Envelope Transfers For Repayments?

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Hi all, I'm new to Goodbudget and budgeting apps in general, so the tool's been helpful but the learning curve has been steep. I created a budget for Christmas gifts last month, which I set to $600.

I bought a gift for my partner using a CC that was $723.20 which I'm splitting with my mother in law. My mother in law paid me back $350, which I recorded as an income transaction into my chequings. I think that's correct. 

The thing is, now my Christmas Gifts envelope is negative. Would the correct way to record this now be an envelope transfer of $350 from my unallocated to my Christmas envelope? 
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Gelaine

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Posted 4 months ago

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Gelaine

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I just tried doing the envelope transfer from unallocated to my Christmas envelope and it caused the amount in my chequing account to go down, which isn't really what I want (since I've already set up an account transfer from chequing to pay towards my CC - unless this isn't what I was supposed to do?).

Any advice would be so appreciated!
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Alex Park, Official Rep

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Hi Gelaine,

If I'm understanding you correctly, this is what you did:
  1. Recorded an Expense of $723.20 to your Christmas Envelope and Chequing Account for the purchase.
  2. Recorded an Income of $350 to your Unallocated and Chequing Account.
  3. Recorded an Envelope Transfer of $350 from your Unallocated to your Christmas Envelope.
If I've understood you correctly, those are the steps I would have recommended (though as featherstories notes below, in lieu of an Income transaction you could have recorded a Credit as well). Additionally, using an Account Transfer from your Chequing Account to your Credit Card Account is the correct mechanism for paying your CC balance.

Recording an Envelope Transfer should not have any effect on your Account balances, so if you're seeing that there's likely either a confounding factor at play or you're experiencing some sort of bug. If you're still having trouble with this would you shoot us an email at support@goodbudget.com with your Goodbudget email addres so we can take a closer look?
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Gelaine

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Thank you! Regarding the change in my account balance, I was digging and realized there was something else causing the issue. It's resolved now :)
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featherstories

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you can do 1 transaction as an income from mom to cash (or however she sent it) and then complete a transaction in the Christmas envelope. It’ll be a credit transaction and it also useful for returning merchandise without throwing off your reports. In the app, start a normal transaction for the $350, Christmas envelope, cash account. Then at the bottom, you can change the Type from debit to credit. It’s a bit different on the webpage, it’s a normal expense/credit transaction, but to designate it as credit, enter the amount as a negative number. I hope this helps.
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featherstories

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Whoops, I just realized the credit transaction would be adding money back to your account- not what you want. I looked back, and in these situations, I simply filled the envelope when I made an income transaction from whoever paid me back.
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Wayne Woodbury

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Gelaine,

Alex has it right.  Don't record the money from your mother-in-law as income, but as a credit transaction.  Record it the same way you recorded the original expense transaction when you purchased the item, but selected "Credit" from the drop-down menu next to the amount if you are using the mobile app (The Web app doesn't allow you to select "Expense" or "Credit", so you would just enter -350.00 for the amount), and select your checking account for the account and your Christmas envelope for the envelope.  That way it stores it all as a single transaction and you don't have to do a separate envelope transfer.

There are two reasons I can see for doing it this way.  The first is that this is not income.  It is more closely related to a refund or rebate.  The second reason is that recording it as income will mess up your reports.  If you run an Income/Expense report, it will show your income to be $350.00 more than it should be and will show your Christmas expenses to be $300.00 more than they really were.  If you record it as a Credit transaction, then your income will reflect accurately and your Christmas expenses will reflect the $373.20 that you actually spent.  Note that your envelope and account balances should be the same either way you record this, but each method has a different impact on your reports.

NOTE: The user interface between the Web app and the mobile apps varies slightly.  The mobile apps allow you to select Expense or Credit next to the amount on the Transaction screen, whereas the Web app does not.  To enter a Credit transaction on the Web app, simply enter a negative value (e.g., -350.00).

Good luck.
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Gelaine

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Thank you! This is super helpful. I mostly use the web interface and I didn't really understand how the credit function worked. This makes a ton of sense. Thank you :)