You need a budget (YNAB) advice thread

FireWyrm

MrsDavo wrote: »

Hi All!

Just started using YNAB on the free trail, and I like it so far!

Amazing to see your debt there in black and white - with a total! Scary stuff.

Anyway, Pre Ynab Debt - So lets say I have one debt, balance of £100. I budget £25 to it this month. When the payment comes out of my bank account, do I go to the bank account, and transfer it to the pre ynab debt? Bit confused on how that bit works?

May need to go back and watch the video again!

YNAB doesnt care where your money is physically, accounts, debt on credit cards or money in your pocket. As far as YNAB is concerned, it is all one profit and loss calculation. So, that being the case, a payment to your credit card debt should be a negative from your current account and a positive to your credit card account because you took money out of your current account and paid it onto your credit card. If you have your credit cards onBudget, then they will be negative balances, since you owe money on them. Your current account on the other hand ought to be a positive balance and you should have some category(ies) which reflects payments towards debt. When you make a payment to your credit card, you can either 'transfer' the money (if both accounts are onBudget) or, you can make an explicit payment out of one account and into another. If the latter, the payment to debt out of your current account will be categorised as 'Debt A' and the payment into your credit card will simply be incoming cash.

I carry by debts off budget in separate accounts because I dont want them fouling my budget estimates. Essentially, I treat them as pure bills.

This is this month and next month categories showing my 'debts' which, remember are bills to me. In this case, I budgeted 50, 70 and 730 to various debts (I am snowballing - will explain later if you want)



So, to explain, last month, there was a screw up with the DD on Nationwide leaving me with £53.16 to clear up. Since I already have a large balance in that account, I elected to skip this months' payment to that account and merely roll it over instead. Next month though, an actual payment of £50 will be made which will cause the category total to be zero showing that the total amount budgeted to that debt has been paid. I am not accruing money in that category because I am paying a bill. The actual acruing will happen in the physical account to which I move that £50 next month and from which Nationwide will take their DD to satisfy the CC.. For Amazon, I made payments totalling the exact budget amount and for MBNA, there was a slight miscalculation a few months ago meaning a shortfall of 47p which I have made up.

If we look at the actual payments for MBNA, you can see that the minimum payment was taken automatically by DD, but I also made an additional manual payment totalling the actual budget amount :



You can see that my credit cards are actual accounts which are off-budget and when I pay from one account, I make a corresponding payment into the other. In actuality, I just 'reconcile' the account every so often with the actual balance on the card and let YNAB fill in the details for me since I never spend from those cards anyway.

If you keep your debts onBudget, then the principle will be the same, but in this case, you will have to assign a category to the money. Just think of it as moving it physically from one pot to another.

Frogletina

I'm going to try Ynab on the trial. One thing though that bothers me is that I'm already £51 over my budget so far this year. I will have enough money in March to clear that, but should I just show £51 less income for March?

frogletina

FireWyrm

Frogletina wrote: »

I'm going to try Ynab on the trial. One thing though that bothers me is that I'm already £51 over my budget so far this year. I will have enough money in March to clear that, but should I just show £51 less income for March?

frogletina

£51 overbudget means you dont have it, and it is no good pretending that you do. Just carry the debt over the category for March or turn the arrow to the right to take the money from next month. In March, you will have £51 less to use and this should square the calculation up. Going forwards, stay within your category balances and as long as the number at the top is a big fat green zero, you are on target and cannot be overspent.

Frogletina

FireWyrm wrote: »

£51 overbudget means you dont have it, and it is no good pretending that you do. Just carry the debt over the category for March or turn the arrow to the right to take the money from next month. In March, you will have £51 less to use and this should square the calculation up. Going forwards, stay within your category balances and as long as the number at the top is a big fat green zero, you are on target and cannot be overspent.

I think I understand.

I paid my telephone rental for a year in February which caused the overspending. So if I show that category as overspend by £51 when I start my trial (don't understand arrows yet as I've not yet downloaded it), I can put my income in as full but it will reduce automatically by £51 as the amount available to budget.

I've no council tax to pay this month so I can put more into the telephone account and leave it with a surplus too.

frogletina

FireWyrm

Frogletina wrote: »

I think I understand.

I paid my telephone rental for a year in February which caused the overspending. So if I show that category as overspend by £51 when I start my trial (don't understand arrows yet as I've not yet downloaded it), I can put my income in as full but it will reduce automatically by £51 as the amount available to budget.

I've no council tax to pay this month so I can put more into the telephone account and leave it with a surplus too.

frogletina

More or less. You will start that category with an overspend of £51. Over the coming months, you just budget more money into that category to cover the 'debt' in that category. Eventually, the category balance will reach 0 and then hopefully, if you keep adding money to the pot, will show a positive balance. When next year rolls around, you will have a positive balance from which to pay your annual bill again and if you have done your calculations, at that point, the category will be 0 again (as you spent it). Months after that, you budget money in and never spend from it, unless you determine that the money in there could be better used elsewhere (called, whack-a-mole).

Turning the arrow to the right...here's a case in point. Different reason, but the mechanism is the same. Here is a screenshot showing January, February and March for my Nationwide debt category.



Last year, Nationwide managed to cancel a DD to from the wrong account resulting in two missed minimum card payments. This meant that I had to make up the missing payments of £53.16 immediately to avoid further penalty charges. Normally, I budget (and physically move) £50 to Nationwide in order to cover the minimum payment to the CC which comes out of there. My normal minimum payment is about £25. I have been effectively overpaying the account by £25 a month but that doesnt matter because the money is going towards the CC eventually when I get around to making a massive lump sum payment to the CC to clear it. As far as YNAB is concerned, my CC is a bill which I pay at the rate of £50 a month.

With me so far....

OK. So, in January I made two payments. One is the normal £50 and the other is the shortfall amount which I already spent to square the account, but I didnt really have that amount of money available. What I want to do, is hold up on February £50 in order to square the overspend in January which I was forced to make by the bank.



My double payment of £103.16 leaves me with a deficit of £53.16 in the category balance. This will be covered by £50 in February and £3.16 in March. In March then, normal service is resumed and a payment of £53.16 will hit the account. This completes the sequence and I am back on track again. As you can see, there is a little red arrow pointing to the right. This tells YNAB to move the deficit from this month into next month. If I budget £53.16 in March, £50 will be normal payment and £3.16 is the overspend from Feb which was carried forward as part of the overspend of £53.16 from January.

There ya go...jiggery pokery with YNAB and how to turn the arrow right.

Frogletina

FireWyrm wrote: »

There ya go...jiggery pokery with YNAB and how to turn the arrow right.

Thank you so much FireWyrm, you're a star :starmod:

I will let you know how I get on once I've started the trial

frogletina

andyfromotley

tizerbelle wrote: »

I'm another YNAB addict. I even have a category for Ground Rent, into which I budget 10p a month for 11 months and 4p for the 12th month to cover the extortionate annual fee of £1.14!!

Bravo!!!:T:T:T:T:T:rotfl:

Bublin1

Hey lovely people...I have a question or I just need confirmation on something.


I get paid on 20th of every month.


I got paid on 20th Feb but some of my bills will be debited from my bank account after 1st March. I budgeted for these bills with Feb's pay, on Feb's spreadsheet.


From the first of March should I now ignore Feb's spreadsheet and start working from March's? I know all balances will be carried over.


I guess this means I kind of have a buffer for some categories and have to remember to allocate my March 20th Pay to them, even though there is money already there.


Uggh trying to type out what is in my head regarding YNAB is hard work!!

FireWyrm

Bublin1 wrote: »

Hey lovely people...I have a question or I just need confirmation on something.


I get paid on 20th of every month.


I got paid on 20th Feb but some of my bills will be debited from my bank account after 1st March. I budgeted for these bills with Feb's pay, on Feb's spreadsheet.


From the first of March should I now ignore Feb's spreadsheet and start working from March's? I know all balances will be carried over.


I guess this means I kind of have a buffer for some categories and have to remember to allocate my March 20th Pay to them, even though there is money already there.


Uggh trying to type out what is in my head regarding YNAB is hard work!!

If you got paid on the 20th, then every bill after that date can be allocated to that payday. You need to determine which bills have priority and how you want to use your money between the 20th Feb and 20th March when you next get paid. Ideally, you should get your whole 'months' pay on that day, which means that everything you need to do in March should come out of there. When the 20th March rolls around, you start allocating again and everything between 20th March and 20th April now comes out. You are living on the money you have on hand right now. So what if you end up with a surplus. As long as you have money to fulfill all of your obligations between paydays, then you are looking good.

You could of course change your billing structure so that all your bills come out on a given day? Mine all come out on the 1st of the month.

Or, you could have a separate bills account into which you get paid and then SOs go out and feed money into running accounts. That way, all your bills are always covered, no matter what.

YNAB is only concerned with category balances. If you have money in the relevant category that you want to spend from, good. If not, it gets ugly quickly. You'll have to move money from another category to compensate. As it happens, I have categories for each one of my standing bills. They almost never carry a surplus. My other running categories, like food do. After a while, payment and billing frequency will become irrelevant to you as you build buffers in every category. It doesnt matter to me when O2 present the mobile phone bill because on payday, I allocated money to that category. As long as they dont try to take it twice, it is irrelevant exactly when they take it. They can take it on the 1st, 21st or next month for all I care. The money has been allocated and I never spend from that category. They could hold off and never take money for 6 months and then take it all at once, and it wouldnt matter.

So, as long as you tell the truth, YNAB is always right. It doesnt matter when the money is physically taken because you allocated it. This is what I mean by running massive surpluses in accounts. Today was payday for me, I have almost £5K in my bills account. Does that mean I have £5K to spend...no. It means that £5K is available to fill all my obligations between this payday and next. As long as they dont take it twice, it doesnt matter. You need to anticipate your requirements, which bills need to be paid and adequately fund that category. When I reconcile, I notice that various bills have gone and then YNAB shows those transactions.

I'll give you an example. This month is perfect actually. Mobile phones have a fairly rigid billing cycle but in odd months (like Feb with 28 days), then I know that rather than O2 taking their money on the 30th, they will take it on Monday now because there are only 28 days which is technically March. They will also take another payment on March 30th, so there will be two payments in March rather than the usual one. This doesnt matter because I knew that and allocated money from today's payday to that category.

Red-Squirrel_2

Ok, I have a quick YNAB question if any experts are around!

I started the free trial on the 20th, but got paid today so have spent some time really getting to grips with it all. I've think I've got the basics sorted but there's one annoying glitch!

When I started the budget, my current account was overdrawn (unexpectedly big phone bill was the trigger for downloading ynab) so it went on as a pre-nab debt of -160.

I've religiously entered every single transaction, my current account is reconciled with online banking, the balance in the left hand list is spot on, but its still showing as a red in the balances column for bot Feb and March for -160. How do I get it to realise I'm not overdrawn anymore?