Envelope budgeting with credit cards

[Brenden Walker]

On Thu, 04 Feb 2010 19:11:58 -0700 Mister Ribble <ender27182818 at gmail.com> wrote:
> 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've been doing almost exactly this.  First thing, I've got my budget accounts as sub-accounts of my checking account.  That way the accounts page shows what I really have in my checking account (as that includes sub-accounts).

In addition to the budget sub-accounts, I have a 'Bills' sub account.  Which really is (and probably should be renamed) CC Debt.

Each charge creates a 4 line split transaction.  For example, if I purchase gas with my credit card I end up with the following splits (from the standpoint of the General Ledger)

                            Funds In    Funds Out
Expenses:Auto:Fuel          20.00
Assets:Checking:Bills       20.00
Assets:Checking:Budget:Auto             20.00
Liabilities:CC                          20.00

Basically I've moved $20 from my auto budget, into the 'holding' account I use for my credit card bill.  As this money hasn't really been spent yet (still in checking account) it has no affect on my actual checking account balance, just moved from auto budget into the 'account' I pay my CC From.

$20 from CC to expenses:auto:fuel covers the actual expense for tracking purposes.

I've found this to work very nicely for me, the 'Bills' sub-account balance should always equal the CC liability I currently have, when I pay the bill I pull from 'Bills' as I've already split out the charges into appropriate expense accounts.

Hope that all makes sense, I haven't fully read the other replies might be better options for you there.