Envelope budgeting with credit cards

[Mike or Penny Novack]

Ulrike Fischer wrote:

>Am Thu, 04 Feb 2010 19:11:58 -0700 schrieb Mister Ribble:
>
>  
>
>>I'm considering using gnucash for my budgeting. My budgeting is a little 
>>unique, but I imagine others have found a satisfactory solution - 
>>hopefully they'll chime in.
>>
>>My finances revolve around a single checking account and a single credit 
>>card. Each month I allocate a number of income dollars to various 
>>budgets, say 100$ for groceries, 200$ for gas, etc. These allocations 
>>roll over each month, so if I spend less than the allocated amount, the 
>>next month I'll have 200$ in gas + whatever was left from last month. 
>>This way I can build up funds for things like car repairs that happen 
>>randomly.
>>
>>All of my transactions go through my credit card, which I pay off at the 
>>end of the month.
>>    
>>
I can tell you how to do this and then you'll have to decide if more 
trouble than it is worth. The method of "envelope budgeting" evolved 
from literal envelopes containing the cash and you took from the 
particular envelope when spending for that category. You could SEE the 
money left in an envelope. That doesn't carry over here where you are 
paying by credit card and paying that balance by check each month. It 
sounds like you just want to know (on say a monthly basis) which were 
over or under and retain that information.

a) Under you checking account (as parent) create a sub account for each 
envelope.
b) At the start of the month, have a "fill envelope" transaction taking 
from the unallocated checking account to the envelopes.
c) Pay for expenses with your credit card.
d) Before paying off the credit card balance, run an Income Statement 
for the time interval (that's Income and Expenses) and transfer back 
from each envelope what that report shows as the expenses that would 
have come from it.
NOTE: "b" and "d" would be single split transactions

Now: You have information how much left in each envelope (or which 
overspent). You can do a transaction to move amounts between the 
envelopes (to deal with the negative ones). If any remain with excessive 
balances you might decide to move some or all of that to a "reserve" 
envelope (like for those unpredictable car repairs, etc.)

That any help?

Michael D. Novack
 

-- 
There is no possibility of social justice on a dead planet except the equality of the grave.