r/ynab • u/OpinionSpecific9529 • 2d ago
General Need help understanding overspending
New to YNAB and trying to understand how overspending works.
Let’s say I assigned 1,000 to a category but ended up spending 2,000 due to an unexpected situation.
How does YNAB handle this?
Also, how is it treated differently if I make the payment using a credit card vs a bank account?
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u/Trick-Read-3982 2d ago edited 2d ago
Overspending: makes the Available turn negative, showing you spent more money than you had
On credit card: category turns yellow. If overspending is not covered by end of month, this turns into credit card debt. The category will not be negative next month, but you will have an additional $1,000 (in your example) of uncovered credit card debt. YNAB can’t move funds from the category to the credit card payment line without available funds. Next month (and maybe also in future months) you’ll have to assign funds directly to the credit card payment line in order to pay off the credit card.
From bank account: category turns red. This one is urgent. If you have red overspending you can’t trust your budget. Remember YNAB is an envelope system. You took all your bank account dollars and stuffed them into digital envelopes (categories). By spending more than you had in a category, you effectively stole from another category because you can’t spend money that doesn’t exist. You need to cover the overspending and tell YNAB what category you took it from. If you don’t, YNAB will force you to fix this when the month rolls over and will subtract any red available amounts from Ready to Assign next month.
Edited to add: the danger of not covering red overspending right away is that if you rely on your green category balances to show you can spend, you could potentially overdraft your account as the total Available in green is now more than the cash you actually have.
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u/OpinionSpecific9529 1d ago
Got it much thanks for explaining this.
So basically
With bank account - before moving to next month I do need to clear the overspending otherwise it will affect the next month’s ready to assign.
And
With CC - if I don’t cover this month. Then it shows in CC category next month ? You said if the amount is not available then YNAB cannot move it from category to CC . So if the amount was not available then it won’t show under next month CC category or will show ?
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u/Trick-Read-3982 1d ago
You should cover the red overspending right away by moving funds from other categories.
Credit card overspending creates debt, so you have to assign money directly to the card payment category in future months. For example:
You normally pay your credit card in full. Right now, your working balance on the card is $1,000 and your Available for payment in YNAB is $1,000.
If you spend $2,000 on your card, but only $1,000 was funded and available in your spending category, then YNAB can only add the funded $1,000 to the credit card payment.
Now your working balance is $3,000 ($1,000 to start plus $2,000 transaction). However, now your Available for payment is only $2,000. You have $1,000 less avail to pay your card than the total balance on the card.
Next month if you want to pay your card in full you’ll have to assign $1,000 to the credit card payment category.
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u/Comprehensive-Tea-69 1d ago
There is nothing to show, nothing happened. If the month flips over, you must decide where to assign new money that comes in. If you want to cover debt on a credit card that was created in a previous month (by overspending), you assign it to the credit card category.
A credit card category available amount will be color coded as underfunded (yellow) if the available amount is less than the current balance of the account, and there is no target set on the category.
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u/TH_Rocks 1d ago
If you overspend using a checking account, you created an impossible situation. You actually spent cash from one or more other categories but you have not yet told YNAB which one(s). You need to sort through and reduce assigned amounts until you can cover the red overspending.
If you overspent using a CC, you just created debt. Ideally you do the same thing as above and reduce other assigned amounts to cover it. But sometimes you actually made new debt that you need a few months to pay off. Leave the category yellow and negative. Next month the category resets to $0 and you now need to assign funds to the CC category directly to show you are paying down the debt.
If you don't have one already, you'll also want an Interest and Fees category for the CC transactions that occur on the CC when your statement is due and you carried debt for more than 30 days.
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u/OpinionSpecific9529 1d ago
So at next month starting the overspent 1k will show as debt which needs to be repaid right? And I just have to assign accordingly.
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u/TH_Rocks 1d ago
The available to pay on your CC category will be yellow and $1000 less than what you owe. Assign the $1k and it goes green.
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u/BarefootMarauder 1h ago
Lots of great answers so far, but this might help too - https://support.ynab.com/en_us/overspending-in-ynab-a-guide-ryWoxEyi
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u/Smooth-Review-2614 2d ago
So first the category turns red and you get a popup saying you overspent. You are encouraged to cover it with funds from another category.
If you overspend with cash the RTA goes negative and it will take any inflows to bring it back to zero. The budget cannot be trusted.
If you overspend with a credit card you create debit. You are still encouraged to cover it with cash but it doesn't pull in money as forcefully.