HELOC Interest as Budgetable Amount?
I recently added my HELOC into my accounts (previously, I just budgeted for it and paid it as a category without linking the account). I’m super confused about how the payment is showing up. I made a single payment ($968.31) which debited from my Checking Account. But it is showing as a credit on my HELOC account in two transactions: Principle (370.77) and Interest (597.54). The problem is, the interest is showing up as a credit—where do I put it? It is not spendable, as it is interest. I understand putting the principle in the account as a credit to be spent later, if I draw on the account, but how do i handle the interest credit?
I assumed the HELOC would be handled more like a credit card in that the incoming funds would be allocated as a *transfer* so I didn’t have to apply it to a budget category as the money was previously spent. Sure, I could borrow it again, but I don’t have concrete plans to do so.
Can you spend directly from the HELOC? If not, then I'd delete that account and bring in money as TBB, budgeting it to whatever category is short enough that you need to borrow funds.
If you keep the account, then you've got a few choices, but it ultimately depends on minimizing the effort. (Another reason not to have that as an account.)
First of all, there must be an interest outflow (increasing the debt). It may not be showing up as an explicit transaction, but it's there. This is what offsets the Interest inflow portion of the payment. (This may have been a transaction on the previous statement.)
If there is no explicit interest outflow, then I think the easiest thing is to delete the principle transaction and edit the Interest to be an outflow. (I'm assuming you are importing these. If not importing, then just enter the Interest transaction as an outflow.) Your payment is already showing up as a transfer for the combined principle/interest amount.
The other option is to delete both principle & interest transactions (or don't enter them if not importing) and reconcile the account, making an adjustment transaction.