Paycheck Deduction Loan Activity?
I wanted to try out a Loan Account for my truck, which is financed with my work credit union and has bi-weekly payments directly deducted from my check.
With a regular budget category, it was easy: I'd allocate enough in my monthly budget to cover the payments (with a bit extra to cover the 3-payment months). I had a repeating deposit that was a split, with a credit to "Inflow:Ready to Assign" and a debit of the loan payment to my Auto Loan budget category.
Now, I've moved it to a Loan Account and I don't know how to process it. I don't see a way to do repeating payments - is there one? If I just enter the payment activity every two weeks, won't it break reconciliation because the amount of my check in YNAB would be different than the bank statement?
Is there any easy way to make this happen? Am I just missing something?
Magenta Sun If you'd like to give this a try again, you can certainly use Repeating Scheduled Transactions and set your Loan Account up for biweekly payments:
- When you pay biweekly, you can calculate your exact minimum monthly payment by multiplying your biweekly payment by 26, then dividing by 12. Enter this number as the monthly minimum payment amount in the Loan account.
- You can set a Target for your loan payment category, to cover your regular payments, plus any additional money you want to set aside for extra payments. If you set the Monthly Minimum Payment amount as the Target, it will prompt you to Assign funds equal to the monthly minimum payment amount, and that means that you may not use all of the funds you Assign to that category every month. This is because you'll pay more some months and less other months, and the Target will spread out the cost of the months you make extra payments across all 12 months in your budget.
- Create a Scheduled payment transaction for your payments in the All Accounts view. YNAB prioritizes Scheduled transactions over the Target amount. Creating a repeating, Scheduled transaction will ensure that you will be prompted to assign extra funds to the loan payment category during the months you have extra payments. 👍🏻
A note on interest: Because Loan accounts are designed with a monthly payment in mind, the entire monthly Interest Charge will be added to the Loan account automatically when you record your first payment each month. Your lender on the other hand might may spread their interest adjustments out over each payment in your real-life account. So! I recommend waiting until you make your final monthly payment each month—at that time, compare the total interest your lender charged during the month to the YNAB Interest Charge. They should be pretty close, but you can Update the Balance of the account at the end of the month if necessary.