Budgeting for Loans & Liabilities

Chris's Avatar

Chris

19 Jan, 2017 04:00 PM

There have been many discussions about this already, but all those that I have found have been closed. We need to be able to budget against loan and liabilities. Most people don't care to budget for their net worth, they budget for their cash flow. Having an increase in my net worth of 200 does not help pay next months expenses if it is tied to my car. I (and many others) believe you should include the option to budget for these accounts.

  1. 1 Posted by Kevin Stembridg... on 20 Jan, 2017 12:24 AM

    Kevin Stembridge's Avatar

    Hi Chris,

    I'm the developer of the Money Foresight extension. If you have transaction reminders set up for your loan payments and liability transactions it will show you the effect on your future cash flow. It will also show you if you have overspent or underspent in the past.

    If you haven't tried it yet you can install it from the Moneydance Extension Manager (Menu -> Extensions -> Manage Extensions...).

    Happy to help if you have any questions.

    Regards,
    Kevin

  2. 2 Posted by rgglickman on 22 Jan, 2017 09:28 PM

    rgglickman's Avatar

    Hi, Kevin,
    What versions do your extension apply to?

  3. 3 Posted by Chris on 22 Jan, 2017 09:53 PM

    Chris's Avatar

    Thanks for the post Kevin. I had already checked out your extension based on your post to a similar thread. It does not meet my current needs. Moneydance already has reports setup to show Comparison to Budget (but doesn't have all the accounts I need), Net Income, and Cash Flow (with a little bit of editing based on accounts).

  4. 4 Posted by Kevin Stembridg... on 22 Jan, 2017 10:25 PM

    Kevin Stembridge's Avatar

    Hi rgglickman,

    Money Foresight is compatible with Moneydance 2015 and above. Prior to that the extension was called Forecaster, which I created in 2008 and can still be used in versions of Moneydance prior to 2015.

    Happy to help if you have any more questions. Drop me a note at support at moneyforesight dotcom.

    Hi Chris,

    Thanks for the feedback. If I could trouble you a little longer, I love to hear from people who find that Money Foresight doesn't meet their needs because it lets me know what I need to work on. If you'd be willing to describe the issues you are having in more detail I'd be happy to listen.

    Regards,
    Kevin

  5. 5 Posted by Mike Enoch on 31 Mar, 2017 08:14 PM

    Mike Enoch's Avatar

    I like Money Foresight and it's useful in projecting forward. It would be helpful to account for and monitor, as part of a Monthly Budget, payments made to Loans, Credit Cards and Overdrafts.

    The only way to do this effectively is for them to be selectable like any other Income or Expense account when preparing a budget within Moneydance itself. I realise they are selectable under the Mixed Interval budget but this is not what I'm looking for.

  6. 6 Posted by Kevin Stembridg... on 31 Mar, 2017 09:20 PM

    Kevin Stembridge's Avatar

    Hi Mike,

    If you have a transaction reminder set up for your loan payments then you will see the effect of that in Money Foresight's forecast view. Credit cards are slightly different. If you pay off the entire card balance each month then Money Foresight can forecast that for you as well. You need to go to Options -> Credit Card Reminders in the main Money Foresight window and configure the statement date and payment date for the card. Make sure you don't also have a transaction reminder for the credit card payment because that will be treated independently and look like a double payment.

    When it comes to monitoring, I'm not sure if this is what you're after exactly, but there is a Reminder Review window in Money Foresight. It can show you how your past spending compares against your reminders. This is equivalent to comparing your spending against a budget. The Reminder Review is actually very important because its not just about telling you if you have overspent in the past, its about confirming that your reminders, and therefore your forecast, are accurate.

  7. 7 Posted by Mike Enoch on 02 Apr, 2017 08:32 AM

    Mike Enoch's Avatar

    Hi

    Thanks for the speedy response. I really like Money Foresight and use it regularly for forward planning. What I'm looking for is a budget which allows me to list all my income and expenses and shows any surplus / deficit.

    Currently using the Moneydance budget you cannot account for payments to credit cards or loans. A payment to a loan account is just as much part of my budget as council tax. Yet the system does not allow me to include the loan payment in my list of expenses.

    This is what I'm looking for either as part of the main program or as an extension.

  8. 8 Posted by Kevin Stembridg... on 02 Apr, 2017 09:00 AM

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    Hi Mike,
    In the latest version of Money Foresight (v39) I added a view that shows you the sum of all forecasted transactions subtotalled by category. In the main forecast window there is a new tab named 'Categories' beside the 'Chart' and 'Transactions' tabs. I think this gives you exactly what you're looking for. I have a transaction reminder set up for a loan payment and I can see in this new view the total amounts going to principal and interest. It all rolls up across categories so that you can see what your deficit is at any level.

    Cheers,
    Kevin

  9. 9 Posted by Mike Enoch on 02 Apr, 2017 09:25 AM

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    Hi

    Just checked that out and it looks promising. I've also noticed under the View menu Reminder Review (beta). This looks even more what I'm looking for but unfortunately it does not appear to be working correctly and it does not include reminders to Loans and Credit Cards,

    Will you be updating this soon?

    Regards

    Mike

  10. 10 Posted by Kevin Stembridg... on 02 Apr, 2017 11:05 AM

    Kevin Stembridge's Avatar

    Hi Mike,

    Glad you found the Reminder Review. The forecast is only as good as the reminders you have set up and this view is intended to show where your reminders don't line up very well with your actual spending. You then have the option of adjusting your spending or adjusting your reminders so that you can trust your forecast.

    It works by looking at income and expense transactions, which is why only the interest part of loan payments show up in the review. The principal part of a loan payment is actually represented as a transfer rather than an expense in Moneydance (same goes for a credit card payment). I realise this is a semantic difference and doesn't match up with how most people perceive loan payments but as long as your actual loan payments match your reminders, which is very likely to be the case, then there would be not net effect on the reminder review. I could look at adding some logic so that transfers into a loan account are treated like an expense.

    I guess it comes back to why you want to see loan payments in a budget. My assumption is that you are interested in predicting future cash flow and this is already catered for in the forecast view. Could you elaborate on why you would want to see them in the Reminder Review as well?

    Cheers,
    Kevin

  11. 11 Posted by Mike Enoch on 02 Apr, 2017 11:32 AM

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    Hi

    Under the View/Reminder View (beta) you've included columns for Reminder, Actual,Diff which is the information I'm looking for. However the Loan and Credit Card accounts are not available for selection when Select Categories... is clicked.

    These columns are not on main Categories tab.

    Also it would be helpful if it could show at the end the surplus / deficit between income and expenditure. This would then be answer to my budgeting prayers!

    Hope this makes sense.

    Regards

    Mike

  12. 12 Posted by Kevin Stembridg... on 02 Apr, 2017 11:39 AM

    Kevin Stembridge's Avatar

    Yep, they're not visible because they're not income or expense categories. Could you elaborate on why you want to see them? For example, is it because you want to know whether or not your loan reminder matches your actual loan payments?

  13. 13 Posted by rgglickman on 02 Apr, 2017 04:39 PM

    rgglickman's Avatar

    Kevin,
    To get back to the original post to Moneydance staff: when will the software allow a payment composed of principal and interest to be treated as a principal expense and an interest expense. You keep asking why a principal payment should be considered an expense when it is treated as a transfer of cash. Because a budget is not about expenses, it is about Cash Flow. Your forecast software needs to consider this.

    I find this fundamental weakness in the automatic liability set up to be the issue in the budget module. The advantage of using the liability setup is that it decrements the liability by the amount of principal. But you never see the principal payment in the budget reports.

    The way to track this is to set up two different expense accounts: House Loan and Mortgage Interest, and any other two accounts where you manually budget for the principal and interest expense. Create a budget with the categories, and when you record the payment split the payment into the two categories for the specific amounts.

    Mike I hope this helps. Kevin if you can find a way to accommodate this that would be great.
     - Rita

  14. 14 Posted by Kevin Stembridg... on 02 Apr, 2017 07:12 PM

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    Hi Rita,
    I very much agree that cash flow is the important bit. I think maybe my understanding of what you mean by cash flow, or at least the specifics of what you would like the software to do, is not very clear. Money Foresight already shows the effect of both the principal and interest in its future cash flow projections so I'm assuming you are interested in being able to compare actual past principal payments with what was expected based on a budget. Is that what you mean when you say the software needs to consider this?

    I could certainly look at including principal payments in the Reminder Review if you think it would provide value but bear in mind that the only time it would make a difference to what the view displays is when your actual payments don't match your reminder.

    Thanks for the feedback and please don't feel like I'm pushing back. I'm just trying to get a better understanding of what you are trying to achieve with the product.

    Cheers,
    Kevin

  15. 15 Posted by rgglickman on 02 Apr, 2017 08:05 PM

    rgglickman's Avatar

     Rita Glickman
    [email blocked]

          From: Kevin Stembridge <[email blocked]>
     To: [email blocked]
     Sent: Sunday, April 2, 2017 12:12 PM
     Subject: Re: Budgeting for Loans & Liabilities [Budgeting #1017]
       I believe Mike is asking you include principal payments. My 'software' comment was directed at MoneyDance, not Money Foresight.
     #yiv4341429538 pre {width:92%;margin:10px 2%;padding:5px 2%;background:#efefef;border:1px solid #d6d6d6;}#yiv4341429538 blockquote {margin-left:0;padding-left:1em;border-left:5px solid #ccc;}

  16. 16 Posted by Mike Enoch on 03 Apr, 2017 03:59 AM

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    Just to clarify my comments were also about Moneydance and I wish I knew how I could get this message across to them also.

    My position regarding Budgeting is that as a personal user I'm not interested in rules of accounting I just want to be able to track my finances. When preparing a household budget I'm looking at my total income and total expenses. The budget report should also show whether my budgeted and actual payments resulted in a surplus or deficit. .

    For example if I rented a property my rent would be classed as an expense and from my point of view that is no different to paying a mortgage loan every month and therefore the mortgage payment is just another expense. I don't understand why both Moneydance and Money Foresight can't allow this to happen. It's then up to the user to decide what to include in the budget not the programmer. The same should apply to credit card payments.

    It's true that most months the actual and budgeted amount will be equal to the transaction reminder but on the odd occasion additional payments could be made and they should be reported.

    I hope this clarifies what I'm looking for.

    Mike

  17. 17 Posted by P on 16 Apr, 2017 01:17 PM

    P's Avatar

    Hi there,

    I am stuck with this too, and am really perplexed as to why support responses don't seem to get it (or maybe I don't? Either way I'm stuck and finding MD useless because I simply can't use it for my primary need, which is figuring out if I can afford to buy stuff this month or not)
     
     If I make (for sake of argument and wishful thinking), say, $10K monthly, but have to pay back $2K in loans (principal and interest together) also monthly, then that means that I have only $8K left to split among my categories.

    Similarly, if another $1K goes to my pension and another $3K to my mortgage then that leaves me with only $5K to spend. But right now (as far as I can tell) the budgeting software says i have the full $10K - because when I pay the loans/ mortgage principal and pensions etc, it is a transfer and so doesn't get registered in the budget.

    I think it is obvious that this is a good way to set myself up for financial ruin, since my budget tells me I have way more money at my disposal than I actually do! Getting back to my example above I would think that I could go ahead and buy the shoes, and the toys, and extra groceries and and and until I spent the full $10K - i.e. $5K more than I really have at my disposal.

    I need to stress that this is not a forecasting issue - if I pay my loans/ pensions at the beginning of the month the money is gone, it just doesn't reflect in the budget.

    Anyone?

    Help?

    There must be some way to do this...

  18. 18 Posted by Kevin Stembridg... on 16 Apr, 2017 02:08 PM

    Kevin Stembridge's Avatar

    Hi P,

    I hope this is not an unwelcome response but I think the primary need you have described is indeed a forecasting issue. In order to know if you can afford to buy something right now it depends on 2 things; how much money you have in your account right now and what else you would otherwise use that money for in the future. You can achieve exactly what you want if you know your current account balance and can forecast your future expenses.

    To follow your example, at the beginning of the month you pay loans, pensions etc and that money is gone. As soon as you enter those payments in Moneydance they will be reflected in your forecast. If you want to know if you can afford to buy other things, the answer is in the forecast. Assuming the things you want to buy are budgeted for (ie. are set up as transaction reminders) and the forecast looks good, then you can afford them. If they're not budgeted items, you can either add a transaction reminder or a future transaction and the forecast will adjust accordingly.

    I hope this helps and I hope I haven't misunderstood what information you need to get from the software. To me, it sounds like forecasting is exactly what you need but please correct me otherwise.

    Regards,
    Kevin

  19. Support Staff 19 Posted by Tom Freeman on 17 Apr, 2017 02:53 PM

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    I am sorry its taken so long for support to respond to this thread.

    There is an option in setting up the budget called mixed interval. This is a more wonky budget type and needs to be crafted manually. In mixed interval you can budget accounts as well as categories.

    When setting up the budget, in the scroll menu for time period select mixed interval. , After you have created the budget, click on it from the side bar, select edit, and then populate the budget with the items you wish.

    I've attached a screen shot of the budget edit window to illustrate.

    Tom Freeman
    Infinite Kind Support

  20. 20 Posted by MAC on 15 May, 2017 03:50 PM

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    Hope I'm not to late on this post. I do agree with everyone about the budget. Its about actual money. Now using the budget in MD and using mixed interval is close but who wants to use their salary and then everything that comes out of the check into a budget? What we want is we deposit so much into our checking account and buy so much each month and in hopes that what we put into our checking account is more then what we spend but that is where the budget comes into play. I want to set up a budget of items but don't want to include everything because some items I don't spend on every month but I want MD to take all these items into the report. Now in Money Foresight Forecast under the transactions is close to what I want but it only includes my reminders How about setting it up so I can put in a Category for instance like groceries. Groceries is not the same each month and I don't spend on groceries the same day of each month either but it does need to be included in the budget. Now there are other things that I don't anticipate buying. Lets say I buy a computer desk and its not in my budget but it would be nice for MD to put it somewhere like lets say in unbudgeted expense. But in Money Foresight would be nice to add expenses that aren't reminders like fuel groceries that aren't the same amount each month but need to be included in the budget and then have it tell me whether I am ahead or behind on my budget. I know this seems to be a lot to ask for but would be nice to see some of this implemented and integrated into Md.

    I hope you understand what I am wanting and I think others are wanting the same. Just to be able to track what I bring in and what goes out total. And set up a budget on at least the item that I spend on each month and for MD (or Money Foresight) to report weather i am ahead or behind on my budget for the month week or year.

    Thank you for listening.

  21. 21 Posted by Kevin Stembridg... on 15 May, 2017 09:55 PM

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    Hi mcampany,

    I see what you're saying about groceries being irregular but I recommend setting up a reminder for them anyway because over the course of time its the average that matters. You could figure out what your usual grocery spend is like and create a reminder for that amount and frequency. You can create separate reminders for special events like Christmas. Then you could use the Reminder Review feature of Money Foresight to figure out if you are overspending or underspending on groceries and either adjust your spending or adjust your reminder to suit.

    For one-off expenses that have no corresponding reminder, these will show up in the Reminder Review as excess spending, which might meet your needs. Happy to hear if there is something else you had in mind for that.

    Cheers,
    Kevin

  22. 22 Posted by MAC on 16 May, 2017 12:46 AM

    MAC's Avatar

    OK that somewhat works, I am using the transactions tab and it somewhat does what i want as for forecasting my amounts. What would be nice tho is to have a column of actual spending compared to the budget or reminder spending.

  23. 23 Posted by Kevin Stembridg... on 16 May, 2017 06:21 AM

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    In that case I've got just the thing for you. You may not have seen it yet but there is a feature called Reminder Review that compares actual spending with your reminders. Open the Money Foresight window, then View -> Reminder Review.

  24. 24 Posted by mhoggie on 19 May, 2017 01:22 AM

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    There is a work around to have MoneyDance capture the loan payments in total for budgeting purposes. Simply create a "holding" account on Moneydance and make your payment to the "holding" account just prior to the time you make the loan payment. (you can set up reminder to either manually or automatically transfer the funds. Then make the loan payment in the normal fashion (principal and interest) from your special "holding" account. In that way you can use the old style Moneydance setup to catch the transfer and pickup the total amount of the cash flow for budgeting. Simple to do once you catch on to the madness.

  25. 25 Posted by mhoggie on 19 May, 2017 01:24 AM

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    There is a work around to have MoneyDance capture the loan payments in total for budgeting purposes. Simply create a "holding" account on Moneydance and make your payment to the "holding" account just prior to the time you make the loan payment. (you can set up reminder to either manually or automatically transfer the funds. Then make the loan payment in the normal fashion (principal and interest) from your special "holding" account. In that way you can use the old style Moneydance setup to catch the transfer and pickup the total amount of the cash flow for budgeting. Simple to do once you catch on to the madness.

  26. 26 Posted by Chris Bowles on 22 May, 2017 03:53 AM

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    With regards to the holding account, while this does work, you'd always
    have an equal and opposite variance between the holding and loan amount
    each month you pull a report. Not very convenient for analysis.

  27. 27 Posted by mhoggie on 22 May, 2017 04:12 AM

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    Just for budgeting reporting where you are looking at cash flow using the original MD budget style, you should be able to select that transfer from your checking to the holding account to capture the full payment (cash flow) activity for that loan on budget reports. Of course if your running normal category reports for loans, you want to pick up the payment made from the holding account in order to pickup the principal and interest components. I think you should be able to use the holding account process for budgeting reports and status and still run your other reports. It's just a matter of what you select as the source for your reports.

  28. System closed this discussion on 21 Aug, 2017 04:20 AM.

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