Dana_S wrote:To transition slowly from using the float to truly paid-in-full, this is what I would do:
(This is actually a detailed step-by-step method of doing what Joel said earlier)
1. Set up all accounts in YNAB with current balances, categorizing all CC balances as pre-YNAB debt. If you have debt other than the PIF card make sure the PIF card is in its own category and click on the red arrow to turn it down, not to the right like the other pre-YNAB debt.
2. Budget the amount of the current balance on the card you intend to pay off at the statement date to the PIF credit card debt. This will leave you with either a small or negative amount available to budget. If it's negative, do nothing until you enter your next paycheck, then proceed to step three.
3. Categorize whatever amount you have "available to budget," starting with any bills/categories that you can't or don't normally put on the credit card (including at least minimum payments on all other Pre-YNAB debt) then to the categories that you do put on the credit card.
4. As you purchase things with your card, categorize them to their appropriate categories. At some point their category balances will go red. That marks the point that you are starting to live off CC float. Ignore it for now -- you aren't doing anything differently than you have in previous months, except that now you're seeing the truth that you're living in the red.
5. Pay the card off in full as usual. You can then hide its Pre-YNAB debt category, since all further purchases are going into their appropriate categories.
6. When you get another paycheck, enter it as income available this month. Then budget the "available to budget" number to zero, starting with bills/categories that you can't/don't put on the card, then categories that are in the red, then everything else.
7. Be as frugal and thrifty as you reasonably can, and the date when the category balances go red will move later and later in each pay period. At some point they will stay in the black for the whole time -- then you are living on current income. Rejoice! And then start saving toward a buffer so you can live on the previous months income.
OK, I thought I was getting closer to clarity but these suggestions have me TOTALLY lost, and they seem to be a different route to take than other suggestions. For this suggestion, I would take my PIF card out of Pre YNAB debt and put it in a category by itself? Why do I turn the arrow down rather than turn it to the right? Maybe I have not watched enough of the videos to understand this, but I have no idea what you mean here. So would the PIF CC be Pre YNAB debt, or not? Concerning step 3, I already have my budget for June totally completed, and it includes everything- household bills, "cash" categories like food, gas, etc., sinking funds for auto, clothing, gifts, annual life insurance, everything. We had a very very detailed budget before, so I just put it into YNAB. And since I plan to keep using the credit card for daily purchases, and then paying it off at the end of the month- how will the individual categories go in the red? For example, I have $200 per month budgeted towards gas. As I spend that, I will enter the gas transactions and that $200 will start approaching zero as I spend out of the category. As long as I don't overspend per my budget in any category, why would it go into the red? The only thing that I would think would be red would be the credit card that I use for everything and pay in full every month.
So outside of my budgeted expenses in any given month, I have about $1200 that is not accounted for that should be going to debt repayment. I am thinking I will now budget that $1200 towards the PIF credit card, which is Pre YNAB debt, and by doing that I will see the balance of the credit card decrease until we are paying forward with that card instead of backward. And really what the money is doing to staying in my checking account as a sort of buffer.
That is where I am with understanding things. I am am feeling less optimistic about this working for me, just because as soon as I think I understand it, I realize I must not understand it. I have already spent hours and hours on this, and I am wondering if this was something I just won't be able to grasp or make work for me.