How do I track money I lent to a friend?

Keep a repayment ledger showing what you lent, what came back, and what your friend still owes. Reduce outstanding principal only by the principal portion of each repayment, and record interest separately. Keep the unpaid balance out of money you can spend, even when a payment is expected soon. If you forgive a remainder or no longer realistically expect to collect it, reduce its recorded value rather than recording another cash payment.

Money owed to you is an asset, not spendable cash

An intentional loan creates an asset for you: a claim to money your friend is expected to repay. For household tracking, you can carry a fully recoverable loan at its outstanding principal. The original advance moves value from cash into the loan asset, so it does not immediately reduce net worth under this method, but it does reduce the cash available for your bills.

Principal repayments reverse that movement: cash increases and the loan balance decreases by the same amount. Interest received is separate income in this household tracker, not a reduction of the amount originally lent. Keeping those two parts distinct prevents your loan balance from reaching zero too early.

A loan is also different from a reimbursement for dinner or a shared purchase. If you covered an expense rather than deliberately advancing money to be repaid, use the method for handling reimbursements and money people pay you back. Here, the central record is the changing loan balance, not an expense awaiting repayment.

Build the ledger around actual repayments

A spreadsheet or a small table is enough. Keep expected payments separate from received payments, because a date on the calendar is not money in your account.

1. Record the opening advance. Write down the date, the amount lent, and a short label identifying the loan. Start outstanding principal at the amount actually advanced, not at the total of future installments that might include interest.
2. List the expected payment dates separately. Use the amounts and dates you and your friend expect. These entries help you notice a missed payment, but they do not reduce the outstanding balance.
3. Record each repayment when it arrives. Enter its date, total cash received, principal portion, and interest portion, if any. Principal plus interest must equal the payment received; do not guess the split just to make the balance fall faster.
4. Calculate the new principal balance. Subtract principal repaid and any principal you forgive. Record additional money you lend as a new advance, so a growing balance has an explanation rather than an unexplained adjustment.
5. Keep a separate recorded-value field. Outstanding principal tells you what remains unpaid; recorded value tells you how much of that principal you reasonably expect to recover. These figures match while full repayment remains realistic and can differ when it does not.
6. Reconcile cash and the ledger together. Match each receipt to the corresponding bank entry or cash received, then update the loan asset. A principal repayment should not leave you counting both the returned cash and the same amount as still lent out.

The principal calculation is opening principal + new lending − principal repaid − principal forgiven = closing principal. A reduction in expected collectibility belongs in the recorded-value field, not automatically in the principal-forgiven column.

For the broader account setup, see tracking accounts you cannot connect. The repayment ledger supplies the balance to use; the account record holds that balance alongside your other assets.

A $1,200 loan ends with $300 forgiven

Suppose you lend $1,200 on March 1. You then receive three payments of $310, each consisting of $300 of principal and $10 of interest. After the third payment, you forgive the remaining $300 of principal on July 1.

This example carries only principal as the loan asset and records interest only when received. Until the forgiveness, assume you reasonably expect to recover the entire unpaid principal, so its recorded value equals the outstanding balance.

The three repayments total $930, consisting of $900 of principal and $30 of interest. The principal reconciles as $1,200 lent minus $900 repaid minus $300 forgiven, leaving $0 owed. The forgiveness entry has no cash movement because you do not send another $300 on July 1.

Across the whole example, cash changes by −$270, calculated as −$1,200 + $930. Net worth also changes by −$270 under this tracking method: the $300 reduction in the loan asset is partly offset by $30 of interest received. The returned $900 of principal is neither a gain nor a loss; it changes where your money sits.

The net of the bank transactions is not the outstanding loan balance. Before forgiveness, those transactions already net to −$270, but your friend still owes $300 because $30 of the receipts was interest. After forgiveness, the cash total stays the same while the loan balance becomes zero.

A doubtful remainder needs a value adjustment

A missed installment does not by itself mean the whole remainder is lost. Keep the principal ledger accurate and review what you realistically expect to receive, rather than treating every delay as forgiveness. Amount owed and expected recovery answer different questions.

As an alternative ending to the example, suppose you do not forgive the remaining $300 but no longer realistically expect to recover any of it. Keep $300 outstanding in the repayment ledger and set the loan's recorded asset value to $0. Record a dated $300 reduction in value, not another $300 withdrawal from your bank account.

If you expect to recover only $100 of that $300, carry a recorded value of $100 instead. The reduction is then $200, while the ledger still shows $300 unpaid. Keep a short note explaining the estimate so you can review it when circumstances change.

Do not recognize the same reduction twice. If you have already reduced the asset from $300 to $0 and later forgive the entire balance, close the outstanding principal in the ledger; there is no further asset value to remove. Likewise, if you originally treated the advance entirely as spending and never recorded a loan asset, adding another expense for the unpaid remainder would count the same unrecovered money twice.

Review the balance when money arrives and once a month

Each repayment is a prompt to check three things: cash received, principal reduction, and the new recorded asset value. Keep the payment reference or a short note with the ledger entry. A receipt without a balance update overstates what you own; a balance reduction without a receipt or explanation understates it.

Between payments, review the loan monthly for missed installments, additional advances, and changes in expected recovery. Keep the original entries and add dated corrections rather than rewriting the history, so you can explain how today's balance arose.

For spending decisions, use cash already available, not the loan asset or a promised repayment. Even a loan you fully expect to recover cannot pay this week's groceries while the money is still with your friend. When a repayment arrives, decide what the returned cash needs to cover before treating it as extra spending money.

Common mistakes

• Subtracting the whole payment from principal. A $310 payment containing $10 of interest reduces principal by $300, not $310.
• Calling returned principal new earnings. Principal comes from money you already owned; counting it as fresh earnings can make your normal income look higher than it is.
• Updating cash but leaving the loan unchanged. Once principal returns, reduce the loan asset too, or the same money appears in two places.
• Treating an expected installment as received. A planned payment belongs on the schedule, not in the completed-payment ledger.
• Recording forgiveness as another cash expense. Forgiveness removes value from the loan asset; it does not cause another withdrawal from your bank account.
• Using a payment total as the loan balance. Interest, additional advances, forgiveness, and value adjustments mean a list of bank transactions alone may not show what remains owed.

Common questions

Is money I lend a friend an expense? Under this household-tracking method, recoverable principal is a loan asset rather than ordinary spending. The cash still leaves your account, so your spending plan must have room for the full advance even though your net worth may initially be unchanged.

How do I track a loan with no interest? Record every repayment entirely as principal. If you lend $1,200 and receive $300 back, outstanding principal becomes $900; there is no interest column to fill beyond zero.

Should I reduce the balance when a payment is late? Do not reduce outstanding principal merely because a payment is late. Keep the unpaid amount in the ledger and review the asset's recorded value separately if the delay changes what you reasonably expect to recover.

What if my friend repays money after I wrote its value down to zero? Record the cash received and reduce outstanding principal by the principal repaid. For example, a $100 principal recovery on a $300 unpaid balance leaves $200 outstanding; if that remainder still has no expected recovery value, keep its asset value at $0, and label the $100 receipt as a recovery of previously written-down principal rather than interest.

How Zypper handles this

Use a manual account in Zypper to hold the loan's recorded asset value, and update its balance yourself as principal is repaid or your expected recovery changes. Manual accounts count toward net worth and have no live feed, so their balances change only when you change them; see Manual accounts. Add tags to the original advance and repayments, then filter the transactions page by tag to see those entries and their total, as described in Organizing transactions with tags. Keep the principal-and-interest calculation in your repayment ledger rather than treating that transaction total as the outstanding balance, and get started with Zypper to track the loan alongside your other accounts.