Mortgage principal and impounds in a budget

Michael Heady

I've read threads on how to account for the principal and impounds in a budget. As of 2020 the functionality didn't exist. Does anyone know if Quicken is working on this. Absent these two important numbers my budget isn't really accurate. Thank you.

jacobs

there is still over $1k that goes towards principal that I would like to have as a line item in my budget.

In accounting, the payment of principal is not an expense; it's a transfer of funds from an asset (your checking account) to a liability (your loan account). That's fine for the accountants, but to you, on a cash flow basis, it feels like an expense. So in your budget, you want to add Transfers To Loan to your budget. Open your budget and click Edit Budget. click the Select Categories button. Scroll down to "t" where you'll see Transfers In and Transfers Out in the list of categories. Select Transfers Out To [your loan account] and click OK to close the window, ands then click Save to close the Edit budget window. You will now see the transfer from your checking account to your loan account — the monthly principal payment — included in your budget. It's awkward that it shows up alphabetically under "TO" instead of with your interest paid expense, but at least it's now a line item in your budget, as you wanted.

jacobs

I'm not sure what you think it not included. You can create a loan. You can separate your mortgage payments into principal, interest, and escrow. Escrowed expenses are entered as expense transactions in the escrow account. And while principal payments are not expenses from an accounting standpoint, you can make them appear in both reports and budgets if you want that cash flow viewpoint. So what is it that you feel is missing in Quicken Mac regarding loan tracking?

Michael Heady

Thank you Jacob. I can account for the impounds and interest in my budget but there is still over $1k that goes towards principal that I would like to have as a line item in my budget. I do appreciate you taking time to help me with this. Thank you!

jacobs

there is still over $1k that goes towards principal that I would like to have as a line item in my budget.

In accounting, the payment of principal is not an expense; it's a transfer of funds from an asset (your checking account) to a liability (your loan account). That's fine for the accountants, but to you, on a cash flow basis, it feels like an expense. So in your budget, you want to add Transfers To Loan to your budget. Open your budget and click Edit Budget. click the Select Categories button. Scroll down to "t" where you'll see Transfers In and Transfers Out in the list of categories. Select Transfers Out To [your loan account] and click OK to close the window, ands then click Save to close the Edit budget window. You will now see the transfer from your checking account to your loan account — the monthly principal payment — included in your budget. It's awkward that it shows up alphabetically under "TO" instead of with your interest paid expense, but at least it's now a line item in your budget, as you wanted.

Michael Heady

Thank you SO MUCH for this thoughtful and easy to understand explanation. I truly appreciate the time you spent on this. I hope you have a wonderful weekend!

Austin@

I'll just add that if you have a detailed reminder set up for your mortgage payment (where it splits out Principal, Interest, etc.), you can also add the full loan payment amount to your budget as one line item (if you don't want to have to independently track principal, interest, escrow, etc. as individual line items in your budget). When you go to categories for your budget, there is a section called "Loans (Detailed Payments)" and you can select the loan payment you want, and it will then let you quickly budget for the entire amount. Even though it is still split out as far as your register, reports, etc. are concerned, now you don't have to budget for 3 (or more items) individually. This is one of my favorite features that was added in the last couple of years.

Michael Heady

Thank you very much, I knew the smart users would be able to help me out!