Setting up Student Loan and Debts

[Ariel]

On Sat, 10 Mar 2007, Micah Carrick wrote:

> Hey, I'm pretty new to all of this stuff. I've read through the docs and
> am still slightly confused about adding in my student loan as it's not
> an asset.

No, it's a liability.

> I got federal consolidation loans on Oct. 5, 2006 which started with a
> principle balance of $14,466.47. So, I created the following:

BTW: Small tip, don't give out so much personal information on the 
internet, make some number up like $12,345.67 or something.

> Expenses
> - Education
> - Interest
>  - Federal Consolidation Loan Interest
> Liabilities
> - Loans
>  - Federal Consolidation Loan

Looks good. Don't forget you need cash/check accounts for when you pay the 
loan.

> And now I'm trying to figure out how this part works. I *think* I should
> create a transaction in the Federal Consolidation Loan account dated
> 10-05-2006, transfer from Expenses:Education for the amount of
> $14,466.47 as a "Decrease" which would result in a negative balance both
> there and in Expenses:Education. Is that correct?

I don't think it should be a decrease. You are increasing your educational 
expense account. So you would have a "positive" balance there, not a 
negative one. Same is true with the loan account. I think you entered the 
transactions backward.

BTW: Actually you can't say positive or negative with gnucash. There is a 
pref to reverse the sign on various accounts, I use it, so that loans and 
expenses show up in red/negative. Probably you will want to use that pref, 
and then enter the transactions as "increase" transactions, which will 
show up negative.

Each month when you get a bill, you enter the interest as a transfer 
between E:Interest and the loan account. Then a separate transfer from 
your checking account to the loan account showing you paying the bill.

Click on Actions->Scheduled Transactions->Mortgage & Loan Repayment. You 
should be able to set up a repeating transaction that will automatically 
create (and remind you, if you run gnucash often enough), the proper loan 
interest and repayment transactions. You can of course, also do it 
manually every time you get a bill.

> And another question... I have several outstanding debts (mostly turned
> over to collection agencies) that I would like to keep track of. Should
> those be liability with maybe another Expense account for "Debt" or
> something? And if I settle with a collection agency-- how do I handle
> that change it balance?

You may want to check out the accounts payable module, if you have many 
outstanding debts it _might_ be useful for you. For most people it's more 
trouble then it's worth, but every situation is different.

You don't have to create extra expense accounts for those loans. Either 
figure out what they were for in the standard expense tree, or if it was 
just general purpose money, which you used before you started with 
GnuCash, just transfer it to Equity:Opening Balances (which is the proper 
account for stuff that happened before the start of tracking things with 
gnucash). And yes, create more Liability/Loan accounts for each one.

You only need one Expense:Interest account in most cases. And someone else 
already replied on what to do when you settle.

 	-Ariel