How Debt Accounts Work

Understand how liability accounts track what you owe, why debt math seems backwards, and how different debt types work in Sure.

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)

And transactions work in the opposite direction from assets:

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

Notice how spending increases the balance (you owe more) and payments decrease it (you owe less).

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

A negative balance on a credit card means you’ve overpaid—the credit card company owes you money. This might happen from:

• 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.

Loan accounts support additional fields:

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:

Net Worth = Total Assets - Total Liabilities

When you pay down debt, your net worth increases (even though your cash decreases). This is because the debt reduction outweighs the cash spent—you’re converting a liquid asset (cash) into reduced liability (less debt).

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

Your net worth stays the same because you traded $500 of cash for$500 of debt reduction. But now you have no credit card debt!

Adding Debt Accounts

To add a debt account:

1. Click + Add Account on your dashboard
2. Select the liability type (Credit Card, Loan, or Other Liability)
3. Enter your account details:
   • Account name
   • Current balance (the amount you owe)
   • For loans: interest rate, term, and rate type
4. 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:

1. Interest - Cost of borrowing
2. Principal - Reducing the amount you owe

Sure tracks your loan balance, which represents the remaining principal. As you make payments, the balance decreases until the loan is paid off.

[!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.