How to show expense that came from line of credit and then payments
I'm trying to learn how to use this budgeting tool for personal finances.
I need to get some work done and will be using my Line of Credit to pay for it, so I create a category for the expense. I also have a transfer to Line of credit in the following months to pay my Line of Credit but this throws everything off.
Can I show that category expense was paid with my line of credit and then I'm paying it back. As it stands it sees the expense and the payments combined and throws everything off
How can I represent this in a budget as I am preparing to build a home and trying to use this to understand my expenses and payments.
Comments
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How does this work in real life? Do you have a card or checkbook where you pay the bills directly from the LoC, or do you pay those bills from your regular bank account & then reimburse yourself from the LoC?
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Assuming you pay bills directly from the LoC, then what I would do is create a Line of Credit account in Quicken and record your expense transactions in the register for that account. When you pay back the LoC you'd record that as a transfer to the LoC account. Then set up a budget and edit it so it only includes the LoC account and modify the categories to include transfers to the LoC. Then your budget should show expenses from the LoC and on a separate line show transfers into the LoC.
To edit the budget, click on "Edit Budget" right below the title of the budget, then in the lower left corner of the edit window there are buttons for Select Categories and Select Accounts.
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I plan on going to the branch and doing a certified check from the the line of credit
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Yes I have added the account and will record the expense.
I want to show this in my main budget with my other expenses where this month I show the expense and then the subsequent months I show the repayment. I guess the issue for me is that the "difference" for the year is wrong.
Lets say I borrow 16k from my Line of Credit to build an entrance. I have a category Property with a sub cat as Entrance. I show that for this month.
Then I also have a category for Transfer to Line of Credit (repayment) for 5 months.
Currently my Year end difference is off by 16 k as it took the borrowed and repaid and combined them rather than 1 offsetting the other. Maybe I'm doing it wrong but I want a single budget0 -
You're not going to be able to get one to offset the other in your main budget because the fact is you're spending money. You can either record it as an expense when you spend the money out of the LoC or you can record it as an expense when you transfer money to the LoC, but it has to show as an expense eventually. The bank isn't giving you the money to pay for construction, they're just loaning it; ultimately the cost of the project comes out of your pocket and that has to show up in your budget somewhere as an expense.
That's why I suggested making a separate budget just for checking the LoC. You can have a budget that just shows the LoC account and nothing else, see that the money going out from the LoC to pay expenses matches the money coming into the LoC to pay it back, and that those cancel each other out .
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