I'm evaluating YNAB to see if it can manage our recently inherited rental income. I like the budgeting feature because we have huge expenditures that we need to budget for: semiannual property taxes, quarterly estimated taxes, and repairs that can be $0 for several months, then suddenly several thousand in one month. We have average monthly figures for these expenditures, based on tax data. We're hoping YNAB can help us keep track of these figures, so we don't think, wow, look at all this income--let's take a trip!! and then get blindsided by a big bill that we should have expected.
So, I'd like to run my setup by the forum. I've input one month's data, and tried to set up my budget categories, but I'm not totally sure what I'm looking at.
I started with TLBauer's excellent post on "income from several sources". He suggests making budget categories for each income source; entering income as an inflow (ex. $1000), then marking the "budget" amount as a negative (-$1000) to balance the income. That's where I get a little fuzzy but thought I'd take it on faith.
I set up one master category for each building, subcategories to match the standard U.S. Schedule E Rental Property tax form.
For example, a master category called "Oak" for the Oak Street rental, which includes 4 units. Under it, I have:
ori - Oak Rental Income
oad - Oak Advertising
oauto - Oak Auto and travel expense
ocl - Oak Cleaning and maintenance
ocm - Oak Commissions
oins - Oak Insurance
etc. I use the abbreviations to get to the right category quickly when entering transactions. I have a lot of categories: five buildings each with their own set, plus our personal monthly bills and expenses, rainy day funds (which are for personal surprises, not the business ones).
In each category, I budget the average monthly expense. I'm hoping to keep those amounts running forward, accumulating until they're needed. For example, the budget for repairs for one building is $500, and every three months I might spend $1500.
Question 1: As I'm starting, I'm in the red on some categories, as those huge expenses happen to have hit this month. I budgeted $500, I spent $1500. Do I ignore this, and just soldier on with budgeting $500 for next month? If I do, though, will I end up underbudgeting for the year?
A transaction for entering rental income might be:
Deposit Split Categories $2700 total inflow
(subtransaction) oinc - Oak income (memo=Apt A) $1500 inflow
(subtransaction) oinc - Oak income (memo=Apt B) $1500 inflow
(subtransaction) ocm - Oak commission $300 outflow -- because that gets taken out before we get the check
Seems pretty elegant! I expect to easily get tax data from this at the end of the year by running a YTD report.
Next, I go to the budget category Oak Income, and enter -$3000 to balance the income. Because I have faith in TLBauer even though I've never met him.
When I close the categories up, I can see the summaries. This is cool. I wish I knew what I was looking at. For example, one building (using fictional numbers) is:
Oak Budgeted= -2200 (which I think means we budget to clear 2200/month)
Actual = +5200 (what we actually netted this month)
Balance = +2000 (what we're stashing for the big bills coming down the pike)
Question: Looking at just this building, we can budget +3200 of this for our personal bills and rainy day funds, right? I'm worried that I'll start looking at that +5200 amount instead.
And then I have another, problem building:
Walnut Budgeted= -1000 (on average, we have 1000 more income than budgeted expenses)
Actual= +120 (what we netted this month)
Balance= -880 RED!!
So, I've netted $120 for the month, but down the line I need to make up the 880 that I should have saved for upcoming bills.
Question: what the heck do I do? I have the 3200 "extra" from the other building -- how do I apply this against the 880 before I get excited and spend it on groceries? Do I apply it next month, or this month??
Question: Can I trust the "Available to Budget" amount on the header? Do I use that to clear out all the red categories? I still have some money in it, but I think I have more red than black, if you know what I mean.
Question: In re-allocating funds and changing budgeted amounts, how do I keep track of those golden averages that I need to make sure I cover every month?
My apologies for the horrendously long post. I just really, really want this to work for us. We need the accounting features of regular bookkeeping software, but I SO want the budgeting features of YNAB that I wouldn't mind having to do a few convolutions if it can work for us.