How to track loans and mortgages in AceMoney
Usually you need two accounts to correctly manage a loan in AceMoney: the actual loan account with a negative balance representing how much you owe and a bank account that is used to make monthly loan payments.
Every loan payment is recorded as a split transaction from the bank account. The first item of the split is principal transfer to the loan account. The second item is interest withdrawal that goes to the bank servicing the loan. It makes sense to give it a unique category in order to track how much money is paid as interest to the bank.
Let's create a new loan account, set initial balance and APR. In this example we are borrowing $20,000.00 at 4% APR for 5 years (60 months). Initial balance should be specified as a negative number since it represents how much you owe, not how much you have.
This is how this dialog should look:
Instead of specifying the initial balance in the account properties, you may also use a withdrawal transaction for the whole loan amount. Once the loan account is created, the main Accounts page should look like this:
You will need to know the amount of your monthly payment, your bank should have specified it in the loan paperwork. In case you donít know it, or want to double check your bank, use AceMoney built-in loan calculator in Tools->Loan Calculator:
AceMoney Loan Calculator says that a monthly payment for 20,000.00 loan at 4% for 60 months is 368.33.
Now let's define a new bill on the schedule page representing your monthly loan payments. Click on the Schedule button on a toolbar, then click on the Add bill/deposit button on the left side of the screen.
The vast majority of the loan payments are made every month, so let's set Frequency to Every month. Then set Next date to the next due date of the bill payment, in this case we set it to 6/1/2011. Pick your bank account in the account dropdown list, Checking in our example, and set bill amount to the value specified by your bank, in this case 368.33. This is what you should see:
Now click on the Split... button to define split items.
The first item of the split is a transfer of the principal payment portion from the bank account to the loan account. Set Category to Transfer, set Subcategory to the name of the bank account, in this example Auto Loan. Transferred amount is your total monthly payment minus interest, let's record it with this expression:
368.33 - Interest("Auto Loan")
Click on the Add button to add the first item to the list.
The second item of the split is interest payment to the bank. Set Category to Loan and Subcategory to Interest. Set amount to:
Click on the Add button to add the second item to the list. Here is what you should see on the screen:
That's it, close Split and Bill dialogs and you will see a new loan payment in the schedule.
You can record these payments to the account every month either manually or automatically. If you are making additional principal payments to reduce interest, please record them as transfers from the bank account to the loan account. Usually no interest is charged on additional payments. New interest/principal portions will be automatically calculated when you record the next payment.