Handling Credit Cards in Stacks

Check out the Tutorial: Intro to Stacks if you haven’t already looked at it.

Picking up where we left off at the end of the introduction, the next thing to do when creating your budget is to add the rest of your accounts.  Likely this will include one or more credit card accounts.  Add them just like you did for your checking account:

Once you create the account you’ll notice a new addition to your budget screen.  A new line item has been added to track your repayment of this pre-existing debt under the “Pre-Stacks Debt” category (you may need to scroll down to see it and click on the arrow next to the Pre-Stacks Debt category to expand the list).  It should look something like this:

If you click on the Planning Tab at the top you can see that Stacks is now tracking this new debt there as well.  Since it’s a credit card debt, Stacks assumes the interest rate is greater than 10% and the debt is going to be tackled at Step 3.  Clicking on Step 3 should show you this:

You can see that you still need to payoff the full balance of your pre-existing debt.  You’ll also notice that you’re probably still back at Step 0 of building your budget and allocating your income.  When using the Planning Tab you always want to start at the earliest Step that’s colored red and complete them in order.  You’re not ready to really start tackling your credit card debt until you’ve established a small emergency fund first.

Let’s go back to the Budget Tab now and finish allocating the rest of our income for the month.  Once you’ve allocated money for all your line items hopefully you’ve got a little bit left over to start your emergency fund.  But don’t forget to make the minimum payment on your credit card account(s)!

For example if you have $100 left over after budgeting your planning Step 0 would look like this:

If your minimum payment on your credit card is $25 you need to add that to the line item for the pre-existing credit card debt in your budget.  It should look like this:

Now you have $75 left to budget with.  Going back to Step 0 in the Planning Tab will show this as well.  Since this is last bit of money for you to allocate it goes towards Step 1: building the small emergency fund.  You would allocate the $75 to the budget line item that’s tracking your emergency fund (by default Stacks assumes this line item is called “Emergency Fund” but you can configure it to be any line item in your budget by clicking the blue Configure button).  Your budget should screen should then look like this:

Your Step 0 Planning screen should look like this:

You can see that the Step 0 box has turned green signifying that you’ve allocated all your available money and you’ve started down the road of building your small emergency fund.  Clicking on Step 1 shows this:

Of course the bad thing about carrying a balance on a credit card are the interest charges.  If you click on Step 3 right now it looks like you’re in great shape because your minimum payment on your credit card paid down $25 of debt:

But that credit card statement that laid out your minimum payment also had an interest charge.  For example purposes let’s say it was $15.  You need to account for this new charge.  New transactions are added on the Accounts Tab.  Change to the Accounts Tab and click “+New Transaction” at the bottom.  When filling in the fields it’s important to know that credit card interest charges for pre-existing debt are recorded against line item for that debt.  In our example, it’s like this:

Click on Add Transaction and you will see the interest charge show up in the Accounts ledger.  In the ledger you can right click on a transaction to delete or edit it if you made a mistake.  If you look at your budget now you will see the line item for your pre-existing debt has been updated with the new interest charge and will look like this:

If you look at your Planning Tab under Step 3 you can see the real progress you’ve made on your debt after interest is accounted for:

The final thing to do is to actually make the credit card payment, ie: transfer the money from your checking account to the credit card account.  This is done with the “Make a Transfer” button on the Accounts Tab:

When transferring money between On-budget accounts a line item is not required.  Only transactions where money enters or leaves the On-budget account list as a whole require a line item.  After clicking Transfer, your Account ledger will show the transaction and the account pane on the left will show the correct balances for your accounts.  You can click on your credit card account to filter the ledger to only show transactions for that account (click on “All Accounts” in the lower left to revert back to viewing transactions for all accounts).  Your credit card balance will match the balance remaining on Step 3 of the Planning Tab:

And that’s credit card debt in Stacks.  Eventually your emergency fund will be established and you can devote more money to paying off your debts.  Once that happens your credit card payment becomes the minimum plus whatever extra amount you have to budget with.  In the example above, if the Emergency Fund was already at $1000 you could budget the full $100 to debt repayment.  When you’ve finally paid off the last of the Pre-Stacks Debt items then you won’t need to worry about calculating credit card payments ever again.  You’ll simply pay the full statement balance each month.

We covered a lot of concepts in this tutorial: using the Planning Tab, Pre-Stacks Debt, transactions and transfers.  Next we’ll take a more in-depth look at transactions and the Accounts Tab.