how to record credit card payments when budgeting

enthusiasticsaver

I use clear checkbook and record a spend on the credit card immediately. As I work to budgets and not to my bank balance the money is always in the account ready to pay off the credit card bill as it automatically gets deducted either from a monthly budget category or from a savings envelope.

enthusiasticsaver

In your situation when you have an erratic income I think I would avoid credit card spending or move the money into another account ready to pay the credit card bill if you think you might be tempted to spend it.

trailingspouse

I update my spreadsheet when the credit card bill arrives (so not on the day I make the transaction and not on the day the money comes out of my account either!). That way I know I won't miss any spends (or conveniently forget them...) - and there's still plenty of time to make sure there's enough money in the account to pay it off in full.



I put pretty much every single transaction on the credit card so that a) it acts as a spending diary and b) I get a little bit of cashback every month.

dreaming

I use a credit card for a lot of my everyday spending. On my spreadsheet I have columns for the various bank accounts/credit cards and just show it as a debit in the credit card column as and when it is used. When the statement is available (I do all of my banking online) I reconcile to my spreadsheet, then when the payment is due I show it as a debit in the bank acount and a credit in the credit card account. It also gets recorded in a separate sheet according to spending category which I keep monthly records for in order to work out a budget for next year. I pay my main credit card off in full each month but I also have another 0% card which is currently being used to fund some large house purchases - partly to spread the cost (although I have the cash available in an interest paying account) and also for the protection it offers. This will be paid off by the 0% expiry date.

InMyDreams

carolinerunner wrote: »

Tempus, thanks for this, so if I do it this way, do I ignore the money going out of my current account to pay off the credit card? Otherwise would I be counting it twice?

Try thinking of the credit card like an overdrawn bank account. ‘Paying off the credit card’ is no different to transferring money between any of your other accounts. Thinking of it in this way, it makes most sense to budget for your credit card spends when you make them rather than when you pay off the card. At least this is what I do.

LobsterMemory

Or, looking at it another way, if you treat your payment to the credit card as your expense then all you would see is something like

Monthly Expenses
Food 200
Gas 75
C/Card 1000

That's not going to help you budget as you don't know what you paid for on the card

Treat the payments payning off the credit card as transfers from the bank account to the credit card account and don't include them in your monthly totals