Credit card payment category in Budget needed?

JJNCN

We've set our budget. I noticed that we have a category called Credit Card Payment. It's not used, I don't use it to categorize anything since the credit card is payed by transfers. When I called quicken, for help for various things, they recommended to just total up the credit card bills for each month and put it in the budget box as a negative number. So being new to budgeting and Quicken in general, I don't understand why that number should be negative and how it affects the overall yearly budget total. When I add in like -$5000 per month, it brings down the budget total amount to $65,000. But then I look at a report and we're thousands in the negative, showing unfavorable graph. When I put zero in the budget box category, our yearly budget total increases a ton (like $90,000), but then the graph report looks better. so, obviously I don't really understand why the numbers change the way they do, but I want to keep our budget correct and as realistic as possible, and I'd like to adjust it if needed (so we're not overspending). So....is it best to put in a negative number each month in that category (that's not tracked), or is it best to keep it all zeros, and not use it at all? Would keeping it zeros give the most accurate yearly budget? Because if so, our spending seems to be we're wayyyyyy over budget. So, just looking for advise on how to use that category appropriately, or not at all, in the budget section. And how to understand why
changing that category amounts affects a report, and what a good in-budget report looks like. Thanks!!

NotACPA

A Budget is for Income and Expense items.  When you use your credit card, THAT''s the expense.

A credit card payment is neither Income nor Expense.  It makes you neither wealthier nor poorer.  It merely transfers an asset (cash) to reduce the liability (the card balance).

You might want to look at the Cash Flow reports to see where your money is going.  That should include the card payment, since it IS "money flowing'

JJNCN

OK. Thank you. So we use our credit card for pretty much everything. Everything we use it for is already categorized, and those categories are already budgeted. So, should I keep the "credit card payment" category in the budget? I'm sort of understanding your response. I will look at the cash flow report.

If the categories in the budget are already our expenses, and if the negative valued credit card payment category (which has a zero value for actual in the report, and a negative value for budgeted) is a negative expense, isn't that incorrectly running a budget? It's like saying, and I'm probably completely wrong and misunderstanding, we spent all this money in these budgeted categories, but we're returning all this money back into the budget through a negative credit card payment category. Maybe I'm over-thinking this, and misunderstanding.

NotACPA

You credit card purchases should be recorded in a credit card account.  One Q card account for each card account in real life.  (NOTE, that my wife and I have separate cards, with different card numbers, for one of our credit card accounts.  That's STILL one account and we get one bill).

I don't understand completely what this "Credit Card Payment" category is.  Is that something that you created?  Because your card payments should be transfers from your checking account to the respective card account.  Transfers, not Expenses.

JJNCN

yes, we have two credit cards too, and the transactions get imported and I categorize them as expenses within individual categories. And yes, I categorize the card payments as transfers.

The "credit card payment" category was automatically created by Quicken. It's a negative number in the budget (like -4000.00). It's the combined sum total of the credit card payments made per month as a negative number in the budget. It would be like adding the credit card payment (transfers) together and putting that number as a negative number in the budget under credit card payment. It looks like the image below (if it comes through).

I've been reading through some old community posts and from what I can tell (and some answers you've given to others), the category should be deleted and not used. And like you said I'll look at cash flow to see what's coming in vs going out.