HELOC payment confusion

After searching the forums, I haven't found an answer to this question, but I apologize if I just missed it.

YNAB is behaving in a way I don't understand when I enter my HELOC payment.  Details:

  • The HELOC is through my primary bank. It's an imported account, as is the checking account I pay it from. 
  • The initial balance was $10,000, but it predates (slightly) my use of YNAB.
  • The bank automatically deducts the interest payment from my checking account every month (about $34); interestingly (see what I did there??), I can't see that the bank actually charges the HELOC the interest and then pays it off with the transfer.  This may be part of the problem.
  • I budget and pay an additional $75/month toward the principle.
  • I have a saved, repeating transaction for $35 in the checking account to cover the interest (this is really a holdover from my previous budgeting app, which didn't download from the bank and I tended to forget things like this if they didn't take care of entering themselves automatically).

The thing that is confusing me is that YNAB correctly sees the interest payment coming out of checking and going into the HELOC, but the balance doesn't then reflect reality.  The $75 manual payment I do (once a month I transfer $75 from the checking account to the HELOC) displays correctly, as a debit from checking and a credit on the HELOC.  The interest payment shows up from the import as a debit both places, which makes the HELOC balance (amount owed) increase by that amount, instead of decreasing.  The thing that really makes it confusing to me is that changing the imported transaction from a debit on the HELOC to a credit doesn't fix the problem, either.  The balances between what the bank says and what YNAB says still don't agree.

This is only my second month with YNAB (and my first full one), so I'm very much learning my way around.  Does anyone have ideas what I'm doing wrong?

Many thanks!

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  • Maybe I'm misunderstanding your situation, but if the accrued interest is always automatically paid from your checking, then I would ignore that for the HELOC account in YNAB, and just setup your recurring transaction in the checking to record it to your interest budget.  Depending on how your bank reflects the interest payments on your monthly statement and the statement cutoff date, you may just need to manually exclude the accrued interest from the "bank balance" that you reconcile your YNAB HELOC balance against.

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  • Austin said:
    I can't see that the bank actually charges the HELOC the interest and then pays it off with the transfer.

     I think you nailed it here. Some banks don't include interest as a separate charge on their loans. So, let's say that balance is $10,000 and essentially becomes $10,035 after the interest is applied. In YNAB, that $35 interest charge is never applied, so once you make your $75 payment, YNAB would say $9,925 when, in reality, the account balance is $9,960. To fix this, you can manually enter a transaction to account for the interest taken out of the payment. Since it's a tracking account, you won't need to categorize the interest transactions, just enter the amount as an outflow with Interest as the payee to keep the balance updated. :)

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