YNAB You Need A Budget

[Patzer]

The Fresh Start feature does some things well, and some things that won't be appropriate for every situation.

1. Existing accounts and categories are kept (good)
2. Existing account balances are kept (good)
3. Budget balances are eliminated (good for some situations, bad for others)
4. Existing transactions are eliminated (mostly good, but people who enter future dated transactions need to be careful)
5. Existing credit card balances create new Pre-YNAB Debt categories (good for debt you're paying down, clumsy for paid in full cards)

The point of this post is not to discuss the Pre-YNAB Debt categories, but I want to mention that the philosophy for these is well developed and they should work to enable a user to deal with the case of a Continued Use Credit Card as well as an Old Debt Credit Card. There's a lot more to be said on that, but in this post I want to talk about Paid in Full Credit Cards.

The way Fresh Start is designed assumes that any credit card balance is a balance that is carried from old debt. The concept is that when you budget dollars to the Pre-YNAB debt categories, you reserve those dollars to pay those cards. The actual payment is then a no-category transfer from the paying account (usually checking) to the credit card. It all works out properly in the mathematical and accounting sense.

The down side is, if you habitually use cards that you pay in full, you have these useless Pre-YNAB Debt categories sitting in your budget. It will take me less than 10 seconds to budget those categories to zero, reducing my Available to what the Available really ought to be. Then I either live with the old unused categories on the budget screen, or hide the categories and have the clutter of hidden categories.

There is a better work around. For the situation of having Paid in Full Cards, and having sufficient funds on hand to pay them in full at any given time, the extra categories can be avoided as follows:

1. Do the Fresh Start
2. For each PIF card, edit the opening balance transaction to change the category to Income Available This Month.
3. Delete the Pre-YNAB Debt master category and all its subcategories, which should have no transactions at this point.

This will leave you with Available equal to your net cash, i.e. the sum of your on-budget accounts. You are now free to budget that Available as appropriate, even if that means simply copying the budget balances from your prior budget.

A further refinement that some users may want would be to edit another opening balance transaction to split off the appropriate amount of Income Available Next Month.

I've had some discussion with the development team on this subject, and I have high hopes that in the future we will see an archive function that keeps existing budget balances and transactions from a user specified month forward. When that feature rolls out, the appropriate workaround would be to use the archive function starting from the end of last month.

Patzer

[PatM]

Most excellent information Patzer. I was stumped on the PIF card as well and you provided the answer. So I see that I have funds available this month that normally would have been my buffer for the following month is this what you are referring to in your second to last paragraph?

Most excellent update for sure. This program is really getting impressive. I still don't download from my bank into YNAB which makes it rather cumbersome. Basically two books. My other is Quicken which downloads all my accounts. They are becoming fewer but I have to download from my Credit Union and it seems to be problematic or I just don't know how to do it properly.

I appreciate the upgrades. The program is getting much more user friendly.

Regards,

Pat

[Patzer]

So I see that I have funds available this month that normally would have been my buffer for the following month is this what you are referring to in your second to last paragraph?

Yes. The Fresh Start turns all your balances into Income Available This Month. If you do a Fresh Start from a position where you have Income Available Next Month waiting to be budgeted, you would need to manually create the Income Available Next Month to replicate the status quo.

Patzer

[mbowling]

Thanks for the information Patzer. I briefly looked at the Error Checking functionality last night. I turned it on and YNAB lit up like a Christmas tree with red and yellow. I was a bit confused because the everything always balances using "Patzer's Formula". Part of the problem is that the accounts were not correctly identified as on or off budget. I rearranged the accounts and had fewer Christmas tree lights, but still enough to confuse me.

I also tried the Fresh Start feature, but then I had too much money available in the current month that is normally my buffer for next month. I also had the paid-in-full credit card balance that was confusing. I decided to not save any changes and revisit the new features this weekend when I'm not as tired and have more time.

[mbowling]

I had time to sit down and evaluate the Error Checking warnings being displayed in YNAB. I was assuming that because my accounts and budget had always balanced per Patzer's Formula, I would not have any issues when Error Checking was enabled. I was wrong. I first tried to fix the warnings, but I seemed to make things worse. I decided to do a Fresh Start. The Fresh Start gave me a chance to delete some hidden accounts and hidden budget categories that are no longer used. While I was in clean up mode, I rearranged and renamed some of the active budget categories. I encountered the paid-in-full credit card issue during the Fresh Start that is mentioned above. I followed Patzer's instructions to conquer that problem.

I had to split off the appropriate amount of "Income Available Next Month" to give me the correct amount in next month's buffer and the correct amount of funds "Available to Budget" in the current month.

I did lose a lot of history in the new Fresh Start budget file, but I think the clean up was worth it. I archived the original file for future reference.

In the end, I'm happy with the Fresh Start. Thanks for the help Patzer!

Also, a big thank you to the YNAB team for the the Error Checking and Fresh Start functionality. Fresh Start gave me a chance to clean my YNAB house and Error Checking will be a big help going forward.

[gallygirl]

1. Do the Fresh Start
2. For each PIF card, edit the opening balance transaction to change the category to Income Available This Month.
3. Delete the Pre-YNAB Debt master category and all its subcategories, which should have no transactions at this point.

Hi, I am new to YNAB and am off and running this month (since 3/1/11) was just struggling with the PIF cards last night. I know this thread is about Fresh Start but I wondered if my situation applies as well....I thought I had it figured out what to do with my PIF card balances from the Help menu, but then I read Patzer's #2 above and wondered if more experienced users could clarify. I read the OP and the Help menu as saying the opposite about categorizing starting balances on PIF cards.

The relevant section of the Help menu dealing with Error Checking (under the heading Common Causes for Errors, http://www.youneedabudget.com/help/webframe.html?Error_Checking.html) and it says, specifically mentioning PIF cards:

One of the main issues with Error Checking and Credit Cards is an uncategorized starting balance. This is primarily an issue for people who have a credit card that they pay in full, but use on a regular basis.

Credit Cards are now On Budget so you'll need to categorize your starting balance on the card. Create a new category called Pre-YNAB Debt: (Name of Credit Card). Categorize your starting balance to that category. When you move to the budget screen you will see that this creates overspending. Simply assign some dollars to this category to eliminate the overspending. If you are unable to do that in the month that the overspending occurs, click on the overspending arrow and change the settings to "Subtract from next month's category balance". That way the overspending only affects that one category. Budget something toward that category as soon as you are able to remove the overspending.

Is the Help menu just incorrect? Following the help menu, I created a pre-YNAB debt category and put the starting balances for two PIF cards in that category. Indeed it created overspending which wasn't pleasing. I allocated some savings toward that category to offset it, but couldn't offset it 100%, so I figured I had to wait until this month's second paycheck to fully offset that category. But if I follow Patzer's #2, I can eliminate the category altogether. It just that the two courses of action are opposite of each other (debt versus income available this month) that I would like some further clarification.

Thanks so much!

[YYC27]

Patzer's suggestion is an alternative to the "official" way of doing things, as suggested by the hlp files. That's why they say different things.

Basically, according to the help file, you should:

1) Categorize your initial CC balances as Pre-YNAB Debt: Whatever
2) Budget enough money to Pre-YNAB Debt: Whatever that it has a $0.00 balance

(this is for a paid-in-full card .. old debt, you'll carry the negative balance forward month to month)

Patzer's sugestion, and the way we did things before the help files were reformulated is

1) Categorize your initial CC balances as Income: Available This Month

What that does is deduct the balance directly off your Available to Budget.

In the end, both methods end up at the same destination. Budgeting the money to pre-ynab debt .. recording an outflow from the income category .. your Available to Budget is reduced, either way.

[los lobos marinos]

This is a great thread. Bumping it to the top.

Should be stickied!!!! (and moved to the 'Frequently Asked Questions' forum)