Credit Card payment

I read this thread, and it was extremely helpful. This is the way I plan on doing things going forward. However my old budget setup, I put money spent in a CreditCard Envelope (CC Envelope), when the bill came due, I simply paid the bill from that envelope. So we are nearing the end of the month, and my bill is due. I have $500 in my CC envelope, and I’m not sure how to use that to pay my Credit Card bill. I have tried this:

  1. I recorded a payment from the CC Envelope to the Credit Card (payee)… this didn’t show a decrease in the Credit card account. So I then recorded it separately as income in the credit card account. I then ended up with unallocated funds. I wasn’t sure how to fix that. So I deleted both of those transactions.

  2. I did an account transfer from the Savings account to the Credit Card account for the $500. The problem with this, I still have $500 in the CC Envelope. I cannot transfer from the CC Envelope, because the CreditCard account is an account, not an envelope.

Any ideas? I just started with GB less than a month ago. So going forward this will not be a problem. I brought it in with the totals and envelopes I setup in the beginning. Totally love GB.

PS - Just to clarify, it is a Credit Card account, not a debt account. It is paid in full each month.

You don’t actually pay the credit card account from an envelope. The credit card account has to be paid from a bank account. It’s a transfer transaction in GB. The CC envelope you have would be used to record a credit card transaction. So, let’s say you have $500 in your CC envelope and you make a $25 purchase using your credit card. You would create a GB expense transaction with the envelope field as “CC envelope” and the account field would be your credit card account. Now your CC envelope will have a balance of $475. This amount in the envelope shows you how much money you have left to spend using your credit card.

So, the principle is envelopes show how your money is allocated and spent, but actual payments to the credit card are paid from a bank account.

To address your first point, you ended up with unallocated funds because you recorded an income transaction. Income transactions are simply money you literally receive and fill envelopes with that money. Some people record income and don’t allocate to an envelope which automatically goes into the unallocated envelope. That simply means they have funds that is not assigned to any purpose. When they have a purpose for that money, then they do an envelope transfer from unallocated to whatever envelope they want. For example, you have $25 in unallocated, but you know that you will be making a $25 credit card purchase. So you will do an envelope transfer from unallocated to your CC envelope. Now you have $25 in the CC envelope to make that credit card purchase. When you actually make that purchase you’ll record an expense transaction using your CC envelope in the envelope field and your credit card in the account field. Now your envelope will decrease by $25 and your credit card account will increase $25 (that is your credit card balance will increase showing you owe $25). When it’s time to pay your credit card, you’ll do a transfer transaction from your bank account to your credit card account.

Envelopes and accounts are independent, but related. So, remember the balance of all your envelopes just show how the funds in all your accounts are allocated. Therefore, make sure the total amount in envelopes equals the total amount of your accounts. This is seen by viewing the total of envelopes on the envelopes tab and the total of accounts on the accounts tab.

Now to address your second point. You actually did the payment transaction correctly. The reason you still have money in the CC envelope is because that money needs to be recorded (used) when you make the credit card purchase.

I just explained a lot, so feel free to ask questions for clarification.


Great info above—may I add my 2¢?
First, Wayne’s 100% correct about doing an envelope transfer from Unallocated to an expense envelope, and I’d add that a “Fill from Unallocated” instruction does exactly the same thing a different way. The advantage to “fills” is the ability to move money into several envelopes at once vs. a transfer between just two envelopes, so you can use whichever is better suited to your needs at that moment.
Second, I’m under the impression that you’ve allocated some money to pay down a balance on an existing CC debt and that’s the CC envelope you mentioned. If I’m right, in order to keep your balances correct, you have a couple of options. If you’re not using the card at all, record the balance as a Debt (not a CC) and fill the debt envelope each month with your pay-down amount.
If you ARE still using it, I’d recommend an envelope transfer on the day you make your payment from the CC envelope to Unallocated. You’ll then make the transfer from your bank account to your credit card ACCOUNT and everything will be square. I hope that helps!

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Thank you for the replies! I need to clarify a couple of things.

  1. The credit card is paid off monthly, so this is not a debit account.
  2. I plan to do what you described going forward. As money is spent, it is deducted from the envelope, and the cc payment is treated as a transfer. (I like this idea). I completely understand that, and love it. However…

In my old program (Moneydance) any charges on my credit card were moved to a separate envelope so I could pay the credit card with that. I don’t like this method. When I started using GB, I brought all the totals over and recreated all my envelopes with starting balance from my old software. So I’m trying to figure out how to record my payment and keep all balances correct. Going forward this will not be an issue because I will do what was recommended.

Looking at my total balances it shows the same in envelopes and accounts and the CC bill is recorded, but I still have the $500 in my cc envelope. I think I have $500 I can move to unallocated, and allocate it elsewhere. I think I messed up some of the beginning balances when I brought everything over. So I’m pretty sure I know where that $500 goes. The balance at the top was very helpful, because I felt like I did not have the right amount in my envelopes.

It seems because I started my credit card account with a balance, GB didn’t allow me to budget that money, and instead, deducted it from available funds to allocate. So when I allocated funds to pay that bill, I shorted my other envelopes to come up with the $500. Now I have that $500 surplus. I think that is what happened. I don’t know if that makes sense to anyone else.

Thank you again for helping me figure this out.

Yep, that makes sense. Since your total envelope balance equals your total account balance then you’re safe to transfer that $500 in your CC envelope to whatever envelope you want.