You need a budget (YNAB) advice thread

edinburghlad · 29 July 2014 at 1:33PM

I download a free trail of YNAB yesterday and have started to use it. I notice on the setup video that you don't have to all your debt accounts with the exception of credit cards.

I am looking to be able to track my progress of paying extra to my debt and was wondering if anyone has advice on the best way to do it? Do you add your accounts to YNAB?

Thanks
:T

FireWyrm · 29 July 2014 at 1:45PM

You ought to add all credit cards as OnBudget, but honestly, I dont. I like to keep my running OnBudget accounts separated from the nasty off budget debts. This is because otherwise, you would end up with a nasty big minus number in the Budget page and it wouldnt be clear at all what you actually have to spend. I do however keep track of transactions that are paid to those OffBudget accounts (debts) and do this via either reconciliation which causes YNAB to add a reconciled entry, or by manually making a 'transfer' from an OnBudget account to the OffBudget debts to simulate a payment. I see no reason to keep Debts on budget since they just mess with the real budget screens. If you have an overdraft in your main 'checking' account, then this needs to be acknowledged, but external cards do not need to be part of the overall flow. YNAB works because it doesnt care 'where' your money is, just the sum total of it which can be a blessing and a curse at the same time. I just keep positive balances in main running accounts as OnBudget and let debts sit OffBudget and accrue payments from the OnBudget accounts as necessary.

The Net Worth report will show you what is happening after a few months and you ought to have a nice curve as debts go down versus positive money goes up.

edinburghlad · 29 July 2014 at 2:03PM

FireWyrm,

Thanks so much for the advice. My "main credit card" thankfully only has a balance of £220 which I plan to clear when I get paid so I will add that to my on budget accounts.

My main 3 debts (with the expection of mortgage and shared equity loan) are all personal loans. So I shoud add these to the Off Budget account section?

edinburghlad · 29 July 2014 at 2:11PM

Thats a bit Scary!!!:eek::eek::eek:

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FireWyrm · 29 July 2014 at 2:24PM

edinburghlad wrote: »

My main 3 debts (with the expection of mortgage and shared equity loan) are all personal loans. So I shoud add these to the Off Budget account section?

I would (and did). Just add the CCs as OffBudget and a negative balance. When you reconcile every month (tell YNAB what the new balance is) I just let it add a 'reconciliation' entry to the register which is the difference between the last balance and this balance - that would be the amount you paid off. If you are naughty, and you spend something on the card, then you need to add that as an Outflow value showing you spent money and therefore deepened the balance into the negative numbers. If you want to 'pay' money to your card, then you could either do a 'transfer' from the main OnBudget account showing you have spent money from your budget, or just leave the reconciliation to do it's thing.

You should of course be taking steps not to spend on the credit card going forwards :-)

In reality, there are very few transactions in the CC registers because I am only paying them off monthly and not making any transactions on them.

If you intend to pay off a credit card shortly, I wouldnt even bother putting that in there at all since it will shortly cease to exist. Just record the fact in your OnBudget account that you made the payment to the CC and be done with it.

hohum · 29 July 2014 at 6:31PM

Mmm

If you are spending on any of the credit cards at all, I would add as on budget. I would read over the YNAB help section on credit cards, and 'turn the arrow to the right' I think would be the thing to do here?

I would put the loans as off budget. When you make a payment to them remember to record as a transfer not a payment.

The YNAB forums are super helpful with specific advice for the program if you get confused.

I haven't included my student loan at all in YNAB because it's deducted from my payslip and TBH I regard it more as graduate tax than a debt.

FireWyrm · 29 July 2014 at 8:43PM

hohum wrote: »

...credit cards, and 'turn the arrow to the right'

:eek: I never do that except in a dire emergency. Turning the arrow right means that you are taking money used this month out of next month's budget - that's almost as bad as a PDL but at least you dont have the interest to worry about, but still...I have always considered it very bad practice to take money from next month that you spent this month because it means you start to 'evil snowball' (accrue debts again) simply because you have less money next month to play with. If you dont have any money left, then sacrifice something non-essential to cover the overbudgetted category.

Toomuchtodo · 29 July 2014 at 8:53PM

Have you looked at the free webinars? I have done 4 and found all but one incredibly useful

egoode · 29 July 2014 at 10:00PM

I agree with Toomuchtodo the webinars they run are really worthwhile and also give you a chance to ask specific questions for your circumstances as there's someone on there just to answer questions.

You don't necessarily need to do all of them just the ones you think would be most beneficial for you. For example I skipped the credit card one as I usually pay mine off in full each month and had no debt on it to begin with. However I did the one dealing with different pay cycles as I get the bulk of my pay quarterly and very little monthly so that was a really useful one for me to do.

hohum · 29 July 2014 at 10:32PM

FireWyrm wrote: »

:eek: I never do that except in a dire emergency. Turning the arrow right means that you are taking money used this month out of next month's budget - that's almost as bad as a PDL but at least you dont have the interest to worry about, but still...I have always considered it very bad practice to take money from next month that you spent this month because it means you start to 'evil snowball' (accrue debts again) simply because you have less money next month to play with. If you dont have any money left, then sacrifice something non-essential to cover the overbudgetted category.

Not if you are starting in pre existing debt. THe ynab tutorial on credit cards suggests you turn the arrow to the right on pre ynab debt. http://www.youneedabudget.com/support/article/using-your-credit-cards

Basically this means that you can budget for payments to that category. It's worked extremely well for me in paying off £400 of my debt in 3 months. Everything balances. My available to budget is £0. I'm making choices about my spending but I'm not going to reduce to absolute £0. That way doesn't work for me. With a variable income, we are about moving from famine and feast to even keel.

The beauty of ynab is that there is more than one way to do things. This way works for me. Your way works for you. There's no have or must about it!

edinburghlad · 30 July 2014 at 12:12PM

Thanks everyone for your suggestions. I have looked at the start up videos and handling credit cards on YNAB. The webinars sound very worthwhile and did have a look at them but the times weren't great. I will try and register for one that isn't at 1am lol :-)

I tend to use my credit card as a charge card and pay it off in full every month (and leave myself short for the rest of the month). As firewyrm mentioned, it's not a good idea to be spending next months salary this month. YNAB is going to help me get out this cycle I am sure.

Now to find the $60 to pay for it.

You need a budget (YNAB) advice thread

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