How to set up a HELOC in YNAB
Good evening fellow YNAB'ers.
So We are embarking on a home improvement project that we have been saving for for the past year. I have about 50% of the project saved for (Thanks to YNAB) and will be able to "save" the rest as we move through the project (about a 1 year timeline). Because interest rates are low and to provide a buffer / safety net I opened a HELOC. My plan is only to use it for short term covering of things as needed. IE Contractor offers $500 less if I pay him in cash but I only have 80% of the bill in cash but will have the remainder on payday. I use the HELOC to transfer to my checking and pay in cash today and the pay the HELOC on pay day with no changes to my normal life budget.
Question is how should I set this up in YNAB, as a loan for the total available? A Credit card (because this is kind of how I'm using it) or some other way.
Thanks for your ideas and input and please no comments on the social or tax implication's of paying cash I know.... I already feel guilty for my local tax based services. Ill donate at the firefighters pancake breakfast or the teachers lunch in. 😂
Create a Line of Credit budget account. Transfers from the HELOC to checking are recorded exactly as that (a transfer in the Payee field), which puts money into To Be Budgeted area. Budget toward the category that is short. (The account register will complain about overspending, which you can ignore.)
The account balance tracks how deep your hole is. Good luck with the home improvement!
For payment: Budget the money for that bill, much like any other bill. The only difference is that the payee is again a transfer.