How to record spending funded by loans

Spoiler - I don’t use debt often so be gentle. I am going to use our HELOC to fund a kitchen remodel. I will record the drawdowns as “transfers” between the loan account and checking. But I am struggling how to record both the spending for the remodel and the eventual loan payments. I think the spending should be recorded as a current period expense, but I don’t want to double count by also expensing the loan payments? Help?

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You could record the HELOC payments as a transfer. Expense any interest and record principal as transfer.


It makes sense to me to record the drawdowns from the HELOC as an income category, honestly. Otherwise, money is appearing in your checking account seemingly out of nowhere. Maybe make a category separate from your normal income, like “Income - Loans”?

If you do this, the spend for the remodel would be covered under this income, avoiding a “double count” situation. Then, when it’s time to repay the loan, you create an expense category for it (“HELOC Repayment” or whatever), and categorize the repayment transactions to this category.


I think @thomasnjefferson’s recommendation makes the most sense in this scenario. Your expenses are the spending toward the remodel + interest. Everything else is just a transfer representing money moving between your checking account and the HELOC account.

Thank you all…I tend to agree.