I’m from Chile, where it’s common to make credit card payments in installments (typically interest free).
That means I can pay a $90 bill in three installments of $30 each, paid over 3 months.
As of now, what I understand, is that all of the $90 will be deducted from my envelope. Also, I would be “owing” $60 in the credit card, which it is technically right, but I cannot pay them until the next month,
How can I track these installments in goodbudget?
Is there an easy way to consider installments so that it would take $30 from the envelope in the upcoming months?
Welcome! I have to ask, do you pay interest on any part of the credit card balance? If not, what you’ve described is very easy. If instead you pay interest on some but not all of your balance, it is a little tricker to set up.
If you don’t pay any interest, just set up the card with a $90 starting balance to “Pay Over Time” but set the interest rate at 0%. Each month you’ll fill that envelope with $30 and make a payment, until the $90 has been paid off.
If you do pay some interest, let us know. Many of us have ways of making that work, but they’re a little complicated and I don’t want to waste your time if that’s not what you need!
Yes, I don’t pay interest on the installments, so it’s a good idea to keep it simple
And thanks for the idea on setting the account to Pay Over Time. Let me see if I got it right.
For example. Say that I pay $90 dollar on Clothes in 3 interest-free installments.
But I only allocated $50 dollars to the Clothes envelope.
The way I imagine (please, correct me if I’m wrong) is that I remove $90 from the Clothes envelope this month (and have a negative $40 envelope). Then, the following 2 months I’d assign the $30 to the credit card debt envelope.
Then, when I fill the full Clothes envelope in the second month, I would only have $10 left (because $50 I “paid” in the first month and $40 is “paid” in the second month").
Would that be it?
I’m just not clear on the money flows. If I add unallocated money to the Clothes envelope on the second month, how do this money goes to paying the credit card?
I apologize if the question is basic. I’m new so I didn’t went over a month yet.
Almost, but it’s even easier than that. Remember that your Accounts and your Envelopes represent the same money, just from different perspectives, and Debt envelopes don’t work quite like the others. In this specific case, I would open the credit card Account with a balance of $90. To start, transfer $30 from your Clothing envelope to your Credit Card Debt envelope. Now your credit card Account has a balance due of $90 and your credit card Envelope has enough to pay this month’s $30 payment, with $20 more still left in the Clothing envelope for this month.
Next month the Account will have a balance due of $60, so you’ll either Fill your envelopes with $20 in clothing and $30 in the debt envelope, or just do another envelope transfer (the outcome is the same). The tricky part is adding new charges, because you can’t assign them to both a “pay over time” card AND a category envelope. In that case, you’ll have to keep to your budget by making envelope transfers like I mention above.
This may be the same as what you’re saying, but I want to be sure we’re in agreement.
Hope that helps!
What Tiffany’s explained here should definitely work, but as she notes, it’s a bit troublesome if you’re also actively recording transactions through that card, so I think it could work fine to set it up as a normal Credit Card Account (rather than a Debt Account, which is paid off over time). Because you’re paying 0 Interest, the Debt Account’s Interest calculations aren’t needed, so you can just let the balance roll over from month to month, and have the benefit of being able to put Expense payments through your card in one go rather than having to do a Transfer.
Additionally, whether you choose the Credit Card Account route or the Debt Account route, you can schedule those payment installments by making them as a scheduled transaction. You can see more info about how to do that here: How do I create automatic Fills and payments? | Goodbudget
Thank you very much for your explanations! They were very helpful.
I was able to try out both options in Goodbudget and I understand better how it would work.
And yes, Alex is right in that I’m using the card to record new transactions. So I found best to use a “Pay in Full” card to use it as an account as mentioned.
Although the Debt Envelope makes the money flow between envelopes clearer, the drawback I had is that the Expense Report masks the true expense category by showing all expenses under the “Debt” Envelope.
Alternatively, working with the “Pay in full” account, I indeed was able to assign the expenses to the correct category by adding expenses in the future. I have to work on the statement to add these new transactions, but the import feature makes it very easy, although sometimes long, as I have to manually assign multiple similar transactions. Luckily I have only between 5-10 purchases made in installments per month, but any trick to assign them quicker is appreciated (e.g. multi selection, adding comments in the .csv file, etc.)
This method also simplifies checking individual transactions against my card statement because the expenses I have for a month in Goodbudget is the same I should have in my statement. I added a #installments tag to know the date is not the true date of the expense and to be able to filter purchases actually made in that month vs. made in previos months.
The only trouble I had was reconciling the whole account. When using the reconcile feature, it only considers past expenses whereas my credit card statement includes all future debt as well. So it’s though to compare the actual statement for a given month. I can overcome that by also clearing the transactions in the future and comparing the total value in my account against my statement.
The upside of all this exercise is that I had to really understand how to read my card’s statement and now I know where my money is going!
Thanks again for the ideas and for guiding me through using Goodbudget! I already feel more empowered with my money and I hope this will translate to better financial decisions!
