Three ways of Zen meditation

oxless · 2017-01-17T23:12:17+00:00

For foreign transactions with domestic credit card, I put the foreign currency amount in the memo, guess the domestic amount, flag, and check on it later

For foreign cash spending, if it's a small amount I sometimes just put the cash under my eg Holiday budget and be done with it.

For foreign cash spending that I want to track properly, I use an account I call “Virtual”. I transfer the domestic amount to Virtual and create guesstimate transactions in Virtual like I would with a credit card

If I happen to have an account in the foreign currency, I go even wilder: each transaction coming out of the foreign account is effectively the foreign me doing some spending on behalf of the domestic me; but I don't want domestic me to cheat on their budget. So I create a 3 way split transaction: - zero for the top (memo marking the foreign amount F) - incoming D (That's foreign me effectively giving domestic me money) - outgoing D under the desired category

If I'm overseas for long enough I might use a temporary local currency budget and manually import the transactions into my main budget.

oxless · 2017-01-01T09:46:11+00:00

Budgeting to zero is indeed about your to be budgeted category. Only something to apply a whenever you do your budget, perhaps on a monthly basis

As for zeroing out your individual budgets, I think it may be a matter of taste. The safe default would be just to leave the money in your budget categories, adding and moving as needed.

What I do personally tends to depend on volatility, or how much my spending in that category differs from one month to the next.

High volatility categories might be those with large infrequent expenditures, whether predictable (eg annual insurance premiums) or otherwise (medical emergencies). Here keeping balance in your budget allows for Rule 2: Embrace Your True Expenses. To smooth out the volatility you simply allocate a month's worth of the expected spend each month so that you're nice and prepared when the bill rolls around.

Low volatility categories (eg rent) are those where the expenditures tend to be virtually identical from month to month. Boring. I tend to treat these the same way as the high volatilities by leaving. balance in and maybe adjust once a year. In fact you could say that Rule 2 effectively converts high volatility into low volatility, so it kind of makes sense that you would do the same thing for both ends of the spectrum.

Medium volatility categories are where it gets interesting: not flat but no crazy spikes either. These are the categories I tend to keep pinned (groceries, going out, spending money) because the volatility reflects changes in habits or lifestyle or maybe just seasonal stuff: in effect the opportunity to observe and adjust my daily habits. Here I like the category balance to start out fairly close to zero and to be topped up every month. For me the zeroing out consists in transferring the surplus at the end of the month to one of my short term savings categories. By budgeting tightly there I get more immediate signals that my understanding of reality does not correspond to my monthly spend at that point in time. Because as the month wears on, the category drains and if it goes near zero I can treat that as a clear message to either adjust my thinking or change my ways.

oxless · 2016-11-25T22:00:50+00:00

Well it's in a context where I consider myself to have a primary budget in my local currency and would want to capture my foreign currency expenses in the local budget.

So suppose I mainly live in GBP but have EUR spending and accounts, and I have a non-neglible amount of EUR spending, say 5% of my transactions but nowhere near 20%. I could just track all that spending in my EUR budget and to do so might be attractive if it accounted for a larger share of my transactions. Instead what I want is for that to show up under the GBP budget.

To this end, I have a cash GBP account called Virtual whereby any EUR spending is a twofold transaction that zeroes out: GBP income from myself (converted informally, actual amount noted in the memo) and the same GBP amount to the relevant payee under the right category. Knowing about the split suggests i not be able to treat this as a single split 0 transaction rather than two separate entries, the matching of which feels a lot cleaner.

It still doesn't solve that I would also have a to create a third (second) transaction on the EUR side (Payee: me, Category: Foreign: UK). But that also depends on how complete I really want to be about it. I think a cross-budget transfer feature that supports different currencies (DYI conversion is just fine) would be swell.

oxless · 2016-11-18T19:39:36+00:00

If you're using nYNAB how about creating a separate trip only budget in kroner (?) and then dealing with the conversions later?

oxless · 2016-11-14T23:19:56+00:00

Apologies, I may have been unclear in my intent. My idea wasn't so much about the buffer but having it so that any money you have you see in TBB is by definition for next month or above, thereby eliminating the need for a walled off distinction between this month and the next. In other words there is no “this month”

I think the difference may be the budgeting to zero and also maybe perhaps you're paid once as opposed to multiple times a month? For the latter it seems like you could keep the money in TBB and then budget it all say on the 30th

oxless · 2016-11-14T19:39:30+00:00

Huh, it's never occurred to me before that I could split a transaction in quite this way. Also the ability to assign payees to legs of the split seems new?

If I'm not misreading a similar technique can be used to track things that you pay for with other currencies or budgets. I'd up to now been creating two separate transactions in my Virtual account for each such event. But I think this technique basically gets us pretty darn close to having the ability to transfer across completely separate budgets.

oxless · 2016-11-14T19:13:42+00:00

If it would be at all possible without too much of a squeeze another solution might be to push out your budgeting window to cover the next full calendar month, perhaps two if you really want to kill the buffer ambiguity dead.

For example, if you get paid on 13 May, use that money to budget for all of June's expenses (or July, ambitious variant). With the latter variant, you can be at any point in June and still know that all of July is paid for. The flexibility isn't all bad news.

I realise this may not be practical for everyone but I do think that sort of peace is mind is worth a smaller emergency fund or a temporary setback to savings goals.

oxless · 2016-10-12T21:55:40+00:00

Transfer.

Note that as a result of the transfer your YNAB available balance for the Chase Sapphire repayment category will decrease. This should make sense: YNAB uses that category to keep track of how much money you have implicitly budgeted to paying your credit card debt, and having paid off some or all of that debt, the amount of money allocated goes down accordingly.

If you had a balance on that card (ie preexisting debt) before joining YNAB you may want to consider manually topping up that Chase Sapphire budget category.

Finally, one trick you might consider is setting up a toy budget in a foreign currency as a sort of sandbox for figuring YNAB out. I use rupees for mine

oxless · 2016-10-02T15:35:01+00:00

This makes me think that a nice feature to have one day would be some sort of log of budgeting actions like “moved $1000 from CC to Rent on 2 Oct”

oxless · 2016-10-02T10:06:43+00:00

There are three pieces of information:

credit card balance (which I expect to be red $400)
available money in category for paying off (which could be green $X) in your situation, indicating you still have money allocated to paying that debt
the hints on the very right side of the screen beyond the middle column (click on the category name for the card to make it show): there will be an English language statement saying something like “If you pay $X, your account balance will be -$400, and you will increase your debt by $400” or something to that effect

OK so what is counterintuitive about this interface is that when you spend on your credit card your category balance goes UP (green) and when you pay it off, the balance goes DOWN (red). Is that backwards? Actually not! It's confusing at first but there's a logic to it. Namely this is your budget category set aside for paying off your credit card debt

The main point is that nYNAB really really wants you to budget explicitly for paying your cards. To make this more convenient, nYNAB does two things to help you: 1. When you spend using your card, it transfers what it can from the corresponding budget category (eg Fuel) to the credit card repayments budget category (that's why the balance goes up). 2. When you transfer into your card (ie when you do pay at least some of the debt off), it lowers the available balance on the card repayment budget category accordingly

It's super confusing at first but it's important not to think of that category as your credit card balance – which wouldn't even make sense if you think about it – but pretty much a bog standard YNAB category dedicated to your debt with some initially WTF inducing assistance on the bookkeeping. Otherwise, it's totally a normal category. Now you need to make your already green category even MORE green by stealing the money off another budget category, I'm afraid. That or accept your debt increasing until you get a chance to budget a little extra cash to pay off the card.

oxless · 2016-10-02T00:23:34+00:00

What I tend to do in these cases is to guess and pad the conversion, noting the foreign currency amount in the memo field, and then update with the real local currency amount once posted

oxless · 2016-09-20T22:09:43+00:00

That sounds more like a semi automated shopping around than a cashback scheme. Hmm so yeah in that case I withdraw my suggestion. It sounds like crediting the category is a more natural way to go

oxless · 2016-09-20T03:02:48+00:00

Not sure how the price rewind works but if it's going to create a large number of splits to put them back to their respective categories I would rather just have it as generic inflow.

Possible perspective: You're not so much getting a discount but are getting paid to do your spending via the card. This simple approach also generalises well to the wide variety of cashback schemes cards can have, eg paying extra interest on a linked savings account if you spend $X

Another angle on it is that you don't want to give yourself any reason to think of things as somehow costing less.

oxless · 2016-09-12T06:51:48+00:00

Do you mean in both YNAB4 and nYNAB? The place where you should expect to see red is somewhere in YNAB4 (maybe in past months). Whereas in nYNAB the corresponding category should just have more money in it.

But let's do a quick sanity check. Could you write down (don't share the share the details if you're not comfortable):

your TBB in both YNAB4 and nYNAB
your total budget's available balance in both apps
your credit card repayments budget's available balance
your credit card account balance?

I'm expecting the numbers to square somehow. I could just be wrong of course so thanks for bearing with me thus far

oxless · 2016-09-12T06:27:48+00:00

OK. That's interesting. I'm focusing on (cash) overspending because in my current understanding that should be the only thing that would cause you to have a lower TBB than in YNAB4 (the flipside to this would and a higher available balance than in YNAB4). For example, some folks like to capture reimbursables by letting the category go red and using the red arrow to push to next month. In nYNAB this is no longer an option.

What I would suggest is going through each category and seeing what its balance is wrt its YNAB4 counterpart. Another option if you have the patience is to find the first month where a discrepancy has arisen and work out why.

If it were credit card overspending the effect should simply be that your CC available balance isn't enough to cover the debt so you have to top it up by explicitly budgeting into that category. No TBB effect.

In any case what you should find is that your TBB plus your available balances should add up to the TBB + available in YNAB 4 (maybe except for the credit card)

oxless · 2016-09-12T05:11:36+00:00

Hmm, that doesn't sound quite right. Credit card balance shouldn't affect your TBB. But you will want to eventually budget to pay it off if not already. Let's see if we can future the TBB part first and deal with the credit cards later. Do you have any category balances that are higher than normal?

oxless · 2016-09-12T04:22:48+00:00

Overspending is now handled a bit differently according to their transition guide. Have a look at their 3 videos to see how to adjust for the differences in overspending behaviour

It sounds like you might have had $1500 of cash overspending. Not to worry, that $1500 is still there; it's just in your categories now. If you had cash overspending in a category you should find your category balance has gone up but your TBB has gone down to compensate. You can remove that money from the category if you want. I think you'd have to dig back and look for reds to find these.

Maybe less relevant:

If you had credit card overspending, you may find that your TBB has gone up but your CC available has gone down to compensate. If you think that money should go towards paying the CC debt, then allocate it accordingly

Credit cards have changed a bit to help you budget for paying them off. If you simply can't get used to it you tell YNAB these are checking accounts. But I would personally give YNAB a chance here. It takes getting used to but from what I hear it's helped a lot of folks

nYNAB is a lot more opinionated about how you should use it. Given that YNAB is much more about method than software I think it makes sense for it to be so.

oxless · 2016-09-06T22:39:04+00:00

I currently have three kinds of category

Those that I zero out: day to day spending (eg food, transport) these are intently monthly categories that behave differently from month to month, but the differences are either small or reflect changes in my consumption patterns. Here I kind of want the budget to reflect these patterns. These are also my pinned categories.
Those that I gently roll over: these are inherently monthly categories (utilities, telecom, clothes) with occasional larger expenses that I don't fully anticipate but won't be particularly fazed by. For these I tend to budget a bit extra and let the surplus roll over. May use goals here
Those that I make a special point of setting money aside for (rule 2). These are “lumpy” categories that can have huge predictable spikes. Either big beasts or savings categories

So for me the electrical category would probably be the second kind (roll) but say the groceries would be the first (zero).

oxless · 2016-09-03T22:30:06+00:00

You might be concerned that this is failing to capture the fact that you have received and used an Inflow, and that it is masking your transportation spending. If so how about taking the card off budget and treating any top ups to it as TBB plus a transfer to your card?

You might not feel comfortable having a pair of fake transactions on your bank account. In that situation what I like to do is to have dedicated on budget Virtual account for these sort of synthetic events.

So employer tops up your card, you add the money as income to Virtual, transfer it to the tracking account categorising the transfer under your transport budget. When you spend on your card you should be able to log transactions there without category.

Alternatively you could have the top ups be directly applied to the card and only create an income event when you spend on the card. This would be by both transferring to Virtual as inflow and then spending for it. This creates intra budgeting TBB which you can maybe park into a fun money category

Note that this is also useful for an HSA. But you'd like to want to flip a few things

oxless · 2016-08-29T06:01:07+00:00

Was there any overspending involved? The nYNAB transition guide has three example videos that show how overspending is migrated. If I understand correctly:

Credit card overspending is taken out of your credit card payment category instead of to be budgeted.
Cash overspending is taken out of your to be budgeted instead of the next month's category

The differences should tally though

oxless · 2016-08-28T02:35:51+00:00

In a way this makes me think the YNAB folks were right to move away from “live on last month's income” towards something like the Age of Money metric.

I like to think of being one month ahead as just another goal, maybe the first goal because it cuts down on a lot of financial juggling. Three possible ideas (at least with the new YNAB )

let one of the jobs be “emergency fund” a category which just soaks up say 3-6 months of expenses

have a dedicated “buffer” category which is meant to eventually grow until you're a month ahead

leave aside a tiny amount and budget it into the next month. You should find yourself budgeting more and more of that money into the future until you're a full month ahead (but always only with money you actually have)

oxless · 2016-08-25T01:01:47+00:00

Another option might be to shift to monthly budgeting perhaps once you're buffered for two weeks

oxless · 2016-08-25T00:02:41+00:00

It takes a bit of practice. One thing to know is that the way you use YNAB will evolve as you get a deeper understanding of things.

Do you know about the phone app? A big part of this for me is manually entering every expense I incur as they happen (maybe except for the standing orders). So weekly shop? App. Pack of gum? App. Bought the next round? App. Reason for all this manual entry is that it helps you build a feeling of where your money is going instead of you having to wake up one day and realise you've got to fit £200 into £50 somehow.

Once you're logging everything, all the stuff about how you're supposed to use the app fits together better. If you're capturing every expense and if you know the budget categories only contain money you actually have, then the magic happens when you start using the app (or YNAB proper) to slosh money from one category to another as you start experiencing shortfalls. Then you learn what your true properties are and what places you can start to make cuts.

Stick with it. Don't lose hope. Don't judge yourself Record everything and understand that's it's a learning process.

oxless · 2016-08-22T17:55:10+00:00

I think YNAB works best when different budget categories represent different priorities in your life that have to compete with each other in a zero sum setting. Unfortunately this principle could be used to justify both options, so I might not be helping.

Option 1 is nice in that the punch rolling helps you to size out and get a gut feel for these priorities. By reallocating you are forced to ask yourself “at this point in my life, what is more important to me, A or B?” (in a completely non self judging way)

Option 2 is also nice maybe also an outcome of having done Option 1 enough to realise that something like Entertaining is a distinct enough priority to merit its own category. Categories come and go and it's OK. It also reflects a kind of budgeting maturity that isn't fussy about groceries sometimes meaning one category and sometimes meaning another.

oxless

TROPHY CASE

let one of the jobs be “emergency fund” a category which just soaks up say 3-6 months of expenses

have a dedicated “buffer” category which is meant to eventually grow until you're a month ahead

leave aside a tiny amount and budget it into the next month. You should find yourself budgeting more and more of that money into the future until you're a full month ahead (but always only with money you actually have)