Money is *very* good at doing that, if you set up your budget as Dick
describes, schedule your paychecks and other bills, and schedule expected
future changes in those scheduled transactions by putting stop dates on
current ones and future start dates on the revised versions. With that, the
cash flow forecast is a powerful tool.

I used exactly that process to lose (frown) a "discussion" with my wife as
to whether or not we can afford to replace the 16 year old Camry. She wants
a new(er) one. I'd drive it until it dropped, but she refuses to drive our
new Durango. Anyway, plotting the effect of a trade-in, down payment, and
continued loan payments, we clearly can afford another car payment starting
around April.

This example is, I think, exactly what you describe that Money cannot do.
Without an accurate budget using Money's intended design, I could not have
projected that result with confidence.
--
Chris Cowles
Gainesville, FL


"harrelsonesq" <harrelsonesq2[at]yahoo.com> wrote in message
news:OBqvaRZIHHA.2456[at]TK2MSFTNGP06.phx.gbl...
- quote -

As you have probably already discovered by reading Dick's very cogent
explanation of the feature, MS Money's Budget "Planner" doesn't do exactly
what most people think of as budget planning.

My idea of budget planning is to subtract the total of my fixed expenses (I
use that term in a generic sense, not in the MS Money sense, so that
anything going out of my day-to-day accounts is included, even if it is
technically a transfer), as represented by my scheduled bills, from my
income. Then I want to divide the amount left over among my discretionary --
or at least variable -- expenses, such as groceries and entertainment, to
see how much I can realistically spend on those items.

Right now, I have a pressing need for a new vehicle, and I would like to see
how much I can afford as a car payment, at my current level of spending, and
if, for example, I reduced my expenditures at the grocery store and the
movie theatre. The backward-looking Money "Budget" does not help you figure
out the effect of changes in either income or expenses. Most people get
raises, take jobs that pay more -- or less -- than the old one, endure
inflation, and buy cars to replace old ones that are paid off. Money doesn't
get this at all.

It can be done, but not without a lot of tweaking. MS Money is quite good at
providing a picture of your finances right now. It is less effective at
letting you run the kind of scenarios that most of us think of as
"budgeting." And you're right -- it is a combination of the Money "Budget,"
and "Cash Flow." It just doesn't exist as a feature.

I use Excel for "budgeting" purposes, and have never really found a way
around doing that. I -- like most people, I would venture -- am less
interested in an item's effect on my net worth than on my monthly cash flow.
That is the "principal transfer" issue in a nutshell.

I have even bigger problems with the escrow portion of my mortgage payment,
BTW. That money is lost to me forever, so keeping it in a separate escrow
account doesn't accurately reflect my net worth, either.

Susan

"Becky" <Becky[at]discussions.microsoft.com> wrote in message
news:316A1728-84A8-4C99-9B5B-6411EAB79F6F[at]microsoft.com...
- quote -

comments inline below.

"Becky" <Becky[at]discussions.microsoft.com> wrote in message
news:316A1728-84A8-4C99-9B5B-6411EAB79F6F[at]microsoft.com...
- quote -

Good. That means we share a coomon understanding of how your loan/payments
are setup.

- quote -

Did you look in the Transfers out of budget accounts section?

- quote -

If you take into account the behaviors of Money and the budget, you should
be able to answer the question: "will this level of income and spending make
me poorer or richer over time?" using the Budget Planner. With any luck, you
can find the prinicipal component in the Transfers Out section, but I can't
remember for sure how M04 treats this.

- quote -

"Break Even" is Budget Planner territory, but you will have to do what
brought you here in the first place: validate the results and make sure you
understand and adjust for how it gets the numbers it gets. You are probably
also wanting to tell if you will have money in the checking account or not
at the end of the month. Forecast Cash Flow can do this but, again, you need
to understand what it's doing and why. Forecast Cash Flow works a lot better
if you have most everything scheduled in Bills & Deposits. Note also the
settings in Customize Cash Flow Forecast that turn on/off inclusion of
trended/budgeted income and expenses.

If I go into the account where the payment is made (like you suggested
below), I can click on "edit" and then details. Then, within the details,
I've got the principal portion, interest portion, HO insurance, and R/E
taxes. I can't modify the Category on the principal line. However, I can
modify the Interest line.

I appreciate your words about the way the budget is constructed. It makes
sense that you wouldn't necessarily include principal transfers in the budget
since it's just "changing hands". However, like you discussed, if I have
$1,000, of which my budget shows I have $800 going to interest, but my
principal doesn't show up there, that would lead me to believe I have $200
remaining by looking at the Money budget. However, if the $200 remaining goes
to principal, then I don't have any money left. So, we've got an "income
statement" vs. "balance sheet" situation here. When, really, it seems that
I'm more wanting to see an actual "cash flow" of whether I will have enough
money to cover all my expenses (and principal payments) in a given month.
Using the Money budget, as it's set up currently, doesn't appear to provide
that information.

So, how can I efficiently (using Money) track my "expenses", but also track
principal payments, so that at the end of a given month, I could see whether
I break even for the month.

"Dick Watson" wrote:

- quote -

It's making sense, I'm thinking, but I can't go revisit how M04 works in
this area. I'm inferring that you have setup the loan to track transaction
details, but I am confused why it is doing what you report in not allowing
you to click on split. Can you click on Split from the account where the
payment is made? (Say your Checking account, not the principal entry in the
Loan account.) Is the entry in the account making the payment categorized as
"Loan Payment : [name of Loan Account]"? You do have a "Loan Payment"
category transaction scheduled in Bills and Deposits?

Let's return to some general principles for a moment: the budget is trying
to track income and expenses. The principal portion of the Loan Payment is
not really an expense since it is money you are moving, essentially, from
one of your pockets to the other. You had some cash and a liability before
making the payment. After making the payment, you have a little less cash
and a little less liability. But cash+liability still adds up to the same
number. You are no richer or poorer. Since Income makes you richer and
Expenses make you poorer, hopefully this helps you see that the principal
portion isn't really an expense. For this reason, I've always thought that
the Budget should reflect the "expense" (the interest you are paying for the
privilege of borrowing the money) but not the principal. The operative
question for the budget is: how much can I afford to spend on other things
when I know I have to spend this much renting the money for the mortgage? In
my view, the Principal should be considered in the Forecast Cash Flow
portion of the problem. The operative question for cash flow is: will I have
enough free cash to transfer the amount to the mortgage that the payments
require?

That having been said, this view causes lots of users problems because they
want the budget to balance out to just slightly positive and will spend
until it does. If the principal transfers are not taken out of the budget,
this causes some people real problems.

In my M07, the Loan Payment, in total, is in the Debt section. But Money
Budget has changed in subtle ways any number of times from version to
version. And I can't remember exactly what the behavior was in M04. (Maybe
somebody else will jump into the thread?) This is one of the reasons my
better judgment is usually to avoid Budget Planner threads. They turn out
poorly far too often.

One other place you might want to look for the principal transfer in M04 is
under the Transfers out of budget accounts section. (You may have to make
sure that the Loan Account is set to not be included in the Budget Planner
in its Account Details.) One way that would be logical--and I think they may
have done this at some point--is to budget for the interest expense portion
of the Loan Payments separately from the Principal Transfer portion. The
latter would make some sense in the Transfer Out section.

I hope this is making sense. It's all very complicated.

"Becky" <Becky[at]discussions.microsoft.com> wrote in message
news:5131A7F8-0B1B-494C-AD75-9BC5592B079D[at]microsoft.com...
- quote -

It automatically calculates the principal payment. I can click on "edit" but
it won't allow me to click on "split". The only portion editable is the
principal.

After going to "edit budget", the only item that will populate under "debt"
is "Loan: Mortgage Interest". I don't appear to have the option to display
any of the "principal" portion of our debt payments.

And, again, if I go to the actual budget itself, it will show the total
mortgage amount, but there's no budget amount associated with it for whatever
reason.

I hope this is making sense!

"Dick Watson" wrote:

- quote -

When you make a Loan Payment:[name of loan account] does it automatically
split that payment into a Principal Transfer:[name of loan account] and an
interest expense against the category you specified when you setup the
account?

If you edit your budget, does the Expenses section have a category at the
top called Debt with your mortgage payment in it?

"Becky" <Becky[at]discussions.microsoft.com> wrote in message
news:40266A6C-CD92-4C1B-9BBB-DD4EAD46AD06[at]microsoft.com...
- quote -

Yes, I have the mortgage under "loans and liabilities".

"Dick Watson" wrote:

- quote -

Check the debt section.

When you say "loan" option, are you saying you setup a loan account that
tracks all of the transaction details?

"Becky" <Becky[at]discussions.microsoft.com> wrote in message
news:8E11F1E8-EC56-4397-BE75-23ADA2EADF97[at]microsoft.com...
- quote -

When trying to set up a budget, I want to include my mortgage payments in the
budget. I've got the mortgage set up using the "loan" option so that I
transfer payments from my bank account to the "loan" account after each
payment.

In the budget, it shows my mortgage amount under the "actual" column but it
won't allow me to "budget" for the mortgage payment. How can I fix this
problem so that my mortgage payments (and other debt payments) show up in the
budget planner? Otherwise, the only expenses that show are the "interest"
portion of the debt repayments, and not the principal.

Please help.