Help with Credit Card Strategy

Hello - I’m new to GB and need a little help. We are retired and live on SS and also a monthly allocation from a 403B account. All these come at different times of the month. We travel in our camper several months of the year and don’t want to be mailing and spending a lot of time paying bills, and all of our money comes in at different times of the month to our credit union. My wife’s SS comes on the 2nd Wed of the month, and mine comes on the 4th Wednesday of the month. The 403B distribution comes around the 5th of the month. This makes it difficult to fill all the envelopes at one time. My strategy has been to charge most all of our purchases and bills on a credit card then pay that card off at the end of the month. Up until recently we did not have a strict budget and that meant we really had no control and were spending way too much, hence the need for Goodbudget. I would like to continue charging everything to the card, which now has a zero balance (Except for what we’ve charged per our budget this month, and I’d like to use the envelopes so we record every transaction at time of purchase, but I don’t have enough income to fill the Envelopes all at once, except at the end of the month. BTW, we DO pay all our bills electronically through our credit union, so that part is easy while we are traveling. Most of our bills, such as phone and home utilities and so on are charged automatically to our credit card, but we do have a couple that come directly out of our checking accounty. What strategy can you recommend for filling our envelopes and making reconciliation easy. I hope this all makes sense. Thanks in advance for any help you can provide.

This is easily “do-able” with Goodbudget!
You’ll want to have an Account for your Checking at the Credit Union, and also Credit Card Account(s) for the cards you’re using. Since they’re starting with a zero balance, just be sure to indicate that you pay them off monthly (Goodbudget handles these differently, vs. ones you’re working to pay off).
As you receive income, Fill the envelopes that are next due. You can have as many Fills as you like, and may choose to create one for each deposit. (Admittedly, the “fourth Wednesday” will fall out of sync twice a year and the date will need to be manually adjusted, but that’s fairly simple)
Now when you make purchases or pay bills, just record the transaction from the appropriate Envelope, charged to the Credit Card Account. (Goodbudget knows this is a debt on the card.) When you pay the card off, you’ll simply do an Account Transfer from checking to the card, which will reduce the amount in your bank account and the amount owed on the card. It doesn’t even matter when you pay off the card; the budget is based on the transactions in envelopes regardless of how they’re paid.
I pay everything this way, so if I can offer more please let me know!
Hope that helps!

It occurred to me that since my income deposits are all automatic, and I don’t pay the card until the 4th Wednesday I could just “Fill” my envelopes with future money at the beginning of the month. Does that make sense? Is there any reason why I shouldn’t do that?

The only risk is overspending, but if you have plenty of reserves and you pay careful attention to the true balance in your credit union, you should be fine.
If one is learning how to live within their means, “pre-loading” isn’t a great idea. But if you’re just using GB to track your spending habits and develop better ones, this can work just fine.

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Tiffany, everything you’ve said is very helpful. Thank you very much. Since most everything gets charged to the credit card, and that gets paid at the end of the month, it seems like prefiling should not be an issue. There are a few small bills that get deducted directly from our checking account, but they don’t come out until after the monthly 403B distribution, so that shouldn’t be a problem, especially if I pay enough attention and keep spending within the envelopes.

Another question, if you don’t mind. Is there a way to separate the envelopes that are charged to the credit card from those that get deducted directly from our checking account? If so, that would make reconciling easier. And if available, how would I go about it, including changing existing envelopes, which are all now tied to our “Income” account.

Thanks again for your help.

It’s actually a common misconception that the envelopes are “tied” to an account, when in actuality they’re both (Envelopes and Accounts) representing all the same money from different perspectives.
For example, on the Accounts side, let’s say I have $1,000 in checking, as well as a credit card with $0 balance that I’ve structured to pay off every month. Before any envelopes are filled, this gives me $1,000 of Unallocated money.
Now I do a Fill, putting $500 into Groceries and $500 into all the other envelopes. My Unallocated envelope is now at $0 (everything has been assigned), my envelope total is still $1000 (that’s how much I have assigned to spend) but my Account balances haven’t changed.
I go to the store and spend $200 from the Groceries envelope on my credit card. My credit card balance is now $200, my checking account balance is still $1000, and my envelope total is down to $800. Now I stop at a quickie mart and spend $50 more from the Groceries envelope, but this time I use my debit card. Now the checking account balance is $950, the credit card balance is $200, and my envelope total is $750 (remaining funds from this Fill).
They’re all working in harmony; at the end of the month if I’ve spent $800 on my credit card (but not paid it yet) and $200 from Checking, I’ll still have the other $800 in checking ready to pay off the card, and everything goes back to $0.
A caveat—this can be tricky if you track accounts that aren’t part of your spending money. For example, a Savings account will show up as Unallocated money unless you create an equivalent Savings Envelope. You’ve “tied” these two together, but it’s a manual process and requires manual updates for things like interest income.
Of course you CAN create separate envelopes for money spent from one source or another, but I think you’ll find you won’t need to. You can tease out the same information either by viewing your Accounts (which will show all the transactions to, say, your credit card, but not by category), by using the Advanced search function on the web version, or by running reports. Finally, you can subdivide expenses into searchable groups by using # in the notes. For my Vacation envelope, I might add #Paris to each expense from that trip, then I can easily sort through just these transactions without building a new envelope entirely.
I know this was long-winded but I hope it’s helpful! I’ve been using Goodbudget for years and it’s hands-down my favorite, so I’m a little passionate, lol! :blush:

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Ok, that all makes sense, and it doesn’t seem long-winded. I think I have a handle on it now, at least for the moment. Thanks so very much for your help, and your passion :grinning:.

I seem to be an outlier here, but I do fill my envelopes with projected income at the start of the month. It’s pretty easy, really, you just create another account. I have: Savings, Checking, PayPal, Cash, and Projected. On the first day of the month I do a “Fill from New Income” where all the money I expect to receive that month goes to Projected account and all my envelopes get filled on day 1. Then, when I receive any of that income, I record it as a Transfer from Projected to Checking rather than a regular Income transaction. There are really only two caveats to this method. 1: you have to respect your account balance in addition to your envelope balance, i.e. just because you put $1000 in your mortgage envelope doesn’t mean you actually have $1000 in the bank to spend just yet (you might have to wait for a payday). 2: at the end of the month you have to account for any difference between what you projected your income to be and what it actually was. Usually I just zero out the balance of the Projected account and treat the resulting adjustment as either surplus income which I put in a savings envelope or an income deficit which I cover from that savings envelope.

You can also do something similar with your credit card. Rather than using the GB credit card account which tries to manage the balance due as a liability, you can create a regular account that treats your credit limit as an asset. This has a similar effect as the Projected account above. If your credit limit is $10k then you set that as the account balance which will increase your Unallocated amount accordingly. Then you fill your envelopes using those Unallocated funds. Then you just spend as normal from the CC account. The balance will go down which reflects the decrease in the credit available. When your income arrives you record it as income to your Checking account, and when you make a CC payment you record it as a Transfer from Checking to CC.

I personally never use a CC except when my debit card is not working for technical reasons (or car rentals, etc), so I do not actually use this method, but I have used the Projected account for years and it works beautifully.

My two cents, my accounts and envelopes match exactly what I have in real life :blush:

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And I use CC’s for every possible transaction, to earn free money/cash back or airline points (nearly $2K sitting in Capital One and Discover!) :grin:
(I also pay them off every Friday, so I never carry a balance longer than a week)

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Hi Tiffany, my CC is only offering statement credit for my credit card rewards. Do you have any tips on how to handle the cash back statement credit with envelope charges? I was considering creating a “CC rewards” account and rewards envelope then use that for any charges on the CC. I’m not sure if that is be best way.

Personally, I don’t track my rewards as a balance, I just use them when I feel like it but I think your suggestion would work. That way you keep visibility of your spending in envelopes, but don’t affect your balances.
If you don’t want/need the extra envelope, you could just create an Account (set up like savings) for your rewards and then “transfer” from that balance to your CC when you make a payment, to offset the difference.
If you don’t even want an extra account, you could just adjust your CC balance down by the amount of the reward redemption, but I always hesitate to just go changing balances as it’s very easy to throw yourself off that way.
I had to really think through this one! :grin:

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I have a separate account and related envelope for my CC rewards because I can use that money any way I want. However, if the rewards can only be used towards paying your statement then no related envelope would be needed. When the statement is paid just transfer the amount paid with your bank account and the amount paid with your rewards.

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