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Whats the best way to handle having a vehicle totaled by insurance? RRS feed

  • Question

  • A few years ago, I bought a brand new car so in MS Money Plus Deluxe Sunset edition, I created a loan for the total amount that was financed as well as an Asset account to track the value of the car.

    Recently, the vehicle was totaled by my insurance and I cant quite figure out how to handle this in Money.

    The outstanding balance on the loan is around $18,500, which is around what I had the car valued at in the Asset account and I'm getting around $20k from the insurance.

    Should I:

    Plan A

    1. Deposit $20k from Insurance Company into checking account

    2. Make a one time loan payment from Checking Account to Car Loan for the total balance and close the loan

    3. Depreciate the Asset account down to $0 and close the Asset account

    Plan B:

    1. Change the Asset Account to make the car "worth" $20k (the amount of the settlement).

    2. Transfer / Make a loan payment from the Asset account to the Loan for $18500 and close the loan.

    3. Transfer the remaining $1500 in the Asset to my Checking account and close the Asset account.

    I prefer Plan A because it will show me depositing the money from the insurance company into my account and then paying off the loan. It just doesnt deal with the Asset account very cleanly. Plan B is what is recommended at the moneymvps website but it just doesnt feel right to me: http://moneymvps.org/faq/article/461.aspx

    Any suggestions or recommendations?

    Thanks!


    Saturday, June 30, 2018 6:31 PM

All replies

  • The current value in your asset account ($18,500) was only an estimate.  What was paid to you ($20K) is the correct value, so I recommend make the change.  You can then transfer the $20K into your checking account and pay the loan from there or do a Split transfer, with $18,500 going to the loan and $1,500 going to your checking account.
    • Proposed as answer by bobjbkln Sunday, July 1, 2018 3:51 AM
    Sunday, July 1, 2018 3:51 AM