I understand your point but in my case my last purchase on the card was over
two years ago and never had credit card accounts in Microsoft account. I am
paying down debt that I already created years ago and so all the cash outflow
for me is just a "debt payment expense" so to speak. But that's just for my
case but again, it is relative so your way would be better for the current
card user.

On 2007-01-24, Ngoni Mareya <NgoniMareya[at]discussions.microsoft.com> wrote:
- quote -

I can understand this sentiment, and I'm *NOT* an accountant,
but I really don't like this method. Imagine I put the following
transactions on the credit card:

$10 lunch
$45 gas
$90 grocery store

Categorizing each of those transactions to "food:dining out",
"auto:gas" & "food:groceries" tells me more about how I'm spending
my money than categorizing $145 to "loan payment" Now, instead of
just 3 transactions, imagine how much more information I get from
50 transactions than from one transaction for $1500!

My point is that doing it the way you do it results in a loss of
information. If that loss doesn't matter to you, ok. It matters
to me.

Thank you so much for your help--I really appreciate it!

"William R Wood" wrote:

- quote -

"dragonwing" <dragonwing[at]discussions.microsoft.com> wrote in message
news:67989154-331E-4E5A-8102-08942DD906AB[at]microsoft.com...
- quote -


Yes, you are correct. Your "real" money includes savings which is not
specifically tracked by the budget report. In fact I do not include every
penny of our income in our budget; anything small or undependable is
purposely left out.

Note also that in addition to the cash flow report you should use the income
and expense report to see the ultimate detail about your real income. I use
the income and expense report most of all because it shows everything to the
penny, all income and all expense and transfers as well. I customize the
report so that transfers to asset accounts (or savings) are reported. That
report and a budget report can be run on a monthly basis to show exactly
where you stand and all of your questions will be answered.

As to the cash flow report I include only 3 accounts: checking, one broker
acct and one money market account. We run all income and expense through
these 3 accounts (mostly the checking account) which makes the cash flow
report very clear and totally accurate. Unbelievably useful since I now
know months in advance whether we will have to funds to do what we hope to
do.

Regards

Bill Wood

This is very helpful. Accounting 101 (or anything remotely similar) has
never been a part of my life, so I've found trying to grasp it now a bit
baffling. I think I understand what I was getting wrong: The budget planner
tells me how much of my budgeted money I've spent and if I've spent more than
I budgeted, NOT how much of my real money I've spent and if I've spent more
than I've got. Now I think I have to go study the Cash Flow reporting part
of the program and see if I can figure it out. Thanks again for your help!

"William R Wood" wrote:

- quote -

Yes, this budget stuff is confusing until you accept accounting logic which
has been tested and proven over a very long time.

Using your example of $2000 monthly income and stashing $100 per/mo in a
cookie jar leaving you $1900 to spend:

Your budget will show $2000 per/mo income and lets say $1900 per/mo expense,
leaving $100 excess funds. Your cash flow report will show the monthly
transfer of $100 to savings so all the income is accounted for. So the
budget planner does not know where the $100 per/mo goes and it doesn't care
because that $100 is not an expense - that money has not been spent and it
still belongs to you.

You said it correctly in your first post. The whole picture cannot be seen
in the budget report. But you will know exactly how much excess money you
have per/mo from the budget report, thus you will know whether you are
"within budget". If your bottom line is a minimum of $100 excess funds
per/mo then a quick glance at the budget planner will tell you if you are on
track.

This stuff is easy to grasp if you will accept the fact that a budget is an
analysis of income and expense - nothing more.

Now - understand that you can force Money to include your cookie jar type
money in the budget by arbitrarily treating the savings as an expense.
Create a category called Savings and categorize your $100 per/mo withdrawals
from checking as Savings. Your budget reports will now reflect this
"expense". But your actual account situation will be somewhat messed up.
If you do keep the money in a jar under the bed this works fine. But if you
put the savings in a bank account you cannot transfer the money from
checking to savings in Money. [By the way a transfer is not a category -
only income and expense goes in a category. A transfer is a transfer,
period.] You can, of course, put the cookie jar money in a real bank
account and track that account in Money but you won't be able to use
transfers (since you are categorizing the transfers improperly as expense)
so Money will not see the source of the funds in the savings acct. Frankly,
there is nothing illegal or immoral about this approach and many folks
handle savings this way. In fact I thought that new versions of Money were
setup to accommodate this very thing.

Personally I prefer the standard Accounting 101 method of handling savings
and other transfers and I pay very close attention to our monthly budget and
cash flow reports. Money really does an outstanding job in this area and I
depend on it every day.

Regards

Bill Wood



"dragonwing" <dragonwing[at]discussions.microsoft.com> wrote in message
news:EBEA3016-7981-4EA1-9A44-F6D2FA4B59A6[at]microsoft.com...
- quote -

Wait: Now I'm confused again. Let's say I have a policy of withdrawing $50 a
month to put in a jar for savings. True, that's money I've transferred, not
money I've spent. But suppose, too, that my budget is down to the bone, every
penny of my checking account accounted for. If the budget doesn't know that
every month I withdraw that $50, then where will I find that $50 to withdraw?
I'm not sure I'm explaining this question clearly. I hope I am.

Again: my budget thinks I have a certain amount of income to work with, from
which all my expenses are subtracted. I've been transferring a fixed amount
of money each month to an "imaginary" savings account which I set up in
Money. That's so I can see if I can stay within a budget that doesn't
include that extra money--to help me see if I can save reguarly. Where does
that idea fit into the budgeting part of the program? If I deposit $2000 a
month in income, and take out, say, $100 a month to "not spend," then I'm
working on $1900 a month of income--but how would the budget planner know
this? So how can I know I'm actually "within budget" when the planner tells
me I am?

I hope I'm making sense--or at least that my confusion is making sense!--so
that someone can help me out with understanding this.

Thank you!

"William R Wood" wrote:

- quote -

This is very helpful: Thank you. I guess I don't really completely
understand the concept of a budget. I've been "allergic" to budgeting most
of my life and only now am trying to get a handle on it. I think I've been
confusing "keeping a budget" with "keeping track of everything." I see now
that I have to look at other parts of the Money program to understand the
whole picture. Thanks again.

"William R Wood" wrote:

- quote -

You cannot include the college savings as part of your budget without
mangling the logic of basic accounting. Trust me, you don't want the
savings in your budget - it simply does not belong there.

Saving money is not income or expense! It is simply transferring money from
one account to another. A budget is a tool to track income and expense,
therefore, it cannot and should not track savings!

Keep doing exactly what you are already doing - transfer money from your
checking acct to college savings acct. And definitely use Bills and
Deposits to automate the monthly transfer. What you are already doing is
exactly correct.

And you are already tracking your monthly college savings beautifully - just
look in your cash flow report to see the monthly transfers coming up in the
future. You will see the precise effect that those transfers will have on
your cash positions. Don't know where the Cash Flow report is or what its
called in your version of Money. In M2002, which I use, it is in
Accounts&Bills> Cash Flow Review. Note that you must set the Cash Flow
report up properly to see what you want. Take some time to do this
correctly. You will find the cash flow report to be invaluable.

Then look in your net worth statement, account balance report and/or your
college savings account itself and watch your savings grow.

Keep up the good work. Sounds like you have good financial discipline - a
very good thing.

Regards

Bill Wood


"dragonwing" <dragonwing[at]discussions.microsoft.com> wrote in message
news:1E3B55B5-087D-4BB1-9D9F-0DC75B6D6F47[at]microsoft.com...
- quote -

I understand about credit cards, but I'm confused about savings. Every month
I transfer a certain amount out of my checking account into a college savings
account; both accounts are in my Money program. Money does this
automatically for me, which is what I want it to do. However, it seems that
in order to have this automated through my Bills & Deposits list, it has to
be categorized as a transfer, which means that it doesn't show up as a budget
expense. I understand that as a transfer from one account owned by me to
another, this isn't exactly an expense--but in terms of budgeting, it is
something I need and want to keep track of. How can I include this college
savings as part of my budget?

Thanks!

"nwsteve" wrote:

- quote -

Thank you all for your input, it definitely shows the limits of communicating
on forums such as this. (and why more documentation with the Money products
is needed!)

Getting back to my original problem which was; trying to include a scheduled
credit card payment to my budget under expenses in the budget group
"transfers out of budgeted accounts" After much playing around I finally
found out that when you set up a new item in the Bills and Deposits section
you have the choice of setting up a new "bill" OR a new "transfer". I had set
up my credit card payments as a bill. When I changed it and set it up as a
transfer, it magically showed up in my budget as a "transfers out of budgeted
accounts".

Now the accountants may say this is not a budgeted item, but for my purposes
it is showing up in my "budget" and Money is now doing what I wanted.

"William R Wood" wrote:

- quote -

Chris,

I agree what I said was not clear enough.

Let me try again for the benefit of the original poster.

Your credit card payment is not an expense, it's cash flow. You already
spent the money when you charged various items to your card during the
month. The charges to your card are the expenses and that is what should be
in your budget.

You cannot budget the credit card payment itself because you already
budgeted the expenses that you charged to the card. If you budgeted the
credit card payment itself, then you would be double counting all of the
credit card charges. So the expense occurs when you charge an item to your
card but the cash flow occurs when you actually pay the credit card bill.

Now, as Chris points out, it is possible to ignore the individual charges to
the credit card and simply budget the credit card payment itself. There is
nothing to stop you from creating an expense category called Credit Card
Bill and charging the entire bill to that category every month. If you set
it up that way, you can then list the credit card bill in your budget. But,
if you do that, you loose the opportunity to categorize each individual
charge on the account and, as a result, you essentially loose control of
your expenses. That's what I meant when I said you cannot budget our credit
card payment. That approach is definitely wrong and illogical.

If some folks are living close to their paycheck (and I have been there
myself) the last thing they should do is slack off on their accounting for
expenses. Only when you keep careful track of where your money comes from
and where it goes can you control your finances and stay above water. Good
accounting is more important for people under financial stress than for rich
types.

Hope this helps somewhat.

Regards

Bill Wood




"Chris Cowles" <spam_magnet[at]remove-me-bellsouth.net> wrote in message
news:e53K0HDuGHA.4748[at]TK2MSFTNGP03.phx.gbl...
- quote -

But it may take Joe6pack a while longer to understand the distinction
between budget and cash flow.

For people living close to their paycheck, budgeting is figuring how which
bill to pay, not how you got the bill in the first place. In that sense,
credit cards are bills to be budgeted.

I'm not disagreeing with you but am trying to explain the conceptual
problem a lot of people have when trying to understand what you described.
--
Chris Cowles
Gainesville, FL

"William R Wood" <secret[at]???.net> wrote in message
news:%23Y0VMz3tGHA.1504[at]TK2MSFTNGP03.phx.gbl...
- quote -

nwsteve,

You ask a question that comes up repeatedly.

Accounting is the same for Joe6pack and JoeCPA. It's not fancy, just common
sense.

You cannot budget your credit card payment. That is wrong. It is
illogical. That's why you cannot do it.

You budget income and expenses. Payment of a credit card is a transfer
(assuming you have a credit card account and a checking account setup in
Money and you pay the credit card from checking). A transfer is not income
or expense. It is simply moving money from one account to another.

So, budget your expenses. Set up your credit card in a credit card account
and categorize every single transaction. Put those expenses in your budget
along with all other expenses.

When you are done your budget will be correct. Then when you pay your
credit card the transfer from checking to credit card account will probably
make sense to you. You are not spending new money. You are simply paying
for expenses already charged to your card. The transfer is cash flow,
however, and if you put the monthly transfer on your Bills and Deposits list
you will see it in the cash flow report.

By using the cash flow report and your budget you will know everything you
need to know about your finances.

Try it, you will like it.

Regards.


Bill Wood

"Cal Learner-- MVP" wrote:

- quote -

OK, that is a good example. Now that you got me thinking about it a little
clearer I can understand the seeming contradiction.

I just want a credit card payment to show up as a monthly expense so it is
included in the "budget" and I can see my net balance for the month whether +
or -. That way I can adjust other catagories until I get a desired net
balance at the end of each month. In addition, I'd like to be able to see a
running balance of funds left in any individual expense catagory.

Perhaps this takes a combination of the budget and cash flow functions in
Money?
I started to look at the cash flow function and got an error message "please
set up at least one checking savings or cash account......" I have several of
each set up already so I don't know why it would ask me this. A Problem for
another time I guess.

In microsoft.public.money, nwsteve wrote:

- quote -

If you buy $100 of gasoline with your credit card do you want to
count that as a budget expense? If you send $100 to the credit card
would you want that to count as a budget expense?

- quote -

could do what?

- quote -

What are you trying to accomplish?

"nwsteve" wrote:

- quote -

OK, so I did some work and read all the other posts about budgeting problems
and Money. What I concluded was that it doesn't work the way I need it to. I
especially enjoyed the post explaining that a credit card bill is not a
budget item but a cash flow problem and so is not meant to be entered into a
budget.

That may make sense to an accountant but not to "Joe six-pack." All I want
to do is make categories for expenses at a certain value and then see how
much of that value I have used as the year goes along.

Long before any financial type software was available I made a spreadheet
that could do this, c'mon MS get with it!

After running the autobudget feature Money does not include all of the
transactions that are listed in my Scheduled Bills and Deposits list. Why not?

I want to include a scheduled credit card payment to my budget under
expenses in the budget group "transfers out of budgeted accounts" but it
won't give me the option to add any such transfers. (It does automatically
pick up another one of my scheduled credit card payments.) Both credit
accounts are set up identically and have the "include this account in the
budget planner" box checked.

Whats up?