Getting started (again)

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I’m coming back to GB after an absence. I have cleared all my data, set up a new set of envelopes and set up my accounts with the correct balances. I now have some basic problems that I can’t remember the answers to.

1. Today is the 11th. I got/get paid around the 20th of each month. A lot of my regular payments go out on the 28th of each month; some go out around the 15th. With all these variables when do you recommend I should set the budget period from?
2. I have filled my envelopes but because I have entered no income yet my unallocated is heavily in the red. Should I enter my income from last month or leave it until I actually get paid next 20th?
3. Can I start recording transactions now or should I wait until I’ve been paid?
4. Is there any value in importing bank transactions now, or should I wait until one budget period has passed?
5. I have credit cards that have a balance that I am paying off but am not spending on. I have opted to create envelopes for them but have not entered them as accounts with balances, as that gives me a negative unallocated balance. That seem fair enough?

Thanks for any help!

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Steve G

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Posted 1 year ago

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Colin Grant

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Presumably you have money to cover the envelope fills in your bank account? If so how did you manage the unallocated funds that arose from you opening your accounts within GB. Remember you do not have to fill envelopes from income, you can also fill from unallocated, which is what I do all the time. Basically, the total of all your envelopes should be equal to the total of your account balances.
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Wayne Woodbury

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Those are some good questions.  I don't know all of the best answers, but here are some ideas:
  1. I would set the budget period to the first of the month.  When you get paid, I would stash it all in Unallocated and wait until the first of the month to fill my envelopes.  I like using the first of the month for the simple reason that it is easy to remember and all of my bills are monthly.  Bills come due at different times of the month, and this can change over time.  The same goes for your income.  If you set things up to revolve around specific bills or income, then you may find nothing lines up a few years from now.  In your case, this would mean that you need to be about 10 days ahead on your finances so that you have enough money budgeted to hold you from payday to the first of the month.
  2. For this question, I have done things two ways.  My first way is to set my accounts up initially with a $0.00 balance and then record an "Income" transaction (with credit cards it would be an "expense" transaction) in the amount of the balance from my last statement.  Then record each of the transactions I have already made for the month.  After recording all of my transactions, all of my envelopes are in the red except the Unallocated envelope.  I then do a Fill and get all of my envelopes back in the green and allocate the excess to the envelopes I expect to use throughout the remainder of the month.  Alternatively, you can record your first income as the current balance instead of the balance at the end of the last statement.  This way you don't have to record all of the transactions you have already made.  For my credit cards, it was easier to use the first method as I use the statements to reconcile my accounts, but I used the second method for my checking and savings accounts as I import those accounts and I set the beginning and end days on the import.  It was just easier that way.
  3. This is a matter of personal preference, but I would start recording transactions immediately.  When do you want to start tracking your finances?
  4. For question 4, it really depends on how you set up your accounts (see my answer to question 2 above).  Whatever you do, when you create your initial balance for an account, you should record any transactions made to that account from the date of the initial balance.  This will allow you to maintain an accurate balance in your ledger/account register.  At the end of the day, your accounts in Goodbudget should balance with your actual accounts, and the total sum balance of all of your envelopes combined should match the total sum balance of your accounts.
  5. This is the most difficult question to answer as Goodbudget is working on software changes to handle credit card debt so that it is not reflected in your monthly envelope balances.  There is no release date for this and they have not provided details (I learned this from a post from Karisa in a different thread).  My suggestion is based on an assumption that you are trying to get out of debt by paying off this balance:
  • Step one - Setting up the account: Create an account for your credit card with the balance set to $0.00.
  • Step two - Setting up an envelope for debt elimination: Create a Savings Goal envelope with the amount set to the balance of your credit on the last statement.  This is the debt you are going to want to pay off.  You can set a date on this if you like and GB will calculate the amount you will need to save to meet your goal.
  • Step three - Recording transactions: Record all transactions made with this credit card. You should also record an expense each month for any interest or fees accrued each month on that card.
  • Step four - Making payments for current spending: When your bill comes due, record a "transfer" transaction in the amount of the total expenses made to that card during the month (including interest and fees).  For example, a "transfer" transaction from your checking account to your credit card account will reduce the balance of your checking account as well as reduce the amount owed on the credit card.  If pay the full amount of expenses, the balance on the card should be exactly the same as it was when the billing period started.  In GB, it will bring the balance back to $0.00 each month.
  • Step five - Eliminating your debt:  As you are able, allocate money to the Savings Goal envelope you created in Step two above.  Periodically, may a payment to the credit card using the money in this envelope.  You should record this as a normal "Expense" from whichever account you are making the payment.  DO NOT record this as a "Transfer" to your credit card account or your credit card balance in Goodbudget will indicate you have a positive balance on this card (we want GB to zero out this balance each month).  Just record the payment as a normal expense.  This will reduce the balance of the account from which you made the payment (i.e., your checking account), but leave the credit card account balance unaffected.  Finally, edit your envelope and reduce the goal amount by the amount of the payment.  For example, if you had a $5000 balance on your card as of the last statement, you would set the goal amount for your envelope to $5000.  If you make a payment of $100 from this envelope to your credit card company, change the goal to $4900 ($5000 - $100) to reflect the remaining debt you owe on the card.
Using this method, you can use the accounts and monthly envelopes to manage all of your future spending on the card and use the Savings Goal envelope to manage and pay down the previous debt.  When your Savings Goal envelope reaches $0.00, you will be debt free.

Sorry this was so long, but I hope you find something useful in this (and hopefully I did not insult your intelligence with my explanations :-).
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Karisa Russell, Official Rep

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Thanks Wayne and Colin!

The only thing I'll add, Steve, is an answer to your fifth question. Goodbudget is in the process of creating a debt feature, like Wayne said, that will help you track debt accounts. In the meantime, if you're working to pay off your credit card, I'd recommend just doing so with an Envelope, and NOT tracking the credit card as an Account as well. That's because the way GB works right now is that your CC Account count against money you can budget with right now, which makes it hard to fill envelopes. 

Hope that helps!