Credit Cards, Interest Fees, and Debt management

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My husband and I are just starting to use Goodbudget to get a handle on our finances.  For the most part, everything is fairly straight forward and easy to use.  
My struggle comes with the Credit Cards and Interest Fees.  I currently have our credit cards entered as an account, but with 0 balance.  This way we can still use the "account" to pay bills, etc.  I have an envelope for Credit Card Payments.  We have only been using the system for a week, and are still working out all the kinks so to speak.  While discussing our budget tonight, Interest Fees came up.  I created a new envelope for that, which in turn needed a new budget. Is there a better way?  My brain pretty much shuts down when faced with these types of problems, so I am really struggling here! lol.
Also, how do we set up Savings Account Transfers?  I don't have our savings accounts entered currently as accounts...  I know this system will be great once we get the hang of it, but getting everything set up right is really over whelming!
Thanks for any help, guidance, etc. that anyone can send my way.
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Posted 2 years ago

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Photo of Ryan


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For our budget, we tend to enter everything manually on the app. For our credit cards and bank accounts, in general, we just pretend that they don't exist. When it comes to interest charges for the cc, we created a "catch all" envelope called Clothing, Gifts, Pet, & Other for all of the little expenses that don't fit into any of the main envelopes that we have. Hope that helps!
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Wayne Woodbury

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Becca, unlike Ryan, I am a little more anal about my accounts and have an account set up for everything and I use the "Reconcile" feature religiously.  I assume by now you have a handle on this (how to record credit card interest), but thought I would offer a reaffirmation of what others have said.  If you are a carrying a balance on your card, you will have an interest payment.  This shows up on your statement and is applied usually on the last day of the statement.  It should be recorded in Goodbudget as an expense.  The same goes for any other fee, such as a late payment fee, or interest payments on a car loan or other loan.  It should be recorded the same way you record other payments made with the card.

The same holds true for interest earned on savings accounts.  For me, this doesn't amount to much, but every penny of interest income should be recorded as income on the day the bank pays it.

As for which envelope to record it against, that is a matter of personal preference.  I'm like Ryan and have a "Miscellaneous" envelope that I record these expenses against.  If you are working on debt reduction, you might have a "debt reduction" envelope you could use.

Since you are a new user, I would like to give a little personal advice about creating envelopes.  You create envelopes to help you plan how you will spend your money.  Too many envelopes can be overwhelming.  I like to keep them as simple as possible at first and then expand them as needed.  If you are having a hard time regulating or planning your spending for a particular envelope, that may be an indicator that it is too general and you need to break it down into more specific envelopes.  Also, if you are having trouble controlling your spending in a specific area, then you may want to create an envelope for that one thing.  It might be somewhat general like "Crafts and Hobbies" or more specific like "Starbucks."  On the other hand, if you go to record an expense and you are having troubles deciding which envelope it should go it (i.e., it could fit into one of several), then perhaps you have too much granularity and you may want to combine some of your envelopes.

Good management of your envelopes will make it easier to stick to your plan and avoid "budgeting burnout."

Welcome to the Goodbudget club.

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Karisa Russell, Official Rep

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Hi Becca, 

That's a good question! It sounds like you plan to track your credit card's balance as an Account in Goodbudget. In that case, you won't need a separate Envelope for the card's monthly payment. But you are right that you'll need an Envelope for the interest charge. And, when you're ready to record that interest, you'll do so by adding it as a regular expense to the interest Envelope and to your Credit Card Account. 

Finally, when you're ready to make your monthly payment on the Credit Card, you'll do that by recording an Envelope Transfer from your Checking Account to your CC Account. You can see how to make an Account Transfer here.

To answer your last question, do you plan to track your savings as an Account in Goodbudget? If so, you can create scheduled Account Transfers (refer to the link above). Otherwise, if you don't plan to track savings as an Account, you can still set aside a budget for the amount you'd like to save each month in an Envelope, and then expense it out of Goodbudget to show that you made a real life transfer from checking to savings. 

Hope that helps!