[Kmymoney] How to handle loans and budgets

[Jack]

On 2012.01.31 17:17, Maximilian Schaufler wrote:
> Hello,
> I've been using KMyMoney for almost 5 years now, but until recently I  
> never had to make use "loans". (I'm using german version of KMyMoney,  
> so I hope to translate all terms correctly)
> 
> Because of the complexity and the missing flexibility I kept away  
> from it, but now I want to find out if I can use it to my advantage  
> at last.
> 
> My case:
> I took a loan for buying an apartment. Right now this loan is a  
> liability account, and I have a category for my "apartment project".
> Advantage:
> Payments for my loan are easily and flexible set up as recurring  
> transfers (they might change often because of my loan interest  
> arrangement). I can see the real balance of my bank loan account in  
> my KMyMoney liability account.
> Disadvantage:
> I can not budget these transfers, as they do not change any category.  
> So my yearly budget is missing the (big) part of loan payments (which  
> is quite not what I want it to look like).
If you simply assign a category (rent or apartment or ...) to the  
transactions, you can then budget them.  You could even split the  
transactions into an interest category and a category for principle.   
You can always assign a category to a transaction, even if you are  
transferring money to another account and not just a payee (which is  
internally just a different account.)   In fact, you say you have an  
"apartment project" category - so you could use this category in a  
budget.  I'm not sure why you think these transfers do not change any  
category, and I don't know if there is a problem in translating terms,  
or there is a misunderstanding of how KMyMoney works.  This does sound  
like an area to discuss more, and hopefully find there is really a good  
solution for you.

> Alternative 1:
> Using a KMyMoney loan account instead of a regular liability account  
> would only gain me the automatic calculation of payment and interest  
> values, right? That is a disadvantage for me, as these values are  
> very flexible, I don't know which bank charges are part of the loan  
> amount that the interest rate is calculated from, etc.
> Would a loan make any difference regarding the ability to budget its  
> re-payments?
Yes - if the interest rate changes, and there are flexible or changing  
fee amounts, then the advantage of a loan account is less useful.

> Alternative 2:
> Set up the loan not as an account, but as a category. This way I  
> would be able to create planned bookings as well as budget expenses  
> for this category.
> But I would be missing the information about my loan bank account  
> balance.
As I said above, keeping the loan as a liability account does not  
prevent you from using a category for the payments, and thus being able  
to use the budget features.

> Question:
> How do you handle loans and budgets?
I don't use budgets myself

> Any helpful information?
You can tell us if this was helpful.
> 
> Cheers
> Max
Hopefully others will also provide their suggestions and experience.

Jack