Loans to children

After loaning money to one of my children is there a way to track the repayment?  Is there a way to carry the negative balance forward so that you know at a glance what their balance is?

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  • I just set up a budget account called Owed by Kids. And when I transfer money to them I don't need to add a category. When they pay it back, I record it in the account I deposit it (or cash envelope) and use the transfer:Owed by Kids payee.  This will show as a positive balance since it is an asset for you (receivable) but you will be able to see the amount.  You can also then filter the account if you need to discuss with them. Easy peasy.

    Like 1
  • Hi, Blue Memory

    I chose to set up this kind of loan (in my case to a sister) with a tracking account, which is similar to the way I deal with reimbursable office expenses or eligible health insurance claims.

    Money I loaned was entered as a transfer to a tracking account (named sister’s loan), categorized to an emergency category, with a note in the memo field.

    As/when she makes a payment, I record that as a transfer from tracking to chequing, categorized as an inflow of income, and then I can budget the returning funds. 

    This enables me to see how much is outstanding.

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  • I set up a credit card account, but called it called "Family loans"  

    I then put the transaction as a credit card purchase (With the Money budgeted) and when the money gets paid back I then put that money back onto the family loans and record as a payment recording the payee's name and mark with category colour 

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    • Keven Pearce I like this suggestion.  I'm trying to work this out for a current loan to our son.  Your suggestion explains the account you use, but what category do you use for the loan transaction (which you say you categorize as a credit card purchase)?  In YNAB credit card purchases are actually categorized as specific things, not just credit card purchase, in order to make sure the money is budgeted.  So do you create an Account AND a Category for the loan?  

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      • dakinemaui
      • dakinemaui
      • 7 mths ago
      • 1
      • Reported - view

      Turquoise Lobster I don't recommend making a fake credit account. There will already be a transaction in a real account (e.g., the withdrawal from checking).

      YNAB wants you to understand that money is gone for the time being and cannot be spent, so it therefore needs to be removed from the budget (the spending plan). Like any expense, that requires a funded category.

      The only difference from normal spending is you want an "at a glance" record of the cumulative total. For that, just add a Tracking account. (The account balance is that total.)

      1. Create a Loans category and fund it (either from TBB or by moving from other categories).

      2. Create a Tracking account (Other Asset) called Loan To Kid.

      3. Record the withdrawal from checking as a transfer to the Kid account, categorized as Loans.

      4. Repayments are recorded in the relevant budget account (e.g., checking if they write you a check) as an inflow transfer from the Kid account (that's the Payee) categorized as Loans.

      5. Consider reallocating any funds in the Loans category elsewhere in the budget.

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    • dakinemaui Thank you!  Got it done, with your help.  :-)

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    • dakinemaui I had to write it out for myself again to get it straight in my head.  Sharing here in case it could help others who struggle with this:  

      A.  Setup:

      1. I created an off budget, non-linked, tracking account called SW-Loan. 
      2. Also created a budget category called SW-Loan.* 

      B.  When money gets loaned to SW: 

      1. Payee is TRANSFER TO the SW Loan account
      2. Category is SW-Loan
      3. In the budget I would fund the SW-Loan category from dollars on hand

      C.  When receiving money from SW: 

      1. Payee is TRANSFER FROM the SW-Loan account
      2. Category is SW-Loan
      3. I would budget an equivalent negative amount to the SW-Loan category to bring the money out into the budget for other uses. 

      (*I have a couple of people who I have loaned money to, so I don't want them all lumped together, so I created separate categories for each loan.  However, if this works well, using the tracking account, I might be able to get rid of the individual category for the SW-Loan, and just put it and other loans in a single LOANS category.)

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      • dakinemaui
      • dakinemaui
      • 7 mths ago
      • 1
      • Reported - view

      Turquoise Lobster I would use a single generic Reimbursement category and put the person's name as the first thing in the memo. You can then search to bring up that person's transactions and pending reimbursement amount.

      You could have an account per person, but that quickly gets out of hand.

      Tip: when someone has settled up, select all the relevant transactions and reconcile to a $0 balance. This let's you hide all those old transactions, showing only the outstanding entries.

      Like 1
    • dakinemaui can you describe the steps you would use to do this...

      "select all the relevant transactions and reconcile to a $0 balance. This let's you hide all those old transactions, showing only the outstanding entries."

      Doesn't that happen automatically when I do the step that I outlined above as C3?  

      Thanks! 

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      • dakinemaui
      • dakinemaui
      • 7 mths ago
      • Reported - view

      Turquoise Lobster Your C3 is in the budget. I'm talking about hiding transactions in the account register. (Once you're "even", you hardly need to see them on a daily basis.)

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    • dakinemaui So how do you hide them in the register?  Do you mean that you change the transaction amount to zero on each transaction related to that loan?

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  • Turquoise Lobster said:
    can you describe the steps you would use to do this...
    "select all the relevant transactions and reconcile to a $0 balance.
    1. Click on the SW-Loan account
    2. Check off all the relevant transactions, both outflows and inflows (selected total should be $0)
    3. Edit Button | Mark as Cleared (Cleared balance should be $0)
    4. Reconcile Button, click "Yes" when presented with a $0 balance.

    Control whether these "locked" transactions are visible by showing reconciled transactions or not.

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    • dakinemaui Oh, OK.  That's just the normal reconciliation process.  That I do every day or so.  Got it.  Thanks.  

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      • dakinemaui
      • dakinemaui
      • 7 mths ago
      • 1
      • Reported - view

      Turquoise Lobster The important thing is that for this account, you do NOT clear/reconcile until you're square.

      Like 1
    • dakinemaui Aha!  Yes, that makes sense.  Got it.  :-) 

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