Keeping list of money owed me/I owe in YNAB

edanmedanm Posts: 4Member
edited July 2012 in Desktop
Hi,

I'm very new to YNAB, and there's one big thing I'd like to understand if I can do with it before I am fully commited.
I'd like to track the money other people owe me, and money I owe them.

For example, I have certain expenses which I need to get reimbursed for my company.
But I also sometimes owe people money, i.e. they paid for a movie ticket for me, and I now owe them 10 dollars.
Sometimes other people owe me money, i.e. I paid them money for a movie ticket.

This happens quite regularly with some people for me, and I'd like to use YNAB to track these exchanges.
I'm not sure how I can use YNAB to track these things.

The solution should be something which:
1. Lets me see at a glance how much money I owe someone, and for what.
2. How much money they owe me.
3. If I understood YNAB correctly, these shouldn't be affecting the budget until actual money changes hands. For example, if I pay for someone's movie, I did actually lose money from my accounts (and my balance/budget? should reflect this). But if someone theoretically owes me $50, this isn't money in my hand yet.
4. Often, I repay money someone owes me with other purchases, so this should also be handled.

So, how do I handle all of these transactions in YNAB?

Thanks for any help you can give me!
Edan
Post edited by Unknown User on

Comments

  • los lobos marinoslos lobos marinos Posts: 567Member, Beta Tester
    A couple of ideas:

    You could create a budget master category called something "borrowing and lending".
    Each sub-category could be the name of someone.
    Money out = outflow transaction categorized with the persons' name
    Money in = inflow transaction with the persons' name.

    If there's like a ton of people that would make the category too big.
    Then you could just have two sub-categories (loan out and loan in).
    Each time your record a transaction in either of these subcategories you input the name of the person in the memo field.
    You could search for balances outstanding via the search filter(memo).

    Split transactions or shifting money within budget categories would probably enable you to keep track on the occasions when you purchase something for someone to repay a debt.

    I don't do any of the above, so can't guarantee any of it works...Just ideas...
  • DeguelloTexDeguelloTex Posts: 3,144Member, Beta Tester
    Depending on the number of people for whom you want to track Reimbursements, I'd probably create a master Reimbursements category and then a subcategory for Work and each person. When you lend money or have a reimbursable expense, record it to the subcategory as an outflow. When you get reimbursed, record an inflow. You'll be able to see who you owe, who owes you, and who you're even with.

    #4 might be an issue if your repayment purchase doesn't exactly match the amount to be repaid.
  • edanmedanm Posts: 4Member
    If I do it as a budget category, won't it mess me up with my account balance?

    For example, if someone owes me $20 (theoretically), I don't actually have more money to spend in my wallet.

    Wont' this mess me up? Or am I missing somethign?
  • los lobos marinoslos lobos marinos Posts: 567Member, Beta Tester
    edanm wrote:
    If I do it as a budget category, won't it mess me up with my account balance?

    For example, if someone owes me $20 (theoretically), I don't actually have more money to spend in my wallet.
    If someone owes you $20 your account register balance will be $20 down. If someone lends you $20 you'll have $20 extra in your register. Either of these two transactions would be recorded with their appropriate budget category that you have created for these types of transactions.
    When someone owes you $20 it will effect next months 'available to budget' figure. This is due to the negative outflow causing a $20.00 negative category balance. A $20 overspend will therefore be carried forward to the next month. In that example, you would turn off rule 3 for the budget category with the red arrow to the right so that the overspend only applies to that specific budget category.
    Once your friend repays the $20 and the transaction has been correctly entered as an inflow in the account register, the budget category balance will return to 0.00.
  • JR5445JR5445 Posts: 97Member
    You could do something similar to how I reimburse myself using an on budget ‘Cash’ account. Make outflows anytime you pay for someone or they pay for you, as they should both impact the appropriate budget category. You will then have a negative balance until you make the appropriate inflows to show that you paid them back or they paid you back. You can do transfers to keep up with your real life account. For example, if I do a ATM withdraw to reimburse my cash, I would record it in checking as a transfer from checking to my fake ‘cash’ account.
  • MalisaMalisa Posts: 6,140Member, Moderator, YNAB Team, Beta Tester
    But yes, if you lend more than you borrow and you're near the financial edge, you could experience bad things. If this is the case, you might want to budget something to a general 'lending' fund or each time you lend, you might want to budget for it. You could negative budget when they pay you back or leave the positive balance for the next time if it's an on-going thing.
  • RandomHandleRandomHandle Posts: 599Member, Beta Tester
    There was some discussion about a similar issue a few weeks ago.

    See if any of the advice over here helps: http://www.youneedabudget.com/forum/the-rules-f1/what-the-best-way-handle-loans-debt-t16638.html
  • rogerroger Posts: 196Member
    Hi edanm,

    I just wrote a journal entry about how I handle this with my wife.

    journals-f18/roger-journal-t15170-30.html#p125109

    From that entry:
    So the important points are that I have a BUDGET CATGORY called "Wife to", *and* an ACCOUNT called "Wife from", and I split the "settling up" transaction between these. I can quickly tell how much to put in each half of the split transaction by looking at the category balance "Wife to" and the account balance "Wife from".

    I think what I do satisfies your list of scenarios... not sure. Check it out, if you want to.
  • edanmedanm Posts: 4Member
    Hey everyone,

    So I've come up with a solution I like, hope people can give me their thoughts on it.

    The idea is, they way I look at an account is "a place where I have money that I can spend". An on-budget account is an account which is accessible to me, an off-budget one is a place I keep money that I can't easily spend (e.g., savings). So for me, any money that people owe me, or that I owe people, is just an off-budget account.

    For example, let's take my Girlfriend. I have an account for her called "Girlfriend". Now, she is an imaginary bank, and I treat her as such (at least in YNAB!). For example, if I lend her money (let's say $100), it's just a transfer from my Checking Account to my "Girlfriend" account, and now my Girlfriend has a surplus of $100. The reason it's a surplus is because it's money that's actually mine, meaning I can spend it. But it's in an off-budget account, because I can't just convert it to actual money at any time like I can with my checking account.

    If she later buys me a pizza for $10, this is the same as spending my money that's in her account, so I'll record a transaction of $10 from there. If she ever pays me back, in cash, the $90 remaining, it's just a transfer from my "Girlfirend" account into my checking account. If the balance between us was 0, but she spent $20 on me, I'll still record a $20 outflow on her account, and now I'll be $20 in the red on her particular account.

    As for the budget, I just categorize everything as "loans/debts". I'll probably right-arrow it, but it's not important to my system, since everything is conveniently in Accounts, just like it should be, instead of splitting up the "knowledge" of transactions into different places. In fact, this system works for me because, as far as I can tell, it exactly explains what happens in the actual world with my money.

    One last thing: because keeping an account for every person is annoying, I have accounts only for the most important cases (Girlfriend, Company reimbursements). For everything else, I have a "Master Account", and I use the Memo field to know who the actual "payee" is.


    Phewww.... so, what does everyone think? Especially Roger, I modeled this after what you did. I'm interested in your thoughts.
  • PatzerPatzer Posts: 3,794Member, Beta Tester
    edanm wrote:
    The idea is, they way I look at an account is "a place where I have money that I can spend". An on-budget account is an account which is accessible to me, an off-budget one is a place I keep money that I can't easily spend (e.g., savings). So for me, any money that people owe me, or that I owe people, is just an off-budget account.

    So far, so good.
    edanm wrote:
    For example, let's take my Girlfriend. I have an account for her called "Girlfriend". Now, she is an imaginary bank, and I treat her as such (at least in YNAB!). For example, if I lend her money (let's say $100), it's just a transfer from my Checking Account to my "Girlfriend" account, and now my Girlfriend has a surplus of $100. The reason it's a surplus is because it's money that's actually mine, meaning I can spend it. But it's in an off-budget account, because I can't just convert it to actual money at any time like I can with my checking account.

    If "Girlfriend" is an off-budget account, the transfer from checking needs a category to show why the money left the budget. It might be something like "Other Expense:Girlfriend" or the "loans/debts" category you mentioned later on; but it needs a category.
    edanm wrote:
    If she later buys me a pizza for $10, this is the same as spending my money that's in her account, so I'll record a transaction of $10 from there. If she ever pays me back, in cash, the $90 remaining, it's just a transfer from my "Girlfirend" account into my checking account. If the balance between us was 0, but she spent $20 on me, I'll still record a $20 outflow on her account, and now I'll be $20 in the red on her particular account.

    Clarification: The pizza purchases have no category, because they happen in an off-budget account. When she pays you back the $90, that has no category in the "Girlfriend" account, but would need a category in the on-budget account that receives the money.
    edanm wrote:
    As for the budget, I just categorize everything as "loans/debts". I'll probably right-arrow it, but it's not important to my system, since everything is conveniently in Accounts, just like it should be, instead of splitting up the "knowledge" of transactions into different places. In fact, this system works for me because, as far as I can tell, it exactly explains what happens in the actual world with my money.

    Clarification: If the "Girlfriend" account is off-budget, only transfers between the "Girlfriend" account and your on-budget accounts get a category.

    The alternative organization would be to make the "Girlfriend" account on-budget. In this system, transfers between your other accounts and "Girlfriend" have no category, but transactions in the "Girlfriend" account must have categories. Which way to go depends on what makes the most sense to you. Either way can be made to work, as can the use of categories without a separate "Girlfriend" account.

    Patzer
  • blackdiamondblackdiamond Posts: 2,313Member, Beta Tester
    I think you're overcomplicating this to be honest.

    (1) Someone owes you money - The most simple solution is to create a category in your budget and turn the overspending arrow to the right. When you make a purchase that will be paid back, you would record it as an outflow. Note: You need to be aware of this amount in your budget because you are responsible for these purchases until you are actually paid back. This could include interest payments on a credit card. When receive payment you would then record it as an inflow to that same category. This will allow the budget category to maintain a running balance of how much money you are owed.

    (2) You owe someone money - This scenario is a bit more complicated to track because it doesn't make sense to enter an inflow transaction for a non-monetary benefit (i.e. someone buys you lunch) because you did not actually recieve money. When you owe someone there isn't an actual inflow to your accounts so what you're really tracking is the promise of a future outflow and the only way to handle this is to budget for it. Because you're trying to track the sum of inflows and outflows from (1) for a given entity, I would suggest simply budgeting the amount of money that you owe to that same category.

    Here's how this would work. Let's assume that the category is "Jane Doe":

    If you purchase a $100 item for Jane Doe you would record a $100 outflow to that category. This would mean that the balance is now -$100, right? Now, if Jane Doe purchases a $25 lunch for you later in the month you would simply adjust your budget by playing whack-a-mole. In this case, you would reduce your Dining Out budget by $25 and then budget the $25 to the Jane Doe category. The result is that you have accounted for this future outflow while still staying within your budget. The net result is that the category balance is now -$75 which is exactly how much you owe her. (If you want a record of each transaction that you owe someone for, you could choose to use the budget category notes to record the individual things that you owe money for.) As long as you turn the overspending arrow to the right as described in (2), any positive balances will automatically roll to the next month as well. The most simple way to understand this is to view a positve category balance as how much money you owe them and a negative category balance as how much money they owe you.

    The caution with this method is that if you're living very close to the edge, owing someone money and turning the overspending arrow to the right can lead to an overdrawn account. If this is a real concern, then I would suggest always paying for yourself and avoiding the situation all together. My checking account never drops below $1,000 so I wouldn't have to worry about floating minor purchases, but only you can evaluate your situation.

    The
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