A good budgeting app???

SeduLOUs

greensalad wrote: »

I'm trying so hard to get on with YNAB. But I keep running into problem after problem. I decided to start with the walkthrough and followed all their instructions. Turns out you can't do the walkthrough unless you have a positive balance in your account. So I can either do the walkthrough or actually put the right value in. How stupid, and difficult for those of us who are trying to budget in order to stay out of our overdrafts!

I wish YNAB had a way of handling overdrafts. I sadly have to live in mine, as once my bills have gone out I hit about zero. I then live in my £500 overdraft. I wish YNAB would allow me to put this overdraft balance in.

I can understand the difficulty, so here's what I would do if I was in your position. Let's go with your overdraft of £500 so that I can provide an example.

Create a new and separate off-budget account called 'overdraft limit', and do a transfer from your overdraft to your main account in YNAB of £500. You can categorise the income to the main account as 'income for December' or whichever month and it will become available to budget.

The overdraft account should then be showing on the left hand side as a debt of £500, and a 'pre YNAB debt' category should have been created for it.

Now, budget the money as you normally would. Spend as much of the overdraft money as you need.

The next bit of the plan is tackling and reducing the overdraft when you are ready.

If in January you decide you have enough money left after bills etc to reduce your overdraft by £100, you can budget £100 to the 'pre YNAB debt' category. You can then do a transfer in YNAB from the main account to the overdraft account by £100. You don't actually physically move any money in your accounts though as it is all in the same place. This will reduce the debt account in YNAB to £400, and will reduce the amount you have available to spend/budget on other things accordingly. A good idea when you do this would be to contact the bank and ask them to reduce the overdraft at the same time to match the new figure so that you aren't tempted to overspend into it again.

During the process the bank reconciliation may be a little bit trickier. The simplest way to manage is never actually mark the transfers as 'cleared' and that way you can reconcile your main account as normal and the cleared balance on YNAB should match your statements. As a 'check' you can add together the working balances (shown on left hand side of main screen) of the two accounts in YNAB to check they add up to the reality of your bank balance.

When you are finished clearing the overdraft, you can either delete or clear all of the transfers (they will all cancel each other out either way) and then you can move on to life with a positive bank balance! You can then close the off budget account to hide it from view (or if you deleted the transfers you can delete the account), as well as hiding the pre YNAB debt category that you will no longer need.

In the interim, the working balance figure on the main bank account in YNAB is the figure you would use to give an indication of what you actually have available to spend, but you shouldn't rely on that anyway as you should be spending based on category balances, not bank balances.

Hope this makes some sense, happy for you to PM me or continue in the thread if you would like more help.

greensalad

SeduLOUs wrote: »

I can understand the difficulty, so here's what I would do if I was in your position. Let's go with your overdraft of £500 so that I can provide an example.

Create a new and separate off-budget account called 'overdraft limit', and do a transfer from your overdraft to your main account in YNAB of £500. You can categorise the income to the main account as 'income for December' or whichever month and it will become available to budget.

The overdraft account should then be showing on the left hand side as a debt of £500, and a 'pre YNAB debt' category should have been created for it.

Now, budget the money as you normally would. Spend as much of the overdraft money as you need.

The next bit of the plan is tackling and reducing the overdraft when you are ready.

If in January you decide you have enough money left after bills etc to reduce your overdraft by £100, you can budget £100 to the 'pre YNAB debt' category. You can then do a transfer in YNAB from the main account to the overdraft account by £100. You don't actually physically move any money in your accounts though as it is all in the same place. This will reduce the debt account in YNAB to £400, and will reduce the amount you have available to spend/budget on other things accordingly. A good idea when you do this would be to contact the bank and ask them to reduce the overdraft at the same time to match the new figure so that you aren't tempted to overspend into it again.

During the process the bank reconciliation may be a little bit trickier. The simplest way to manage is never actually mark the transfers as 'cleared' and that way you can reconcile your main account as normal and the cleared balance on YNAB should match your statements. As a 'check' you can add together the working balances (shown on left hand side of main screen) of the two accounts in YNAB to check they add up to the reality of your bank balance.

When you are finished clearing the overdraft, you can either delete or clear all of the transfers (they will all cancel each other out either way) and then you can move on to life with a positive bank balance! You can then close the off budget account to hide it from view (or if you deleted the transfers you can delete the account), as well as hiding the pre YNAB debt category that you will no longer need.

In the interim, the working balance figure on the main bank account in YNAB is the figure you would use to give an indication of what you actually have available to spend, but you shouldn't rely on that anyway as you should be spending based on category balances, not bank balances.

Hope this makes some sense, happy for you to PM me or continue in the thread if you would like more help.

Thanks for this! That does seem to make more sense. It's frustrating when it constantly tells me I've overspent by £500. I obviously want to reduce my OD but it's way down my list of debts to repay (it's 0% interest) so it's annoying to see myself always in the red on YNAB.

SeduLOUs

greensalad wrote: »

Thanks for this! That does seem to make more sense. It's frustrating when it constantly tells me I've overspent by £500. I obviously want to reduce my OD but it's way down my list of debts to repay (it's 0% interest) so it's annoying to see myself always in the red on YNAB.

Well if it's at 0% it does make a lot of sense to utilise it to pay off more expensive debts. If you stick the 'debt' aspect of in an off-budget account it is out of the way of your everyday budget, but still in the system as something that you owe.

Then you don't have to worry about it always looking 'in the red' and just save up in the category balance for it when you are ready to start getting rid.

moneypanicker

I cannot rave about YNAB enough! We started using it in June and it has completely changed our finances. Before I used to hide money away because my husband would spend it then we would end up in the overdraft. He used to put his card in the machine and see available balance thinking he could spend what was in there but not thinking that other bills had to be paid out of that. In 6 months we have an extremely healthy balance in the account and it doesn't matter what bank account we use. We are saving for all "things" throughout the year so when we need things such as a new tumble dryer we have the money there waiting.

I did not find YNAB on here i have not been on here for a while but searching online as we had tried everything and I was getting really frustrated with my husband not getting it!! He has fully embraced it and now we don't argue about money. I paid full price for the software and it was worth every penny.

danibee2k

I downloaded YNAB yesterday for the trial after reading this thread and have just gone ahead and bought it as it's 75% off on Steam at the moment so only £7.49! Scary seeing my debt but feel it's going to make such a difference to my budgeting and spending. Now I just need to get my head round it all and see if I can persuade OH to use it too!

moments_of_sanity

I too have gone ahead and bought this as I really need to budget for things like car insurance, mot's etc and whilst I put the money away I do forget what I have put it into a certain account for so hoping this will keep me on track.

Can someone with a little knowledge of YNAB explain the outflow column to me, should I be putting my info in on the 'budgeted' column and then fill in the outflow on the day they are to be paid out?:o

molerat

moneypanicker wrote: »

I cannot rave about YNAB enough! We started using it in June and it has completely changed our finances. Before I used to hide money away because my husband would spend it then we would end up in the overdraft. He used to put his card in the machine and see available balance thinking he could spend what was in there but not thinking that other bills had to be paid out of that. In 6 months we have an extremely healthy balance in the account and it doesn't matter what bank account we use. We are saving for all "things" throughout the year so when we need things such as a new tumble dryer we have the money there waiting.

I did not find YNAB on here i have not been on here for a while but searching online as we had tried everything and I was getting really frustrated with my husband not getting it!! He has fully embraced it and now we don't argue about money. I paid full price for the software and it was worth every penny.

Budgeting is more a state of mind than anything else and once you have got that then it does not matter what method you use to record it. The bank balance is of no real relevance, ( as long as it stays above £0 and you all realise that what is in there is not for spending ) it is the bottom line of the budget sheet that matters.

SeduLOUs

moments_of_sanity wrote: »

I too have gone ahead and bought this as I really need to budget for things like car insurance, mot's etc and whilst I put the money away I do forget what I have put it into a certain account for so hoping this will keep me on track.

Can someone with a little knowledge of YNAB explain the outflow column to me, should I be putting my info in on the 'budgeted' column and then fill in the outflow on the day they are to be paid out?:o

The easiest way is to think of each line of the budget (each category) as an envelope. When you get paid, you take all of your money and put it into the various envelopes.

If you don't take any money out of the envelopes, the money carries over into the next month, so if you want you can build up balances in there when you are saving for something like an annual bill.

The outflows column represents you removing money from the envelope.

Say you budget £100 to the 'groceries' category in January, and on 2nd January you buy groceries for £20. The -£20 will show in the outflow column, leaving a remaining category/envelope balance of £80.

This is where the idea comes of being able to ignore your bank balance. If you put every penny you have (and no more) into your categories, then you use the category balances to dictate your spending, NOT the bank balance.

If you don't have enough in a category to cover the spend you want to make your options are either not to spend it, or to increase the category balance - you can do this by reducing a different category balance and on the YNAB forums this is referred to as a WAM (whack-a-mole).

It's perfectly OK to adjust as you go, but you are making conscious decisions instead of hoping for the best. Last week I reduced my planned debt payment in order to budget for a pizza. Not the most money savvy thing in the world to do, but at least I adjusted the budget accordingly, and knew exactly what buying that pizza meant in terms of my financial picture.

moments_of_sanity

SeduLOUs wrote: »

The easiest way is to think of each line of the budget (each category) as an envelope. When you get paid, you take all of your money and put it into the various envelopes.

If you don't take any money out of the envelopes, the money carries over into the next month, so if you want you can build up balances in there when you are saving for something like an annual bill.

The outflows column represents you removing money from the envelope.

Say you budget £100 to the 'groceries' category in January, and on 2nd January you buy groceries for £20. The -£20 will show in the outflow column, leaving a remaining category/envelope balance of £80.

This is where the idea comes of being able to ignore your bank balance. If you put every penny you have (and no more) into your categories, then you use the category balances to dictate your spending, NOT the bank balance.

If you don't have enough in a category to cover the spend you want to make your options are either not to spend it, or to increase the category balance - you can do this by reducing a different category balance and on the YNAB forums this is referred to as a WAM (whack-a-mole).

It's perfectly OK to adjust as you go, but you are making conscious decisions instead of hoping for the best. Last week I reduced my planned debt payment in order to budget for a pizza. Not the most money savvy thing in the world to do, but at least I adjusted the budget accordingly, and knew exactly what buying that pizza meant in terms of my financial picture.

Thank you so much for taking the time to explain this for me. So in essence the only things I really need to track (once all the budget categories have been set up) are the groceries and my DH's Whiskey limit, I know this one sounds odd but my DH likes Whiskey but instead of buying it as and when he needs it, I want to set a budget for it, hopefully this will make him realise exactly how much he does spend on it (about £30 a month!). Every other category I can leave as is without adding a cashflow amount?

If there is every anything left out of the budget (two Hope's here, Bob and No) do you move that to a savings account or another account and remove it from the amount included in the balance....so for example, I don't want my savings to be included in the amount available as this isn't for spending at all?

SeduLOUs

moments_of_sanity wrote: »

Thank you so much for taking the time to explain this for me. So in essence the only things I really need to track (once all the budget categories have been set up) are the groceries and my DH's Whiskey limit, I know this one sounds odd but my DH likes Whiskey but instead of buying it as and when he needs it, I want to set a budget for it, hopefully this will make him realise exactly how much he does spend on it (about £30 a month!). Every other category I can leave as is without adding a cashflow amount?

Correct. You can't 'add' a cashflow amount anyway on the budget screen, the only way for something to go into the outflow column is for you to post a transaction via the bank account.

Budget column represents planned spend (or save), outflow represents what has actually been spent.

Be careful with the whiskey budget. I personally find that if I budget £100 for takeaways I spend £100 on takeaways. Instead I budget zero for takeaways, knowing that if I do decide to have one, I consciously have to sacrifice something else I had planned in order to do it.

Perhaps giving him a category called 'personal spends' and budgeting an amount there would work better. He gets £X per month to do with as he wishes. He may wish to spend it all on whiskey. He may also realise that instead he could spend it on you!

moments_of_sanity wrote: »

If there is every anything left out of the budget (two Hope's here, Bob and No) do you move that to a savings account or another account and remove it from the amount included in the balance....so for example, I don't want my savings to be included in the amount available as this isn't for spending at all?

This is where it gets clever. YNAB doesn't care where your money actually is. Put your savings account on budget and make that money available to budget.

Then, create a category called 'savings' and stick all the money into it. If you create a master category for savings instead, you can sub-categorise your savings instead of just having one big pot, i.e. I have saving categories for holiday, general emergency fund, house deposit savings etc. To make life easier for yourself and to avoid having to check your bank balance before making purchases, try to transfer money so that the savings account balance always matches the total of all the savings categories.

I personally just have one account now and keep my savings in my current account as it earns more interest than a savings account anyway. I'm not afraid of spending it, as it has been categorised into savings categories so I know it is appropriately ring fenced and won't get spent on pizzas!

When you really get going with YNAB, you'll find it's actually easier to have as few physical bank accounts as possible.