How to handle a Note Receivable
Ok, here's the scoop: I loaned my daughter some money. And, I borrowed that money from my 401(k). (yes, I know!) I am trying to find the best way to set this up in YNAB.
My payments on the 401k note are taken directly out of my paycheck. I have the amortization schedule that is used to determine my principal and interest. My 401k loan is set up as a tracking account in YNAB to avoid affecting the budget. I have it pretty well set up to post my principal to the 401k tracking account and the interest I pay to my Interest and Fees category.
I am tracking my daughter's balance in a tracking account as well. When I receive a payment from her (she pays once a quarter), I receive it into my checking account as a transfer to her tracking account and with a posting to the category "Income to be Budgeted". That much works ok.
The problem is that my daughter has also agreed to pay the interest that I am paying on my note. Since you cannot affect a category directly from a tracking account, I don't know the best way to move the interest I paid from my Interest and Fees category to the note receivable tracking file at the end of each month.
Note: I tried setting her note up as a savings account. But the balance owing becomes a part of my budget and messes with the "Age of Money" calculations.
Terry Bauer said:
I don't know the best way to move the interest I paid from my Interest and Fees category to the note receivable tracking file at the end of each month
Record your interest payment as a transfer to the tracking account, updating what she owes. (Her account should have a positive balance.)
Record her payments as a split transaction. Example, for a $105 payment of which $5 is interest:
Net (top line): $105
Split 1: inflow transfer from her account for $100, categorized as TBB
Split 2: inflow $5 as Interest (not a transfer, since that account tracks the principal).
Note the cancellation of your earlier interest expense. Basically a refund.