Budgeting vs Loan accounts

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LeXa2
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Budgeting vs Loan accounts

Post by LeXa2 »

Hi all,

I'm trying to set up budgeting in MMEx 1.3.3. In general things are working as I expect them to work for a simple budgeting application but it looks like I'm missing something on a proper way to track a loan and plan a budget for its repayment.

My current setup for tracking a loan is to have a "loan" account with negative initial balance set to the full amount of credit I have to repay to the bank excluding the interest. Each time a payment is done bank split it into two parts one being an interest earned by the bank and rest being a partial repayment of the debt. In MMEx I track this as two transactions: a transfer from another bank account into loan account and a withdrawal of the interest by the bank from the loan account. This way I'm able to track the debt left to repay at any given moment.

But it looks like this scheme does not fit well into the budgeting tool available in MMEx. From the "reality" PoV each payment I do for this credit is a withdrawal but as I track it by means of a "transfer to the loan account" it is not reflected in any way in the budgeting tool.

Could anyone advice me on how to deal with this situation in a more convenient manner so it would be possible to both track the amount left to repay for the credit and to plan and execute the budget in the budgeting tool?
Thanks in advance.

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LeXa2
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Re: Budgeting vs Loan accounts

Post by LeXa2 »

Followup:
So I had kind-of "found a solution": instead of tracking credit payments as a transfer from one account into another with a followup withdrawal of the bank's interest rate I track them as two separate transactions - one withdrawal from the originating account and one deposit to the loan account. For withdrawal I set category to be "Bills:Credit payments" and for deposit to the loan account I set category to be "Transfer:Credit payments". This way budgeting work as expected allowing me to plan and trace credit payments on "Bills:Credit payments" category and I still have got a possibility to track total transfers amount by summing up everything in "Transfer" category.

Sure this method isn't that convenient but it does the trick. I'm considering implementing some kind of a build-it solution for automagically handling this situation but that's a matter of "if-s" and "when-s" I'd be able to find some spare time for coding.

Capez9982
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Re: Budgeting vs Loan accounts

Post by Capez9982 »

I have the same situation and in another post (Feature Requests -> Specific account budget) I asked
"the possibility to create budgets for specific accounts or, if it's possible to have only one budget, to decide which account (or accounts) to consider in this single budget."

IMHO with this feature you can have a right budget also with only one transfer and not with "a withdrawal and a deposit" for every payment.

aka13
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Re: Budgeting vs Loan accounts

Post by aka13 »

LeXa2 wrote:
Thu Jan 11, 2018 7:54 am
Followup:
So I had kind-of "found a solution": instead of tracking credit payments as a transfer from one account into another with a followup withdrawal of the bank's interest rate I track them as two separate transactions - one withdrawal from the originating account and one deposit to the loan account. For withdrawal I set category to be "Bills:Credit payments" and for deposit to the loan account I set category to be "Transfer:Credit payments". This way budgeting work as expected allowing me to plan and trace credit payments on "Bills:Credit payments" category and I still have got a possibility to track total transfers amount by summing up everything in "Transfer" category.

Sure this method isn't that convenient but it does the trick. I'm considering implementing some kind of a build-it solution for automagically handling this situation but that's a matter of "if-s" and "when-s" I'd be able to find some spare time for coding.
While I was initially optimistic at your suggested solution, this sadly stil skews the budget. The "Deposit" would then count as income and will be displayed correspondingly in the Income/Expenses, and on budgeting, which solves the original, but adds a new problem.

I have taken your concept and reiterated it.

My Situation is the following:

Initial Situation
1) I have a Bank Account B, where I get paid on and from which I pay my bills
2) I owe money, which is represented by a term account T with negative balance. I do not own interest on it(but could)

Requirements:

1) I want to see/plan payments on my debt in the budgeting section
2) I want to track how much money I still owe
3) I want to be able to quickly filter for all debt-related transactions

I am not sure if my solution would be applicable to america, since the credits/loans work magically there, but here is what I cam up with, which does not add "Income" but does count as "Expense" in my Budgeting, and does not disturb my net worth. Assuming that I pay 500$ from my banking account towards paying off my debt:


Preparation:
Categories "Loan:Principal Payment", "Loan:Interest Payment", "Transfer:Loan Principal Payment", "Transfer:Loan Interest Payment" are created.
Accounts Bank Account "B", Term Account "T" are created
Payee "T" is created



Transactions
1)Transaction Type: "Withdrawal, 500$" Account: "B" Payee: "T" Category: "Loan:Principal Payment"
This is our base Loan-Paying transaction, assuming that we have no Interest/Don't want to track it separately. What this does is creates an entry for budgeting/expenses categories, that we have spent 500$ on Loan payments.

2)Transaction Type: "Transfer, Advanced, Amount: 0 500$" Account From : "B" Account To : "T" Category: "Transfer:Loan Principal Payment"
This is our "Trick" Transaction. What this does is it adds the value we want to the Term account, so that we have registered the made payment, without having the money appear as "income".

All in all, this gives the Result of -500$ on the Bank Account B, 500$ paid off from T, proper (almost) categorization, as well as 500$ Expense and no income for that time period. You also get a Payee "T" which can be used to look at, how much money went into a specific debt in expenses reports.

I hope someone finds this as useful as I do.

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