YNAB You Need A Budget

[TomBushaw]

I perused the "Windfalls" thread in the Rules forum but did not see an answer to my question. So, here it goes...

I get an IRS refund deposited in my bank account, say $1000. I want to use $700 to pay down the principal on our mortgage, $200 to boost our vacation savings, and pump the remaining $100 into available income this month. How best to handle this in YNAB 3? I thought I would get clever and try a split transaction on the deposit into my bank account with the first two portions being transfers to the respective accounts and with no category assignment (thus "bypassing" the budget), and the third one categorized as Income: Available this month (thus helping out with my budget for the month). Trouble is, what's an inflow for my bank account is an outflow for the account being transferred to so the balances in the "Mortgage" liability account and in the "Vacation" savings account move the wrong direction. Plan B: I record the transactions as they happened: 1) A deposit (Inflow) into checking for the IRS refund, categorized as "Income: Available this month" and two Transfer transactions for the principal pay-down and for bumping up vacation savings, also categorized as "Income: Available this month", but recorded as an outflow. The remainder left in my bank account ($1000 inflow - $700 outflow - $200 outflow = $100) is the net "Income: Available this month" (left over from the original $1000 deposited) that can be used for budgeted expenses. This seems to be the answer, but it seems counter-intuitive to categorize an outflow as "Income" (I guess I can rationalize it by thinking of "Income: available this month" as just another category, which happens to have "income" in its name).

Is there a better way to handle this situation in YNAB 3?

Thanks,

Tom

[Mudie]

Hi Tom,

By the looks of things you're making it more complicated than it has to be. I suggest the following:

• Call the $1000 'income this month'
• Budget $700 to your mortgage and outflow the payment
• Budget $200 to your vacation category and let it sit
• Enjoy the freedom to budget the remaining $100 to wherever you'd like to put that money to work

In other words, all ON budget and assigned to work.

Easy enough?

[TomBushaw]

Steve,

Thanks for the quick reply.

I see it more clearly now -- I was trying to avoid "budgeting" the windfall, but I see now that there's probably nothing wrong with doing so. I'll just have to remember (with notes ) that this month's budgets in these categories are out of the ordinary and should not be carried over to future months and "normal" expenses. I think my "Plan B" gets me to the same place without the spikes in the category budgets, but I see the merit (and remember the rule) for giving each dollar (whether windfall or expected) a job.

Thanks again.

Tom

[blarg]

The other option is to dump it directly into the categories themselves without increasing the budgeted amount. You could think of it as negative spending in a category.

In other words you'd enter a split:
$1000 total inflow
- $700 inflow, Mortgage
- $200 inflow, Vacation
- $100 inflow, Income: Available This Month

Personally I'd just budget the amounts in instead of doing it that way, but it is an option if you do want to dump things directly into categories and you don't want to confuse yourself the next month as to why the number's high, because it won't be. But if you're whacking it into the category, it's nice to be able to see that you could put more into a category in a month and know why (I use notes for this like you're talking about doing) instead of just seeing the balance go higher.

[TomBushaw]

Got it. Not a YNAB 3 expert yet, but a baby step closer.

Thanks to all for your assistance!

Tom