How should I handle lent money?

I have a few arrangements where I routinely "lend" small to medium amounts of money to my friends and family, which they then pay back. Common examples in my life:

1) I go grocery shopping and buy my housemate the frozen pizza she wanted. She will eventually pay me back for it.

2) My housemate and I split the electricity/gas bill. The bill comes to my name. I pay it, effectively "lending" her the money until she pays it back.

3) A relative is kind enough to pay for one of my healthcare expenses on an ongoing basis. When I get this healthcare service I pay with a credit card. My relative then electronically transfers the money which goes into my checking account. There is sometimes a delay of a few days in between.

4) I am the primary account holder of a cell phone family plan. Every month the bill for all five of us comes to me and I pay it. I then tell the other four people what they owe me and they pay me back via electronic transfer. As with the healthcare bill, the payment is made by credit card and the reimbursement goes into checking. To make this one more muddy, one person routinely accumulates a couple of months of debt and then pays a large lump sum, paying off what she owes and paying forward a couple of months. Sometimes she does this by electronic transfer to me and sometimes she pays directly to the cell phone company.


How do I categorize all this back and forth? I started out simply lumping it under the expense for which I will eventually be reimbursed. For example, the phone bill for all five of us went under my Phone and Internet category and then when the reimbursement payments come in they went under the same Phone and Internet category as credits. Hopefully, that eventually evens out.  That's a simple method, but it distorts my actual spending. If I do a report on who my credit card payments went to, I get a large payment to my phone company, but most of it is money I actually paid forward for my other people and got back.

Then I thought that I would separate the payments that aren't really "mine" into a category called Lending, but I'm discovering that this is also messy. Re-categorizing all those expenses from groceries or healthcare or phone to Lending  wreaks havoc with my credit card budgeted amount because  categories such as groceries have a budgeted amount that can transfer to credit card payment, but Lending never has a budgeted amount since it's supposed to always wind up at 0 once the "loan" to me is repaid.

Also, I'm discovering that the expenses and payments don't necessarily evenly line up at the end of the month. For example, the person on my phone plan who always waits a couple of months to pay her share and then pays a large amount. That means that the balance in my Lending category will either be a shortage I have to make up elsewhere in my budget, or a surplus. But it's really neither. It's just essentially a transfer.

Of course there is also the possibility that at some point I will actually lend money to someone over a longer term and then they'll pay me back on whatever terms we decide. I don't know how to account for that either.

I would appreciate some help with how best to keep track of this without creating a mess.

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  • This video is a pretty good explanation of reimbursements:

    If you want the official YNAB response:

    • Joe Thanks for the very useful video link!

  • Budget for the expense from your cash in the Lending category (enough to keep the Available positive). The CC Payment will take care of itself since all transactions are budgeted. Setting a Goal for the amount you allocate up front will give you the pending reimbursement amount in the Inspector area on the right.

    In contrast to the official guidance, categorize the inflow back to the original category (Lending) -- NOT TBB (which causes various problems). It is sad those docs haven't been corrected yet.

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