Debt Tracking: How to track interest/principal?

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  • Updated 6 months ago
Thank you to the Goodbudget team for adding the debt tracking feature to the web.  I have a question.  How do I track, month to month, which amount of a payment to pay down debt is going to interest, and what is going to principal?  I'm tracking a car loan.  I do intend to send an occasional principal-only payment, which of course would put the full amount into the principal field, when I conduct a transaction.  However, month to month, while I know interest is most of the payment early in the loan, there's nowhere on my statement that shows that.  

Any thoughts?
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impaler

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Posted 1 year ago

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Alex Park, Official Rep

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Hi impaler,

It sounds like you've just created a Debt Account, entered your Monthly Payment, and are wondering how and where you can split that payment into its different amounts. To clarify, the "Monthly Payment" amount you enter when you create a Debt Account is for budgeting purposes only, and sets the monthly budgeted amount for the associated Debt Payment Envelope. It does not control, limit, or connect to your actual payments.

Instead, you can choose how the total amount of a payment you make on your debt is split up when you create a Debt Payment transaction. When you create one, you'll see a place to enter the total Amount, and then three automatic boxes to split the Payment over, one for Principal paid, one for Interest paid, and one for any other Fees paid.

The Debt Payment transaction will automatically calculate the Interest split from your total Amount based on the Interest Rate you entered for your Debt Account, but you can manually edit it if it's not accurate to the payment you're recording. For example, you say that sometimes you record Principal-only payments, you can manually adjust the splits of your Debt Payment transaction when you create it.

Hope that helps!
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Rena Kat

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This answers how to enter interest but not how to track it. I have two debt accounts, each paid out of a different bank account. I have been tracking my payments to these since February and payments are variable because they are LOC's. I have entered the interest charged every month. I now want to know how much interest I have paid over the course of the year. Is there a report for this? Or do I have to go and manually add up all the entries?
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Alex Park, Official Rep

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Hi Rena,

You can see your Interest paid by clicking on your Debt Account in your Accounts tab and looking at the gallery card at the top. There should be a line that says "You've paid ... ## in Interest so far." I've provided a screenshot of an example.