Newbie question. LOC is supposed to be a CC, but I want it to be "Liability". Am I missing something?

Part of our mortgage was taken out on the HELOC. 
it isn't a sum I expect to pay back anytime soon.
if I put it in the same category as a CC, then my entire budget is way in the negative, and I have no dollars to allocate. am I doing this wrong ?  
reading the forums, LOC is supposed to be a CC. 
is that just a CC with a huge balance? how do you manage that? set a target by date? 

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  • The line of credit referred to in the documentation is something like an overdraft line of credit from a bank, which does work like a credit card. Your HELOC should be a liability tracking account, just as you suspect. In fact, you don't even need to add it to YNAB at all.

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  • Wait, if i don't add it, how can I track paying it off over time?

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      • Moohouse
      • Software developer
      • Moohouse
      • 2 mths ago
      • 1
      • Reported - view

      Ivory Nomad You likely get monthly statements for your HELOC? Those will tell quite clearly what the balance is, and the monthly transactions.

      Even if you add it as a tracking account I'd recommend using the reconciliation feature to keep it at the correct level - unless you really like detailed reports of incurred interest and fees.

      I would recommend adding it as a tracking account, but then again, I like tracking where my money ends up. Also, I like seeing at a glance at any time what my current debt is, without looking up statements.

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      • dakinemaui
      • dakinemaui
      • 2 mths ago
      • Reported - view
      Ivory Nomad said:
      Wait, if i don't add it, how can I track paying it off over time?

      Arguably, the more important thing is to reserve funds for the payment each month (or whenever you make them), which simply requires a category. You can look at your statement if you need to know the remaining balance.

      The ONLY thing the addition of a tracking account provides is the remaining balance in YNAB. A little more information, but also more effort to add the recurring interest transactions and reconcile.

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      • Tif_Ann
      • Tif_Ann
      • 2 mths ago
      • Reported - view

      I'm a tracker. I have my car loan, student loans, 401k, and a personal loan all as tracking accounts. I like having them on there for the net worth reports and because debt payoff is my priority right now so seeing red is motivating.

      I don't do a lot of extra work. When I get the statement or log in to make the payment, I make note of what the balance is as of statement date or that day and do a monthly reconciliation. I don't add in interest and transfer payments, I simply adjust the balance. My payments are budgeted in a category and when I make them I do them as simply sent to the Payee, not a transfer to the tracking account.

      It's fast, easy, and keeps my net worth accurate and me motivated to pay off debt.

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  • Ivory Nomad Don't forget that this is your budget, you may track a hundred accounts if you so wish, or none. But of course, every added account does add some extra work. If you bother to keep it in YNAB it should have some purpose for you besides moving your net worth graph in some direction or other.

    When starting out with YNAB adding tracking accounts may not be the optimal way to spend your time and energy? It's better to join some free YNAB classes on various topics, I think.

    I started out with a debt I needed to get rid of quickly, so adding it was motivating for me. Closing it a few months later was very motivating.

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