Home Equity line of credit - how to best set up & track in Q2001?
Lew Sheen
didn't have time to scan them all.
I have secured a home equity line of credit from my financial
institution. I can borrow up to a certain amount, but the principal on
the "loan" is only what I have borrowed to date - IOW the principal
varies. Furthermore, the interest rate is variable, too!
I spoke with Intuit support, they said there wasn't any way to
accurately track this in Quicken 2001, so I figured I'd ask the
experts.
Any ideas?
Stumped in Mass.,
LBSIII
Peter J. Ricciardiello
> Apologies if this has been covered - there were 13k headers and I
> didn't have time to scan them all.
Google Usenet Archive search is your friend. :-) Able to search any
newsgroup on any subject going back to 1981 in the blink of an eye:
http://www.google.com/advanced_group_search?hl=en
> I have secured a home equity line of credit from my financial
> institution. I can borrow up to a certain amount, but the principal on
> the "loan" is only what I have borrowed to date - IOW the principal
> varies. Furthermore, the interest rate is variable, too!
>
> I spoke with Intuit support, they said there wasn't any way to
> accurately track this in Quicken 2001, so I figured I'd ask the
> experts.
>
> Any ideas?
If both the principle and the interest are variable, then one method to
set up the loan in Quicken is to simply create a "Credit Card" liability
account. Use zero for the opening balance and whatever interest number
you want for the interest rate (since the interest rate is simply a "FYI"
field only).
When you receive your first cash amount from the HELOC account, create a
transfer from the HELOC account to your checking account (assuming you
deposit the check into your checking account).
When you send in a payment, you can simply create a transfer from the
checking account to the HELOC account for the full amount of the payment.
But wait, you say! What about the principle/interest breakdown?? Read
on...
Most likely you will not know the correct principle/interest breakdown
of that payment until you receive your monthly statement from the lending
agency. Thus, when you receive the statement, you will need to revisit
the monthly payment transaction in your checking account and edit it to
reflect the correct split. Are you familiar with how to categorize a
checking account transaction to more than one category/account (called a
split transaction)? If not, use the SPLIT button that appears on the
transaction when you edit it.
The "principle" portion of your payment will remain as a transfer from
checking to the HELOC account (which reduced the outstanding balance
owed), but the interest portion can be categorized to an expense category
you created to track interest paid in this account (for tax deduction
purposes, if allowed).
--
Peter J. Ricciardiello
(omit 'x' to reply)
Dennis Munro
of credit for my banking; 1 for my personal/business banking and the other
for 24 unit rental property. Most often I don't even owe anything, but
occasionally I do have the need to draw down on the LC.
That way you don't have to worry about overdrafts or overdraft charges; if
you, owe a balance, you immediately "save" interest every time you make a
deposit (in Canada we earn virtually nothing on credit bank balances); and
there are no service charges.
I simply charge any interest to an expense category.
Dennis
"Lew Sheen" <she...@tiac.net> wrote in message
news:3d19d519...@supernews.110.net...
Peter J. Ricciardiello
> Why not consider using it as your bank bank account! I actually use 2 lines
> of credit for my banking; 1 for my personal/business banking and the other
> for 24 unit rental property. Most often I don't even owe anything, but
> occasionally I do have the need to draw down on the LC.
I am not clear on something: Are you suggesting to use a LOC as a bank
account or are you suggesting to set up the LOC in Quicken as a bank
account?
I cannot comment on the former, but if you are suggesting the latter, it
would not work too well in Quicken because bank accounts are considered
an asset, whereas loan and credit card accounts are treated as a
liability. This difference affects the net worth reports.
Dennis Munro
It's great to use as a bank account for the reasons mentioned. As far as
affecting your net worth, it's no problem.
If you have a credit balance it will show exactly the same as if it were a
true bank account. If you have a debit balance, it will show exactly the
same as a bank account overdrawn, but your net worth report will still be
100% correct.
The real difference is you might end up showing a liability as a "negative"
asset, but I don't think that is a big deal.
I started using it as my bank account because I receive almost $25,000 every
month in rent payments, and a substantial amount of that remains in the bank
account for much of the month earning absolutely no interest. With the LOC I
earn no interest on a credit balance, but I can have a $25,000 loan that
gets reduced by every deposit so I can save currently 4-5% PA using the
account.
That being said, my LOC (in Canada) has chequing priviledges - so in essence
it is a bank account with overdraft priviledges. It may not work in the USA,
or it may not be worth it if it is always overdrawn. But, every deposit acts
as a loan payment and reduces the loan interest charges instantly, so I
think it would work fine there also.
Dennis
"Peter J. Ricciardiello" <prgr...@twcny.rrx.com> wrote in message
news:MPG.1783d15fa...@Spamkiller.newsfeeds.com...
Lew Sheen
I'll try it both ways and see which works better for me.
Off & running,
LBSIII
On Wed, 26 Jun 2002 21:30:35 GMT, "Dennis Munro" <denm...@rogers.com>
wrote:
>Actually both, Peter.
>
>It's great to use as a bank account for the reasons mentioned. As far as
>affecting your net worth, it's no problem.
>
>If <<<<<<<<<snip>>>>>>>>>