I’m using Linux Mint 21.2, Cinnamon version 5.8.4, Linux kernal 5.15.0-91 &
KMyMoney Version 5.1.2. I have read everything I could find about setting up “Loans” but have seen nothing that applies to any form of Lines of Credit. How are those handled?
Same as a loan as a line of credit is an on demand loan given by your financial institution to you to be used whenever you want to. When you take money from it, it would be the loan amount, the interest paid would be your interest charge both liabilities and of course the cash received is cash the asset part of the transaction.
Thank you for getting back to me so quickly. One more question. Would I set up the HELOC as as two accounts; one liability and one asset?
You would have three, the loan, a liability account, loan interest account, an expense and cash, an asset account. When doing the transaction for an opening of the line of credit balance it would be a credit to the loan liability account to reflect its opening balance of loan taken and a debit to your cash account to reflect its increase. When making payments it is split transaction a credit to cash to show a decrease in it and two other the debit to the loan account for the amount paid on it with the payment made and another debit to the loan interest expense to account for the amount of the interest expense you incurred when making the payment. The debit to the loan account decreases the balance owed left. Just as the interest expense debit shows the increase in the amount of that expense you have had.
I think I’m beginning to understand. I’m going to have to work with this for a bit to get it down. Thanks again for your help.
You are welcome, it can be a little much when starting but you will get the idea.
While that will certainly work, it seems overly complicated for my tastes. I wouldn’t necessarily create an account for a line of credit until I actually took any money from it. Although I might do it differently in the future, I do have an account with my broker which they call a “Loan Management Account” which is essentially a line of credit. I have created it as a checking account, which gets a negative balance when I use it, and goes back to zero when I pay it back. I see no need for a separate account for loan interest, I just track that with an appropriate Category. I can draw from it either using a check, which gets recorded with the appropriate Payee and Category, or by transferring funds to a different account, whic I record as a transfer.
I give this info mainly to point out that there is often more than one way to do something in KMyMoney, and the “correct” way is whatever you are comfortable with, and which can produce whatever displays and reports you want or need for your record keeping and tax preparation purposes.
That makes sense for the cash account dealing with investments. The HELOC I’m referring to is in essence a 2nd mortgage. I also have a personal LOC for use in emergencies or as an overdraft account. They both have been in place for several years. We’ve used the HELOC to renovate the kitchen and other projects around the house. The personal LOC came in real handy this past year. I had a heart attack and triple by-pass surgery last June. Needless to say we got a little behind in a hurry. Thanks for your comments though. I appreciate them.
Congratulations fellow survivor I almost had what the maximum bypasses they will do is but the surgeon came back and canceled the operation after the final review before doing it. He told me he did not think there would be a good result, my heart was so weak they did not think I would survive it. Managed to skip the heart attack part somehow, they ended up doing a stent operation instead still have one fully blocked artery in there they cannot do a stent procedure with. They say the arteries managed a bypass all on there own for that one I think is how it was put. Going on seven bonus years this November coming all thanks to them wonderful people at the hospital that saved my life by doing it. Oh and now I think about it, it is just about exactly six sometime this month since they stopped then restarted my heart to give it a normal beating rhythm. One of the chambers was out of sync with the others. I thought everyone could feel their heart beat at all times as I had for my entire life but no that is not how it works once it beats properly you only feel that when exerted.
Wow! You are truly blessed ass am I. My heart attack hit me out of nowhere. When they got me to the cath lab the Dr. told me the 3 main arteries were almost completely blocked. There would be no stents. The next step after he spoke with the surgeon was to put in an aortic balloon pump. A rather painful procedure, made me forget about the pain from the heart attack. But that pump put more blood into my heart and kept me alive through the surgery. Hang in there my friend, I’ll keep you in my prayers.
I am doing good now the procedure has been done. Always good to hear from another who has managed to survive it too. Not all of us do my cousin died in the hospital parking lot just weeks before I ended up in there as he did not get to the emergency room in time when driving himself there after feeling strange.
Just wanted to let y’all know I was able to get the HELOC and the Personal LOC set up over the weekend using the information provided. Now I’m working on the mortgage.
Thanks again.
Glad to read that you got it working. Just a small request: in case you have questions on your mortgage case, please open a new thread/topic. TIA.
Understood. Just mentioned the mortgage because I was able to use the information received on dealing with the HELOC to help me with the mortgage. Thanks for the support.