I think there are lots of users (5%? 50%? 95%?) who are willing/want to do
the full drill but who have a hard time getting to the Light Bulb Moment
where they start to understand what's going on. I guess those are the ones I
like helping most. Sometimes I get success. Much more rewarding than taking
on yet another "My Downloaded Data Is Garbage And It's All Money's Fault"
question.

My $100 is ready too. Alas, nobody seems to want to take it.

"Steve" <sjcohen730[at]aol.com> wrote in message
news:1155082701.031881.324710[at]m79g2000cwm.googlegroups.com...
- quote -

Dick Watson wrote:
- quote -

You have again done a wonderful job of explaining in detail how
Money CAN handle transactions. I do hope that Chris understands it all.


Unfortunately, I believe most readers of this response will
throw up their hands and say "I don't understand it". That is probably
why Money is continually "dumbing down the product". I was an
accountant until I retired so, of course, I know exactly what you are
saying. I probably couldn't have said it better. But the real problem
is that there are probably only 10% of Money users who really use the
product as it was intended, or use only certain parts. Then they make
wrong decisions and screw up their file. We hear all the complaints
here. Let's hope somewhere in the future the base Money product with
its good intentions is updated to fix the bugs and then sold to us
financial types who want to manage our money accurately. I'd even pay
$100 a year for a good updated program.
Steve

You have hit upon two issues, both relevant to your understanding how Money
and accounting work.

Take your car payment case. You have, apparently, setup the car loan as just
a liability account, not a "Loan" type of liability account. You are
expecting the loan payments (note that Money has a special type of
"category" called Loan Payment that goes with Loan accounts; I infer this is
not what you are using) to show up in, say, spending and expense reports but
not twice. You are entering two Automobile:Car Payment transactions and the
spending reports think this is either twice what you think you are spending
or adds them up as an expense (in the Checking account) and an income (in
the Liability account, reducing the liability) that net to $0. That's
because you entered two transactions. So you are on the right track in your
understanding.

You are also on the right track re. a Transfer that moves money from the
Checking account to the car loan Liability account. That's the general
direction you want to go. Indeed, that's what the Money "special category"
Transfer:[name of Money account] transaction is for--moving money from one
of your accounts to the other. In general, Transfer is for cases that are
"net worth neutral" to you like moving money from your left pocket to your
right pocket. This is just such a case.

But you ask: where'd the spending go? The transfer doesn't show up on
Spending/Expense kinds of reports. The reason it doesn't is because the
payment is (in general--another detail coming shortly) "net worth neutral."
You have a stack of cash. (Say $10,000.) You have a liability hole.
(Say -$5,000) You move money from the cash stack to the liability hole. (Say
$500). The two stacks still add up to the same amount. (Say $10,000
+ -$5,000 = $5,000 before and $9,500 + -$4,500 = $5,000 after.) That's "net
worth neutral". Thus, the car payment wasn't spending. You are no worse off
than you were before. So, when did you spend on the car? The day you bought
it.

But there is one expense associated with the payment you may not be
tracking: the interest expense. Say your $500 payment is really $400 of
principal reduction and $100 of Interest:Auto Loan Interest. It's not
entirely net worth neutral now. The balance only declines by $400 and there
needs to be, somewhere, the $100 of Interest:Auto Loan Interest expense.
($10,000 + -$5,000 = $5,000 before and $9,500 + -$4,600 = $4,900 after
with -$100 of Interest:Auto Loan Interest .)

So, how to account for the interest? Two possible ways from where you are
and a third, maybe better, way.

Way 1: just transfer the whole payment amount and, when you get the loan
statement telling you how much interest they took out of the payment, put an
Interest:Auto Loan Interest expense transaction in the account you have for
the loan. This will bring it's liability balance back up (done) to how much
you still owe. This is also how you should handle, say, credit cards.

Way 2: if, say, your payment coupons list the interest amount, split the
checking transaction of, say $500 into two parts, first a $400
transfer:[name of car loan account] and second a $100 Interest:Auto Loan
Interest expense.

Way 3 (how Money was intended to support this kinda stuff): Money has a type
of liability account called a Loan Account. Loan accounts are setup with you
specifying the amount of the loan, the length of the loan in number and
frequency of payments, the category you want to use for the interest
expense, and the total amount of the payment. (You can get all of this from
the loan paperwork you signed.) From that, Money can figure out the
approximate interest rate--the ways of calculating this vary slightly--and
setup a scheduled "Loan Payment" special category transaction in Bills
Summary for you. The cool thing about the Loan Payment "special category"
transaction is that it automatically calculates the interest expense
component in the transaction when you enter it and transfers the remaining
portion of the payment to the loan account. One step. All neat and clean.

The advantage to the scheme of accounting that recognizes the car payment
expense at the point of purchase and the interest expense along the way as
you make the payments is it separates the original decision to spend money
on the car from the ongoing decision--forced when you took the loan--to
spend money on the interest. This is a powerful tool to separate what you
need to spend money on, say the car, from what you ELECTED to spend money
on, say the interest expense.

See if this makes sense and post back with questions.

"chris" <chris[at]discussions.microsoft.com> wrote in message
news:4B5932D6-32C8-4C66-9AF2-31CF27DFB56B[at]microsoft.com...
- quote -

Actually, I have two issues, but I think they are related.

I am a little confused on entering transactions that "cross" accounts. I
realize I can either enter two seperate transactions or enter one Transfer.
However, in both cases I seem to have report issues.

As an example,

To show a payment to my car loan from my checking account, I either:

1. Make one entry in my Checking account
2. Make an entry in the Car Loan

In both registers, the category is the same: Automobile : Car Payment.
However, when I run a report (i.e. spending by category), the entry for
Automobile : Car Payment is duplicated.

--- or ---

1. Enter one Transfer : Car in my checking account.

When I do this, the transactions are not included in the reports.

I apologize for the simplicity of this question. I have searched for
answers in this forum (and others), but have come up empty.

Any direction would be helpful. Thanks.