Ok, that explains it. I have been keeping new cars only about 6 years and
they still hold quite a bit of value at that point. On my Toyota pickups I
have recovered half or more of the purchase price after 6 years. But then I
bought a Dodge in 2000 and I only recovered about 1/3 of the cost on that
when I traded it in this year. But it was still worth 10K.

Regards

Bill Wood




"Chris Cowles" <spam_magnet[at]remove-me-bellsouth.net> wrote in message
news:%23SyzcTf1GHA.1252[at]TK2MSFTNGP04.phx.gbl...
- quote -

If I intended to sell it sometime for a significant amount of money, I
would. But since I drive them until they're run into the ground, what's the
point. Since I have no expectation ever of selling a car for more than a
nominal down payment on the next car, or a donation to charity, I do not
include the value in my net worth.

If I were ever in a position that I HAD to sell it for money, the cash
gained would be less than the loss in transportation, purchase of a cheaper
alternative, etc.

"William R Wood" <secret[at]???.net> wrote in message
news:ewae5Yb1GHA.4648[at]TK2MSFTNGP04.phx.gbl...
- quote -

William R Wood wrote:
- quote -

I'm suspecting that our actual net worth is unlikely to be off by even 10%
by failure to include all of life's little detritus, err, personal property.

I've got a basement full of obsolete computers (anybody want an IBM 5150
with the 2nd version 256K mobo with a NEC V20?) and some really nice
obsolete film camera equipment and some then-high-end audio equipment that
predates my use of Money (with all the relays and capacitors slowly
failing). A VCR that's got a clock that can't be programmed to a date past
2006 that has a dead NiCad battery besides. Two TVs that predate all of this
neato digital TV stuff. Oh, and some tired furniture, worn out clothes, a
2004 Acura TL, a 2000 Honda CR-V that needs a battery, and a 1999 M-B SLK230
with new tires. (I'll ignore, for the moment, my wife's collection of
trinkets and baubles. I'd probably get an unpleasant and confused reaction
if I started talking about how to value the Mikimoto...) For stuff acquired
after I've been using Money, there are generally notes in the transactions,
but I agree, transferring them to an Asset account might be more manageable.

Because I think my ability to convert any of this stuff to nursing home
payments in my doddering old age is limited, I skip tracking it. Since
nobody has asked me for an auditable net worth value for the here and now,
it hasn't seemed like much of an issue.

I do understand why others might get to a different answer and might feel
more compelled to have a net worth that was accurate enough to include this
stuff.

"William R Wood" <secret[at]???.net> wrote in message
news:%23G9n5Yb1GHA.4648[at]TK2MSFTNGP04.phx.gbl...
- quote -

I'd like to put in a plug for asset accounts, not just for cars but for
everything you buy of any significance.

For accounting accuracy, there should be no difference between they way you
handle the purchase of a car or a house or a camera, etc. When you buy a
physical item that is not perishable you exchange cash for an asset of equal
value. Your net worth is unchanged. If you expense the transaction, you
understate your net worth and overstate your expenses. Asset purchases are
not expenses, they are transfers from a cash account to an asset account.
Cash flow reports do reflect the purchase and show the flow of funds, of
course. After you have your asset setup in an asset account, you can then
account for appreciation or depreciation - these represent non-cash income
or expense and increase or decrease your net worth accordingly.

That doesn't mean its wrong or foolish to expense asset purchases, its just
not the most logical or accurate method in most cases. There can be good
reasons to expense asset purchases rather than capitalize them. For
example, businesses expense whenever possible, not because their financial
statements are more accurate but because it saves income taxes (overstating
expenses understates income which reduces taxes).

There are some pretty compelling reasons supporting asset accounts for most
everything:

1) A complete, incredibly handy list of all your possessions is
automatically created. You can look up the vendor, price, date, etc on
anything you have owned in a flash. "Honey, when did we buy that old vacuum
cleaner and what did it cost?"

2) Your asset accounts provide a listing, description, individual and total
value figure that can be very useful for insurance purposes. Not only do
you have all the details about the purchase (assuming you are careful to
type in model no, serial numbers and good descriptions, etc) but you have
solid figures for cost and current market value. If you are insuring
valuables, making a claim, buying homeowners coverage, etc etc this
information can be very useful.

3) If you croak, your heirs can easily figure out what you own, what it cost
and what its worth.

4) If you donate old stuff to charity, Goodwill etc you have a great source
of information for your IRS returns.

5) Your net worth statements will be far more accurate.

6) Your asset accounts will serve to confront you with the total cost and
value of your purchases. This is a powerful cost control feature. For
example, say you are an amateur photographer. You have been buying camera
stuff for years. How much do you have invested and what is it worth? Most
folks have no idea. Maybe they don't want to know. But if you really want
to control your finances, you must know.

This work sounds overwhelming but it really isn't. Simply open up an asset
account for all your stuff:

House
Home Contents
Cars
Sports Equipment
Whatever

When you buy stuff make a transfer from your checking, savings or credit
card, etc account to the appropriate asset account and put in all the
details. Just doing this will be a real help to you. If you are really
energetic, adjust for appreciation and depreciation about once a year or
more often if you like. It is easy to get current market value for most
stuff. For example, look up your car on Kelly Blue Book or NADA, subtract
the current value from your cost and transfer that amount from the Car
account to a non-cash expense account called Depreciation. I have a cutoff
figure of $50 for household items like furnishings - anything that cost less
than $50 gets expensed, anything over that goes in the Home Contents asset
account. But for my hobbies like shooting, photography, woodworking, etc I
record everything in the appropriate asset account. So I know to the penny
how much money I have tied up in camera equipment, guns etc. There is a
very active secondary market in guns, cameras etc so I know what my stuff is
worth and I appreciate or depreciate it accordingly about once a year. You
can make a single overall adjustment to each asset account rather than item
by item if you like. For big stuff like cars or our house, I do adjust item
by item.

I think most folks will be amazed by how much real net worth is tied up in
stuff that you have expensed. Knowing your actual net worth is nice and it
gives you something to look forward to as you watch it grow over time.
Personal properly is a significant part of our net worth and I really use
the asset accounts in Money quite often for financial planning and day to
day decisions.

Regards


Bill Wood







"Dick Watson" <littlegreengecko[at]mind-enufalready-spring.com> wrote in
message news:uuElVuB1GHA.4972[at]TK2MSFTNGP03.phx.gbl...
- quote -

Chris,

I am curious about your treatment of cars.

A new car that looses 25% of its value in the first year is still worth 75%!


The depreciation should be expensed but why not include the 75% in your net
worth? It is real value that can be turned into cash and the amounts are
not insignificant given today's ridiculous car prices.

I put new cars into an asset account which I do include in my net worth and
depreciate the initial cost down to market approximately annually using blue
book values just like you do. Hence, my net worth reports are pretty
accurate every year.

Regards


Bill Wood


why you don't include cars in your net worth
"Chris Cowles" <spam_magnet[at]remove-me-bellsouth.net> wrote in message
news:uqme%23jE1GHA.4796[at]TK2MSFTNGP03.phx.gbl...
- quote -

If you're buying a Duesenberg, it's an asset. A new car that loses 25% of
its value is reasonably characterized as an expense. If you really want to
follow GAAP (Generally Accepted Accounting Principles) then yes, it's an
asset. But that assumes you're also going to depreciate the asset over its
live. That smooths the expense over time.

Personally, I do create them as assets but do not include them or the
depreciation transactions in my net worth or expense budget. I do include
the loan costs and, obviously, maintenance and operational expenses. I
depreciate them approximately annually by adjusting the value down to the
market, determined by nadaguides.com or something similar.

I do not include the asset account in my Lifetime Planner, either. It's too
hard to model, especially since the LP does not handle negative
appreciation. It's easier to schedule a periodic car purchase as an
expense, for that purpose.


"Michael J. Blazin" <mjblazin[at]swbell.net> wrote in message
news:XhzMg.23994$kO3.16229[at]newssvr12.news.prodigy.com...
- quote -

In microsoft.public.money, Michael J. Blazin wrote:

- quote -

In that houses typically rise in value and cars typically fall in
value, then I think they could reasonably be treated differently.

I don't treat the cars as assets because they always decline to essentially
$0. So I just discount them from net worth immediately and expense the
purchase price as Automobile:Payments. If I get something back eventually,
I reduce the payments amount by that much.

There are other ways and maybe good reasons for those as well.

"Michael J. Blazin" <mjblazin[at]swbell.net> wrote in message
news:XhzMg.23994$kO3.16229[at]newssvr12.news.prodigy.com...
- quote -

Is getting a car really treated any differently than a house?
Money wants you to treat it as an asset.
You then have transfers from checking and credit card to the asset.
Create the loan and assign it to the asset. Make sure that you make
interest non-deductible
Lastly have an account adjustment for the amount of the loan and a second
account adjustment for the immediate 20% depreciation.
I don't know if there is a way around having the loan amount essentially
appear as income for 30 days, but after that point, Money has it ok.
You also need to periodically (I do it annually) do an account adjustment
for reduced value of car under depreciation (non-deductible). I go to Blue
Book and use that value.
You end up with an asset that is under water unless your down payment+100
was > 20%. Hopefully your car
will retain value faster than you pay off the loan. Money does a good job
of showing what a $40K car is really worth to you.
If it's a used car, you modify the intial account adjustment with current
Blue Book value.

Sale of old one again should work like selling a house. You have to first
set up the old car as an asset ( and assign a loan, if you had one, that has
already started payments - Money can handle that situation) and then its
value either gets transferred to your checking account or gets transfered to
the new car asset as down payment. If you still had a loan, you'd have to
transfer the cash as required to pay off the loan.

Money, to me, seems very capable if you are willing to go back to double
entry bookeeping 101. Or you can make it very simple. The problems occur
when people want some detail and tracking, but don't want to do the whole
green eyeshade routine. That's where Money gets confused and the weird
results appear.

"Dick Watson" <littlegreengecko[at]mind-enufalready-spring.com> wrote in
message news:ev0yco20GHA.4648[at]TK2MSFTNGP04.phx.gbl...
- quote -

Sadly, Money makes it very difficult to transfer in/out of a loan at
beginning/end. There are painful ways to do it, but they are likely not
worth it. If you want to go down that path, let me know and I'll post a link
to a home refi q/a that should point you in the right direction.

What I do is to create a huge split transaction for the car purchase. The
two biggest components of this can be (I don't account for cars with Asset
accounts):

- an Other Income:Loan Proceeds Received (say--for the loan you took out;
yes, I know it's not income, but see paragraph #1--and put in a memo that
references the name of the loan account)
- a Transfer:Car As Asset (for the amount of the car you want to call the
asset, remembering of course that it took a 20% hit driving off the lot).

All the minor split entries can be taxes, et al. The net amount of this
transaction, say you put it in your checking account, is the amount of the
check you wrote out. Voila.

As for the part of the car you put on plastic, I'd call the plastic
transaction something like Miscellaneouseposit, Credit to Follow. Then on
the mondo split transaction from above, add an opposing
Miscellaneouseposit, Credit to Follow entry.

There is no one right way. The "rightmost" way, in formal accounting terms,
may be too hard to do in Money as noted in paragraph #1. Microsoft is
tailoring Money ever more toward people who neither know nor care about that
"rightmost" way.

"Deborah" <Deborah[at]discussions.microsoft.com> wrote in message
news:91569454-57C0-470F-AB52-CDA99178C832[at]microsoft.com...
- quote -

How to I enter a new car? I just bought a new car with a loan, a $100 credit
card deposit and a large down payment from my checking account. I'm able to
set up the car and the loan, but what are my offsets for the transactions to
my checking and credit card accounts? I have an accounting background and I
would expect to debit an asset account (the car) and credit the checking,
credit card and loan accounts, buy Money won't let me do that. I tried
entering the car with a zero balance. Then I put the check in trying to use
splits of a greater amount for the car and negatives to the credit card and
loan to net to the check amount. It wouldn't let me make a transaction to
the loan. And I found I couldn't start the loan at zero and add the balance
through a transaction anyway because I think that would mess with the
amoritization.
I'm very frustrated and ready to go back to Quicken! Can anyone please help
me?

Thanks,