Reconciling Mortgage and Loan Accounts
Hi,
Having read previous posts, I created an Asset account that I could use to 'transfer' the necessary amount to reconcile the loan accounts. I'm still surprised there isn't an easier way to do this as there will be differences in the balances as banks will calculate interest differently to us. However, this left a positive balance in the 'asset' account I had created which is included in reports, so I entered an opposing transaction in the asset account to reduce the balance back to zero...but of course that shows up as an expenses, which it isn't. Has anyone got a better idea for reconciling loan accounts?
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1 Posted by Ben Spencer on 07 Apr, 2012 02:41 PM
If I understand you correctly you want to make minor adjustments at the end of the month to bring the balance of the Moneydance loan account into agreement with the statement. Is this correct?
The usual way I recommend to do this is to create an expense category called loan discrepancy. You can then go inot the register for that expense category and enter a transfer to the loan account. This will of course show the expense in the report and that is correct. If the value of your loan increases because of additional interest or a fee that is an expense.
Ben Spencer
Moneydance Support
2 Posted by barny.blue on 07 Apr, 2012 05:10 PM
Hi Ben,
Thanks for the response. The discrepancy is between the way MoneyDance calculated the interest and the way the provider does and this leads to the outstanding balance of the loan being wrong in MoneyDance. A reconciliation would correct differences regarding payments made; in which your answer is right. But, the payments are all correct; I can't therefore 'spend' more money to increase the value of the loan.
What's needed is a way to create a reconciliation transaction that is not included as an income or an expense.
The only other way I can see to do this is not to use the Loan account for the Loan; which is a bit daft.
Steven Manning
3 Posted by Ben Spencer on 07 Apr, 2012 09:31 PM
I think it is correct to consider this discrepancy an expense. The amount of money you owe has increased. That decreases you net worth, therefore an expense has occured.
4 Posted by barny.blue on 08 Apr, 2012 07:02 AM
The value of the loan hasn't 'increased' so there is no expense. The value of the loan, according to MD, is wrongly calculated because the interest is added on a different basis. Correcting MD's wrong value to be in line with the provider's value is not an expense: no extra money leaves my account.
I'm not sure how else to say it, I know this problem has been around for a while.
5 Posted by Ben Spencer on 08 Apr, 2012 02:57 PM
If Moneydance is not calculating interest in the same way as your bank and you are waning to apply adjustment every month then you might be better off using a plain old liability account and enter the principle and interest split manually.
6 Posted by Tad Smedes on 24 Jun, 2012 11:10 PM
Ben, I have a different need for this type of transaction. Every time I spend $2,500 on my credit card my bank makes a $25 deduction (payment) from the principle on my mortgage. It doesn't happen regularly and the money is not a payment from one of my other accounts, I have not been able to come up with a way to handle this at all in the software other to completely recalculate the value of the loan when it happens. Some help here would be appreciated.
7 Posted by Ben Spencer on 25 Jun, 2012 11:20 PM
As transactions cannot be entered directly into loan accounts you need to enter the transaction in the register on the other side of the transfer.
Moneydance is a double entry book keeping system. This means that categories are accounts and just like any other account they have a register. The solution is to create an income category called something like "Credit Card Bonus" and enter the transaction in the "Credit Card Bonus" register transferring to the loan account.
Select Tools->Categories... and create the new income category.
Select Tools->Edit Categories... and and from the list of categories right click on the "Credit Card Bonus" category and select "open in new window".
You will now be looking at the register for the "Credit Card Bonus" category.
Click new transaction and enter a $25 transaction with the amount in the increase column. Specify the loan account in the category of this transaction.
Ben Spencer
Moneydance Support
System closed this discussion on 31 Mar, 2015 03:47 PM.