Lending money to friends & family
happy to take part in this great forum,
from your experience using new YNAB, can you suggest a simple way to manage lending money to friends and family...
Thanks in advance.
I use an app called Splitwise (YNAB, you need a companion app like this). With this app, you invite the person via email and then, when you add money lent, it emails them of their "balance due" to you (and you can send reminder emails to nudge them). I also create a Splitwise Category Group and when I lend money to someone, I create a new category in that person's name and track that way. When they pay back, I add the inflow to that category to zero our their balance due to me.
I have a Category Group named "Reimbursable Expenses" and I have in there some bills I pay for my mom (who then direct deposits into my account), business expensese (I do an expense report monthly) and I could see adding a friends group here too. I pre allocate money to these categories. And then I true up when I get "paid"
Disappointed that the overspent category no longer remains overspent in the next month. I know why, but for this purpose it's a nuisance. I like the category method, it's simple and quick, and it's intuitive. Using a tracking account instead of a budget category is so much more trouble.
For one thing, finding Transfer: Loan Account in the payee dropdown is a lot more trouble - after typing the first couple of letters of the person's name, it's right down the bottom instead of at the top.
But worse, the main way I lend to anyone is in my son's allowance. I pay him a monthly amount, of which most is categorised as Allowance, but £10 is my contribution to his mobile which I have always categorised into the phone bills category. If he overspends (eg buying a phone case through the mobile provider, which has my bank details so that's where the payment is taken from), then I put that into the category with his name, within a category group called Loans - just like YNAB4.
Now for the first time I have lent him money that wasn't paid back in the same month. We're doing this for a few months and he will pay me back when his new job starts. It's only now that I discover I can't continue doing this the way I always have.
I tried setting up a tracking account as recommended, but this screws the monthly allowance, which imports as a single payment to the mobile company but needs to be saved as two separate transactions, one to the mobile company and one to the "faux" account for tracking the loan. Loadsahassle.
So... will this work? - If, I keep the category method, and at the beginning of each month, I look at the overspend from the previous month and budget that to the loan. For example in June (simplifying amounts for the example), my son overspent on the mobile by £2 and I lent him £50 as a "real" loan. That was an overspend of £52, which is "wiped" when the month rolls over - so in July I budget £52 to his loan category. This is still a nuisance but less bother than any other way that I can think of (especially with a category note to remind me to do this). Is there a way this will mess things up, that hasn't occcurred to me?
I wish there was an automated way as this DIY budgeting defeats the purpose. I suppose it would have to be a loan category that didn't work the same as other categories when overspent - in the way that the credit card category works in its own way.
... Oh! Would adding my son as a credit card work? Hm... I'll come back to that when my brain's less tired, or what does anyone else think?
I feel like this be a fairly common topic. I have read this entire thread and am verify confused. Can someone from YNAB provide a step by step explanation for my situation. Please explain if both categories and a tracking account are required. I took $2500 from a line of credit (which is listed as a tracking account in YNAB) transferred it to my checking account, then transferred it to my daughter as a loan for a move. She will make monthly payments including the interest that I am paying. How do I set his up the loan and record payments?
Hi, I'd like to first thank everyone who has contributed to this thread, I admit I'm still a bit confused but slowly, I'm processing all the ideas. I think I have a situation that is similar to some of those mentioned here, but it's possibly just a bit different that at least I'm confused and so hoping someone can help. In my situation, I have a credit card which has offered me one of those 18-month interest free promotions on purchases made in the next 60 days. At the same time, I was planning to loan my son some money to help him get some videography equipment he needs. Anyway rather than just giving him the cash, I put the equipment on my card figuring that I can pay it off as he pays me back or, if things don't go according to plan, I can just pay it off at the end of the interest free window. So the first part of this is easy, I can record the purchase on my card and put it to a category, putting any money he gives me this month into that same category. Problem is next month: the category will roll over to 0. As he pays me back I can budget it directly to the card, however his are not the only purchases on that card as it's a card I regularly use, so that will get messy. If I create an off-budget tracking account to start tracking starting next month after the original category is zeroed out, I'm not sure how to handle payments he makes to me: I can credit them as in-flow to that tracking account, but not sure how I then move the money so that I can put the payment on the card. If I enter a transfer transaction, won't that essentially increase the amount being tracked by the amount of his payment?
Someone in a previous post mentioned the idea of possibly setting up a person as a credit card and the more I think about this, the more I wonder if it might work for my situation. My thought is to create a credit card account with a positive balance for the amount he owes. When he then makes payments, I log them as outflow and put the money toward to be budgeted. I think if I set the fake card account up with a positive balance and then log the outflow, the amount will actually increase my to be budgeted amount which I then can budget directly to the real card I actually used. I may have all this inflow outflow stuff reversed so have to think it through more, but the main advantage would be that month to month, the amount wouldn't 0 out and as payments are made, the remaining balance would be accurate.
I'd definitely appreciate any thoughts especially as I may be over complicating everything. :)