"Tim" <ads[at]theboohers.org> wrote in message
news:1132546147.169207.241090[at]g49g2000cwa.googlegroups.com...
- quote -

I think the 'pay in full' option affects cash flow projections, but I don't
recall. Other respondents may be able to answer that.

"Tim" <ads[at]theboohers.org> wrote in message
news:1132546147.169207.241090[at]g49g2000cwa.googlegroups.com...
- quote -

Correct.

If you have several accounts with outstanding balances, Money calculates the
payments to optimize the payoff. It considers the total monthly cash
available for payments (or total required by the target payoff date),
required minimum payments, and interest rates on the accounts in the plan.

It makes minimum payments on all except the highest rate account. On that,
it applies all available cash, less the minimums required of the other
accounts. As balances are reduced on the other accounts, cash available for
the higher rate account goes up because the required minimums go down.

As accounts are paid in full, all available cash is then diverted to the
next-highest rate account, consistent with minimums required by the others.

A nuance is, if you include two accounts with exactly the same interest, it
focuses on the higher balance account. When the balances equalize, it
switches back and forth each month. That's unnecessary and looks silly on
paper.

I worked around that by adding .00001% to the rate on one of the cards. (I
picked the one with the lower starting balance.) Now it applies the majority
of the cash to the one I tweaked, until paid off. Then it switches to paying
off the other. The difference in the calculated interest is immaterial.

Yes -- I don't carry a balance, I guess there is completely no reason
to use the debt reduction planner. I forget why I was using it, maybe
simply because they provided the option to "pay the balance in full".
Seems like a blunder on the developer's part to add this functionality
when it creates such problems.

So, thanks for the insight -- so MS$ considers the account 'inactive'
so when I returned items the account had a capital inflow, which MS$
considered debt that needed immediate payment to get the debt reduction
planner calculations to work out correctly. O.K. that makes sense, but
it seems like this should be at least documented.

So, in summary, the debt reduction planner is only useful if you have a
lot of consumer or other debt that you are trying to whittle down, not
for periodic credit card payments that are paid in full.

Regards,

Tim

"Tim" <ads[at]theboohers.org> wrote in message
news:1132539546.855190.130590[at]g14g2000cwa.googlegroups.com...
- quote -

I believe what you're seeing is due to an assumption of the DRP that
accounts included in it are inactive. Apparently, if included, any activity
in those accounts appears in the special debt category.

Categories are either income or expense. A return is a negative expense, not
income. It's appropriate that it appear in an expense category. It is
inappropriate that they're shown as absolute values.

If your goal is to pay off the accounts, I suggest you get a different
credit card for daily use. My suggestion also assumes you pay that card off
monthly. That way you can avoid additional interest expense.

You may want to consider accepting any unsolicited credit card offers you
receive with teaser balance transfer rates. That assumes any transfer fees
are less than the interest you'd pay during the same period if you didn't
transfer, and that you're willing to take the risk of either not paying it
off before the teaser period expires, or that you won't get another similar
offer from another bank. I paid off 10's of thousands of dollars in credit
card debt in the early 90's by rolling it from one card to another. It
works, if you understand the risks and how to play the banks. DRP will help
you optimize the payments. You have to manage the rollovers.

Loans appear in the debt category but I don't think DRP plays well with
them. I haven't tried that in a few years but it didn't do that well in the
past. Perhaps it's improved?

Note also that escrow portions of mortgage payments are included in the debt
category, even if you categorize them as transfer. Take care to exclude the
corresponding expense categories from your budget, or you'll be
double-counting them.
--
Chris Cowles
Gainesville, FL

Hello,

I have read about 10 different posts about the budget planner when one
uses the Debt Reduction Planner (DRP) with Credit Cards and the
category 'Special-> Debt" and a lot has been cleared up, but some
mystery remains.

Now I have two credit cards in DRP, three different mortages but not in
DRP. Now in the "Budget Summary" top level screen, I have no way of
knowing what causes the the budgeted column to have, say, $1500, but I
can click on the actual expense for last month and I get the components
of the actual amount--which is, say, $900. Here comes the strange part
-- there are positive cash flows (say a $20 return to Wal-Mart) and
negative ones, say, ($300) car or ($500) loan payment. The $1500 is the
sum of the absolute values (treating all as negative cash flows).

So what is appearing here are all of our returns plus loan payments on
loans not in the Debt reduction planner. It makes sense that these
payments need to be somewhere, but why are the returns added as
EXPENSES here? What is that budgeted amount. And, most important, why
isn't there documentation on this. Does microsoft not have knowledge
base articles that address this? I am sure their software engineers
have specs for this stuff -- someone is thinking about it, but MS money
help files don't cover any of this difficult (i.e. Credit cards, cash
flow, etc). Is there a good book (O'reilly style -- right to the point,
discusses the internals) out there. How do I learn what is going on?

Thanks for any information in advance,

Tim