I’m hoping some budgeting expert out there can tell me the best way to record some relatively unusual events in YNAB. I don’t know how to simplify this without risking misunderstanding, so here’s the situation. Let me break it down:

BEFORE THE LEASE:

I had made purchases on behalf of a friend over several years, and just gave her her own budget category to look back at what she owed me and what she repaid. I could use Reports to add the transactions up and see a total.

Then, I took on responsibility for a substantial car loan on her behalf by signing for it, under the agreement that she’d be making the payments. I say substantial because it also contained the negative value of a car she still owed money on. It was underwater from the start by design. I used the nifty Loans feature to keep track of what I owed the lienholder, although I had no expectation of having to make any payments myself; this loan was for my friend to repay.

When it became clear to me that my friend wasn’t going to be making any payments on this loan, I felt pressure to get out from under it. I traded in assets, both the car the loan was for, and my own car, which I owned outright (and loved), to approach a zero-value starting point to lease a car for myself. It was the only solution I could come up with.

AFTER THE LEASE:

The operation was a success, and I am now making payments on a leased car for myself. Now my carless friend owes me—not the bank—the difference between the value of the loan and the value of the car it was for. That’s on top of her existing debt, which is preserved in the budget category I made for her.

I don’t know how to document this situation in YNAB, though. What do I do with the loan section? Is a lease a loan for budgeting purposes? Do I create an asset tracking account or keep using my friend’s budget category to keep track of this now-massive debt? Any thoughtful suggestions on handling this would be super helpful.

  • mapikiEnglish
    1·
    1 year ago
    1. Do you expect her to ever pay you back? Does it impact your friendship? If she’s been unable to pay you back previously, then I would be careful about including the amount she owes you in your budget. It might be best to simply let it go or let it be a happy surprise if she does ever pay you back.

    2a. If this is a lease - by my understanding, you don’t own the car in any way and never will. It’s simply a monthly payment on its own and at the end of the lease you return the car? So I would just set a monthly category. 2b. If you mean it’s a loan and eventually you’ll own the car, then I would create a loan category and find out the terms (interest, minimum payment, ability/consequences to pay off early) and do exactly what you are thinking.

    1. For the portion she owes you, I’d simply create yet another category if you do want to track it.

    Final bit of wisdom, friends/family and owing money is never a great way to keep a relationship healthy. Most people with the ability to pay a loan back have many options to go to banks and credit unions. If they’re asking friends/family, I would expect either they’re struggling financially (not to discount circumstances where they are unable to interact with the financial system… Language, age, citizenship, etc.). Don’t loan money - just gift it. If you aren’t comfortable with that set boundaries and say no. You deserve better.