How Debt Accounts Work
Debt accounts (also called liability accounts) track money you owe to others. This includes credit cards, loans, and any other obligations.Why Debt Math Seems “Backwards”
If you’re used to thinking about asset accounts, debt accounts can feel counterintuitive at first. Here’s the key difference:| Balance Type | What It Means |
|---|---|
| Positive balance | You owe money |
| Negative balance | The lender owes you money (overpayment, refund) |
| Action | Asset Account | Debt Account |
|---|---|---|
| Spend money | Balance decreases | Balance increases (more debt) |
| Receive money | Balance increases | Balance decreases (less debt) |
[!TIP] Think of a debt balance as “Amount Owed” rather than “money I have.” A higher number means you owe more, not that you have more.
Credit Card Example
Let’s walk through a typical credit card scenario:| Action | Balance Change | New Balance | What It Means |
|---|---|---|---|
| Starting balance | — | $500 | You owe $500 |
| Buy groceries (+$80) | +$80 | $580 | You now owe $580 |
| Gas purchase (+$45) | +$45 | $625 | You now owe $625 |
| Make payment (-$300) | -$300 | $325 | You now owe $325 |
Overpayment Scenario
What happens if you pay more than you owe?| Action | Balance Change | New Balance | What It Means |
|---|---|---|---|
| Starting balance | — | $100 | You owe $100 |
| Make payment (-$150) | -$150 | -$50 | Card company owes you $50 |
| Buy coffee (+$5) | +$5 | -$45 | Card company owes you $45 |
- Overpayment
- Refunds for returned purchases
- Statement credits or rewards
Types of Debt Accounts
Sure supports three types of liability accounts:Credit Card
Track your credit card balances and spending. Credit card accounts can include:| Field | Description |
|---|---|
| APR | Annual percentage rate (interest rate) |
| Available Credit | Remaining credit you can use |
| Minimum Payment | Minimum amount due |
| Annual Fee | Yearly card fee |
Loan
Track mortgages, auto loans, student loans, and other installment debt.| Subtype | Description |
|---|---|
| Mortgage | Home loan |
| Student | Student loan debt |
| Auto | Car loan |
| Other | Personal loans, etc. |
| Field | Description |
|---|---|
| Interest Rate | Annual interest rate |
| Rate Type | Fixed or variable rate |
| Term | Loan duration (months) |
| Monthly Payment | Calculated based on loan details |
[!NOTE] For fixed-rate loans, Sure can calculate your monthly payment automatically based on the original balance, interest rate, and term.
Other Liability
For debts that don’t fit the above categories:- Personal loans from friends/family
- Medical bills
- IOUs
- Tax obligations
How Debt Affects Net Worth
Liabilities reduce your net worth:Example: Paying Off a Credit Card
| Account | Before Payment | After $500 Payment |
|---|---|---|
| Checking (Asset) | $2,000 | $1,500 |
| Credit Card (Liability) | $500 | $0 |
| Net Worth | $1,500 | $1,500 |
Adding Debt Accounts
To add a debt account:- Click + Add Account on your dashboard
- Select the liability type (Credit Card, Loan, or Other Liability)
- Enter your account details:
- Account name
- Current balance (the amount you owe)
- For loans: interest rate, term, and rate type
- Click Create Account
[!IMPORTANT] Make sure to select a liability account type (Credit Card, Loan, or Other Liability) when adding debt. If you accidentally create a Cash account for your credit card, the balance calculations will be incorrect.
Understanding Loan Payments
When you make a loan payment, the payment typically covers:- Interest - Cost of borrowing
- Principal - Reducing the amount you owe
[!TIP] To track loan payments accurately, create a transfer from your checking account to your loan account. This properly reflects the payment in both accounts.