Gen'l Money 2007 Question

Hello,,

This year I've decided to expand my use of Money 2007, to begin a more
analytical look at my budget & spending. One question I do have is
when categorizing payments to a credit card and/or equity loans.
Should I record the expense and categorize it to it's appropriate
category at the time the item initially appears on the credit
card/equity loan?? Or should I expense it at the time of payment?? If
I should do it at the time the item is recorded on the creditcard,
what would be the best way to categorize the payment?? I'm not certain
what is the correct way to do this. I think it would be best to do it
at the time it is recoprded on the credit card, but then I have no
idea as to how to categorize the payment.

Thanks for your assistance on helping me better understand this
process.

mikester

Dick
Sun Jan 13 14:47:08 CST 2008

The "best practices" answer is to expense the transactions that account for
where the money actually got spent. Then the Liability account (the credit
card or the HELOC, same diff) will have a high balance--because these
expenses came out of there.

Then you use the Transfer (assuming you are not using Money Essentials and
are using Advanced Register) special category to move cash from your
checking account to the liability to reduce the balance of both. The latter
doesn't change your net worth at all. It's like moving cash from one pocket
to the other. Also, record the interest charges in the liability accounts as
Expenses.

This way all of the expenses REALLY ARE and are captured when they were
incurred. It separates they why from the how. This is an important step in
letting you actually see the why of your spending without getting all
wrapped up in the how.

"Mikester" <none@email.com> wrote in message
news:mjsko35orvf2n9apg3rfl6k9gr78v0d0g4@4ax.com...
> Should I record the expense and categorize it to it's appropriate
> category at the time the item initially appears on the credit
> card/equity loan?? Or should I expense it at the time of payment?? If
> I should do it at the time the item is recorded on the creditcard,
> what would be the best way to categorize the payment??

Mikester
Sun Jan 13 15:17:09 CST 2008

On Sun, 13 Jan 2008 13:47:08 -0700, "Dick Watson"
<littlegreengecko@mind-enufalready-spring.com> wrote:

>The "best practices" answer is to expense the transactions that account for
>where the money actually got spent. Then the Liability account (the credit
>card or the HELOC, same diff) will have a high balance--because these
>expenses came out of there.
>
>Then you use the Transfer (assuming you are not using Money Essentials and
>are using Advanced Register) special category to move cash from your
>checking account to the liability to reduce the balance of both. The latter
>doesn't change your net worth at all. It's like moving cash from one pocket
>to the other. Also, record the interest charges in the liability accounts as
>Expenses.
>
>This way all of the expenses REALLY ARE and are captured when they were
>incurred. It separates they why from the how. This is an important step in
>letting you actually see the why of your spending without getting all
>wrapped up in the how.
>

Hi Dick,,Sounds like a good process for the 'best practice'. Bwhen
doing the transfer from my checking account to the credit
card/liability account, what catewgory and/or sub-category shoudl I
use for the transfer?? Can't be a normal expense category, as that
would have the effect of doubling up on the expenses. So I am lost at
how to categorize that transfer from checking to the credit card.

Your thoughts are greatly appreciated!

mikester

Dick
Sun Jan 13 17:41:53 CST 2008

This is exactly why you use Transfer. It is a "special category" (Money's
term) that is neither Income nor Expense. It's net worth neutral. It just
transfers money from one account to the other. You didn't spend it. You
didn't earn it. You just, well, transferred it.

This is a good thing since it's not something you "budget" in the sense of
plan on "spending" it. You just have to make sure you have the cash to make
the transfer. Again, this separates the why (Food : Groceries, Automobile :
Gasoline) of your financial life from the how (Transfer : DiscoverCard).

"Mikester" <none@email.com> wrote in message
news:dnvko35sq4ie30uest21v99qkjmmbafl5u@4ax.com...
> Bwhen
> doing the transfer from my checking account to the credit
> card/liability account, what catewgory and/or sub-category shoudl I
> use for the transfer?? Can't be a normal expense category, as that
> would have the effect of doubling up on the expenses.

Chris
Sun Jan 13 18:47:14 CST 2008

"Dick Watson" <littlegreengecko@mind-enufalready-spring.com> wrote in
message news:Oo7zKWiVIHA.4972@TK2MSFTNGP02.phx.gbl...
>
> ... assuming you are not using Money Essentials and are using
> Advanced Register ...

Since the 'what category do I use' question was repeated, the
conditions above bear repeating, as well.
--
Chris Cowles
Gainesville, FL

Mikester
Mon Jan 14 20:05:33 CST 2008

On Sun, 13 Jan 2008 16:41:53 -0700, "Dick Watson"
<littlegreengecko@mind-enufalready-spring.com> wrote:

>This is exactly why you use Transfer. It is a "special category" (Money's
>term) that is neither Income nor Expense. It's net worth neutral. It just
>transfers money from one account to the other. You didn't spend it. You
>didn't earn it. You just, well, transferred it.
>
>This is a good thing since it's not something you "budget" in the sense of
>plan on "spending" it. You just have to make sure you have the cash to make
>the transfer. Again, this separates the why (Food : Groceries, Automobile :
>Gasoline) of your financial life from the how (Transfer : DiscoverCard).
>
>"Mikester" <none@email.com> wrote in message
>news:dnvko35sq4ie30uest21v99qkjmmbafl5u@4ax.com...
>> Bwhen
>> doing the transfer from my checking account to the credit
>> card/liability account, what catewgory and/or sub-category shoudl I
>> use for the transfer?? Can't be a normal expense category, as that
>> would have the effect of doubling up on the expenses.

Hi Dick,

I think I see the light now. I was envisioing the transfer to be a
'type' of transaction, rather than a 'category'. And now the whole
picture clears up a whole bunch.
Looking back now, I was trying to work a budget where I could track
payments to credit cards, rather than tracking the category of the
expense itself. If I try to capture Food: Groceries, I could end up
with an incorretc picture, as we sometimes pay with either Cash or a
Credit Card. But it appears that I can capture the total by selecting
for the 'Transfer: DiscoverCard'

And yes, I am running with the Advanced Register.

Thanks for the help folks,
mikester

Chris
Mon Jan 14 20:37:56 CST 2008

"Mikester" <none@email.com> wrote in message
news:4q4oo396ng40v6108u6hfqjiml2q3b1dgc@4ax.com...
>
> I think I see the light now. I was envisioing the transfer to be a
> 'type' of transaction, rather than a 'category'. And now the whole
> picture clears up a whole bunch.

For scheduled bills, it is a 'type'.
--
Chris Cowles
Gainesville, FL