgeted" does not mean "amount paid" even though that's how I'm using it. I paid $96, then bought some things and got some refunds. Now it's as if I've only paid $44.08, since I spent more than I got in refunds.
    [/quote]

    As long as it makes sense to you now, it's all okay!
  • S3NTYN3LS3NTYN3L Posts: 200Member
    While not dealing directly with refunds, perhaps this helps?
    http://www.youneedabudget.com/support/video/handling-credit-cards-in-ynab
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