Budgeting with a Credit Card
November 25, 2019 6:36 AM Subscribe
My wife and I purchase everything we possibly can with our credit card and pay it off every month. We don't have a problem paying that bill religiously every month. What we do have a problem with is spending more than we probably should. Is there a service or tool that can nag me through the course of the month and say "Hey jasondigitized, your daily budget is $10, and right now, your daily spending average for the month is $20?"
We are trying to figure out a very simple system that doesn't require much effort that can keep us more financially fit. Just like my Apple Watch tells me how many steps I have taken, I would like to know to know the same for my spending. I'd basically like to know how I am tracking on my monthly budget day to day and understand where that money is going.
There are obviously fixed expenses that go on this like our cars, internet, etc. so being able to see where our discretionary income is going is the most important. A rolling average of that spending seems to be the best way to keep yourself on track considering some days will have smaller and larger purchases and certain purchases don't clear until the next day.
I would prefer to keep using a credit card to buy things. We get free stuff from points when we do this. We have never incurred any interest on the things we buy. Using the envelope system seems silly to me. We use a CapitalOne Venture card if it helps.
What is the FitBit of money?
We are trying to figure out a very simple system that doesn't require much effort that can keep us more financially fit. Just like my Apple Watch tells me how many steps I have taken, I would like to know to know the same for my spending. I'd basically like to know how I am tracking on my monthly budget day to day and understand where that money is going.
There are obviously fixed expenses that go on this like our cars, internet, etc. so being able to see where our discretionary income is going is the most important. A rolling average of that spending seems to be the best way to keep yourself on track considering some days will have smaller and larger purchases and certain purchases don't clear until the next day.
I would prefer to keep using a credit card to buy things. We get free stuff from points when we do this. We have never incurred any interest on the things we buy. Using the envelope system seems silly to me. We use a CapitalOne Venture card if it helps.
What is the FitBit of money?
YNAB is great for this, and is honestly the ONLY way I can use credit cards without overspending -- I went into so much credit card debt before I started YNAB, and since I started using it in 2015, I've never overspent. The way that it works is, YNAB is payment method agnostic -- doesn't matter what payment method you use because you have $X to spend every month, and if you spend $X in cash the money is just gone, and if you spend $X on credit cards the amount that you have available disappears from your budget and gets allocated to your credit card payment (and then once your credit card payment is made that money is gone from your checking account). There is a learning curve, and it does have a subscription fee, but the amount of money it saves in interest fees and generally by curbing your spending is WELL worth it. There are a lot of tutorial videos and live online classes, and very active Facebook and Reddit communities to ask any questions -- lots of people (like me) have been turned into total budget nerds by YNAB and are happy to help!
posted by rabbitrabbit at 6:44 AM on November 25, 2019 [3 favorites]
posted by rabbitrabbit at 6:44 AM on November 25, 2019 [3 favorites]
I did this by setting a daily SMS alert if my balance was over $50, so basically every day I'd get a text in the morning with my balance. I found this really helpful, and it was easy to tell if I was going to exceed a budget.
I suppose you could do email alerts and then have IFTTT or Zapier process that email alert into a Balance divided by Days Since Beginning of Billing Cycle, and alert you on that.
posted by MonsieurBon at 6:45 AM on November 25, 2019 [3 favorites]
I suppose you could do email alerts and then have IFTTT or Zapier process that email alert into a Balance divided by Days Since Beginning of Billing Cycle, and alert you on that.
posted by MonsieurBon at 6:45 AM on November 25, 2019 [3 favorites]
I used the app Unspent for basically this. The one thing it doesn't do is allow you to calculate a rolling average (which I agree is the most reasonable way to think about this). But you can set up a budget for each month and then I enter each transaction and it subtracts it from the monthly budget in a very satisfying way. It's fairly to easy to then see if you're going over budget or under budget because you know roughly when the halfway point of the month is and what the halfway point of your monthly budget is. I personally found YNAB to be more trouble than it was worth for this kind of simple monthly allowance type structure.
posted by peacheater at 6:49 AM on November 25, 2019 [2 favorites]
posted by peacheater at 6:49 AM on November 25, 2019 [2 favorites]
Personal Capital will do this, they send out weekly alerts telling you "You spent X this week, which is Y more than last week". It can hook into most credit cards and online banking to provide a single view of your finances.
The only downside is that they use their free tool as a lead generation tool for their (fairly expensive) investment management service.
posted by Kadin2048 at 6:55 AM on November 25, 2019 [2 favorites]
The only downside is that they use their free tool as a lead generation tool for their (fairly expensive) investment management service.
posted by Kadin2048 at 6:55 AM on November 25, 2019 [2 favorites]
Mint does this, I use it and love it. Though I believe they are about to change their system a bit and perhaps make some of their features pay to use.
posted by raccoon409 at 7:56 AM on November 25, 2019 [1 favorite]
posted by raccoon409 at 7:56 AM on November 25, 2019 [1 favorite]
We pay everything we can with a credit card and I manage the budget by paying the bill in full every week. Every Monday I check the balance and schedule a payment to hit that Friday. This way if we overspend in a week I'm dealing with the consequences immediately and can be more careful immediately, versus waiting a full month.
posted by COD at 8:36 AM on November 25, 2019 [8 favorites]
posted by COD at 8:36 AM on November 25, 2019 [8 favorites]
I’ve used the “Pennies” app for this and found it useful: https://www.getpennies.com/
posted by jennyesq at 9:28 AM on November 25, 2019 [1 favorite]
posted by jennyesq at 9:28 AM on November 25, 2019 [1 favorite]
I'd recommend a YNAB trial, although it may be overkill. One caveat: if you always pay your credit card balances in full, then you'll save a ton of hassle by telling YNAB that those accounts are actually just plain old checking accounts. They have a lot of functions to calculate payments and handle interest and it's just not necessary if you don't carry a balance.
posted by acidic at 10:00 AM on November 25, 2019 [2 favorites]
posted by acidic at 10:00 AM on November 25, 2019 [2 favorites]
I have an old school system for tracking my spending: I write down each cash and credit card expense in my planner as I incur them, and when I reach whatever my limit is for the month, I am done making any discretionary purchases for that month. At the beginning of each month, I try to write down any upcoming expenses (i.e., dental appointment, haircut, birthday present for so and so), leaving the amount blank, so that I am reminded that I must reserve money for those things.
posted by orange swan at 11:16 AM on November 25, 2019
posted by orange swan at 11:16 AM on November 25, 2019
My favourite budgeting app is literally called Daily Budget.
It's super easy to use, but you so have to you it (it doesn't sync with your account).
posted by jrobin276 at 11:55 AM on November 25, 2019
It's super easy to use, but you so have to you it (it doesn't sync with your account).
posted by jrobin276 at 11:55 AM on November 25, 2019
I know this isn't exactly an answer to your question, but I want to put in a plug for super-quick envelope-style budgeting. (I don't personally endorse actual envelopes, or Mint or YNAB or Dave Ramsay's system). However, I want to suggest some big perceptual shifts caused by envelope budgeting that helped me overcome incidental/occasional overspending, and get me into better financial shape. Here's what you need to do:
(1) determine your true income per month (real income, based on yr. least generous of last few month's income). This is amount A
(2) List out your regular monthly expenses. Include bills, but also all predictable stuff – medication refills, dog food, gym membership. Total these expenses. This is amount B.
(3) List out annual/irregular/known upcoming expenses/vacations, divided into monthly set-asides such that you'll have the balance in hand by the time the expense comes up This is amount C
4) Subtract B and C from A. What remains is amount D.
5) Understand that D is the absolute outside maximum amount of money you can spend in a month. However, from D you'll need to further subtract outstanding credit card expenses, planned savings, emergency funds, etc., and you can't ever spend more more than D. (Ideally, you shouldn't spend nearly D, because that's the pool from which you'll also have to deduct unexpected expenses).
Often before I began 'envelope lite' budgeting, I'd inadvertently spend more than D, because I considered that the amount I had in C was fungible. But it's not. Whatever system you decide on (FitBit but for budgeting), I think you should set your cutoff amount at some %age of D, which is the best expression of your habits. Good luck!
posted by mr. remy at 12:03 PM on November 25, 2019 [1 favorite]
(1) determine your true income per month (real income, based on yr. least generous of last few month's income). This is amount A
(2) List out your regular monthly expenses. Include bills, but also all predictable stuff – medication refills, dog food, gym membership. Total these expenses. This is amount B.
(3) List out annual/irregular/known upcoming expenses/vacations, divided into monthly set-asides such that you'll have the balance in hand by the time the expense comes up This is amount C
4) Subtract B and C from A. What remains is amount D.
5) Understand that D is the absolute outside maximum amount of money you can spend in a month. However, from D you'll need to further subtract outstanding credit card expenses, planned savings, emergency funds, etc., and you can't ever spend more more than D. (Ideally, you shouldn't spend nearly D, because that's the pool from which you'll also have to deduct unexpected expenses).
Often before I began 'envelope lite' budgeting, I'd inadvertently spend more than D, because I considered that the amount I had in C was fungible. But it's not. Whatever system you decide on (FitBit but for budgeting), I think you should set your cutoff amount at some %age of D, which is the best expression of your habits. Good luck!
posted by mr. remy at 12:03 PM on November 25, 2019 [1 favorite]
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We do the same thing with my Amex. I use the Amex account to watch categories, but it does not proactive warning or anything.
posted by uberchet at 6:38 AM on November 25, 2019 [1 favorite]