Credit Card Accounts

Dave S.'s Avatar

Dave S.

16 Jan, 2016 09:00 PM

I'm currently tracking 7 credit card accounts. Each one of those accounts is being paid out of my checking account. When I pay my credit card bills I categorize each payment to be applied to the appropriate credit card account. So when I set up my budget, A) They aren't categorized under any expense categories, and B) The Credit Card Accounts aren't listed in the budget categories list. So, how then can I budget my credit card bills? (See attached screenshot)

  1. 1 Posted by Dave S. on 16 Jan, 2016 09:17 PM

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    Forgot attachment.

  2. Support Staff 2 Posted by Ethan on 16 Jan, 2016 09:54 PM

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    Hello,

    Other accounts do not appear in your budget because when you do something like pay a credit card bill, you are not actually paying an expense in terms of expense categories, but are transferring money from one account to another. This does not affect your net worth any more than transferring between your checking and savings account would. Moneydance budgets are for budgeting your actual spending, which in this case are the transactions created when you purchase items with your credit cards. If you were to budget for both of these, you could essentially be counting the same purchases twice: once for the actual purchases, and then again when you paid your credit card bills.

    Ethan
    Moneydance Support

  3. 3 Posted by Dave S. on 17 Jan, 2016 05:19 AM

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    Thanks Ethan,

       Hypothetical scenario: I go to Macy's. I purchase $500 worth of clothes on my Discover card. I get my Discover statement in the mail. I write a check for $100, lick a stamp and send payment to Discover. I go to my computer to record the transactions in Moneydance. First, I record the $500 purchase into my Discover account register and assign it to the "Personal:Clothing" category. I then record the $100 check in my checking account register being applied to my Discover account (category <Discover>). The Discover account register shows the Macy's transaction and the payment from checking (as seen from the previously attached screenshot).
       As I see it, the credit card bill comes out of my checking account and is given to a creditor, which to me is an expense (actual spending). An expense I need to budget for. This bill is being paid no differently than say my natural gas bill. The process is the same. The difference is the gas company isn't a creditor and therefore doesn't carry any balance of debt in which I need to track.
       In theory, I AM transferring from one account to another. Only I don't own the money after the "transfer" to a credit account. This is much different then say transferring from checking to savings where after the transfer, I still own the money. And, yes it would affect my net worth. Now I pay $100 to each of seven credit card companies of which I track in Moneydance. If there is no way to assign these transactions as expenses, how then can I budget them? I am essentially missing $700 every month from my budget for my credit card expenses.

    I understand that you can't budget an account. I am budgeting my expense spending. And my credit card bills are an expense and they are actual spending. There should be a way to assign a credit payment from a checking account to both a "transfer" and an expense category so that the expense can be budgeted.

    I sincerely thank you again for your help.

  4. Support Staff 4 Posted by Tom Freeman on 17 Jan, 2016 05:43 PM

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    Macy's is what you spend, the credit cards are what you pay. If you put both on your budget, you are double expensing. My suggestion is to create two budgets one for spending and one for payments.

    The new budget system is good for spending. For your payments I suggest using the mixed interval budgeting. This will allow you to put in both your salary and all your accounts. To do this go to tools > budget manager. This brings up the edit budget window. Click new. In the new budget box name the budget the in the period menu select mixed interval. Click create.

    Back in the edit budget window, select edit. The budget will open empty. There is a + button at the bottom. Use this to add an account. The account will default to the fist category. Click on the category field to edit to the proper account. Then edit the amount and date field. repeat for each account you wish to budget.

    Tom Freeman
    Infinite Kind Support

  5. 5 Posted by Laura Shepherd on 18 Jan, 2016 05:51 PM

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    I have this same issue - let's say the credit card is NOT for new spending but has an old balance that pre-dates setting up money dance - how can we show the $ we are paying to pay off the credit card debt as expense? Most "personal finance" programs deal with this someway. OH, I guess you could set up the credit card as a LOAN, and then pay it off?? will then it show as an expense for that loan payment?

  6. 6 Posted by Dave S. on 19 Jan, 2016 12:58 AM

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    Thank you Tom for your input.

       First things first. Macy's is what I pay ON CREDIT. This DOES NOT affect my checking account balance. The payment I make once a month to Macy's credit department comes from my CASH account and it does affect my checking account balance. I don't want to budget my credit spending, I want to budget my cash spending. Also, creating a mixed interval budget doesn't resolve the issue either.
       After many hours of trying different ways to figure this out, I finally found the solution, or at least I thought! So, here's what I did (you may need to refer back to post #3). I've decided to re-categorize my "Discover" credit card payments in my Checking register from being applied to the <Discover> account in Moneydance, to Bills:Credit Card. Under my "Discover" credit card account in Moneydance, I simply apply my payment as a deposit line entry in the Discover register and I categorize that payment as Bills:Credit Card. I can now budget my credit cards! YAY!!! Wait, HOLD THE PHONE!!! If I have seven credit cards, and I budget $100 for each of them and I pay $100 to each of them, theoretically I should have a balanced credit card budget ($700 paid on a $700 budget). But because my Moneydance budget pulls all expenses (and deposits) from all accounts (Credit cards, Checking, Savings, etc), my budget shows $0 of $700. Here, Moneydance is taking the $100 deposit in my Discover credit card account and applying to my budget which is actually canceling out my true checking expense. I do not need to budget my credit card spending! I need to budget my credit card payments! Here is another hypothetical scenario with this way of budgeting.
       I have a $15,000 credit line on my Discover card. I once again go to Macy's and this time I buy a new king size bed. And because I want the best, I spend $7.500 on that bed and charge it to my Discover card. I come home and record the transaction in Moneydance in my Discover credit card account and assign the category Home:Furnishings. At the end of the month I write another check for $100, lick another stamp and send my payment to Discover. I open Moneydance and I now record that payment in the Discover Account register as a deposit under the category Bills:Credit card and I also record a payment in my Checking account register under the category Bills:Credit card.
       If I look at my budget, it now shows I'm over budget by $7,500 because in this scenario, the bed was an emergency purchase and was budgeted $0 for the category Home:Furnishings. And, my Bills:Credit card budget still says $0 of $700.
       One of a few things has to happen here. 1) The payments on a credit card account need to be categorized differently. Or, 2) Show "Payment" as an option under the <Check #> field in the register and have no categories available. Or, 3) Have an account specific budget where only the categories in that account can be budgeted.
       I did not actually spend the $7500. If I did I'd be broke (Hypothetically that is)! The budget thinks that my Macy's purchase on my Discover card was a cash expense. In fact it wasn't. The $100 payment on account however, was. The accounts and the categories in those accounts need be be kept separate! If for some reason I want to create a budget for my credit card then only the categories used in that account should be budgeted. The same goes for all other accounts. My checking account shouldn't be budgeting my credit card transactions. These transactions aren't true cash expenses. This really isn't complicated. I just want to budget my liquid, cash, accounts. More specifically, checking. And, track all my credit card transactions, and keep them all budgeted as separate accounts.

  7. 7 Posted by laura on 19 Jan, 2016 02:49 PM

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    Massq2,
    thanks for all the detail - any chance you can post a screen print of how you are handling it ?

  8. 8 Posted by Dave S. on 20 Jan, 2016 05:33 AM

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    Laura,

    Here are the screenshots of what's happening. I hope this helps.

  9. 9 Posted by Laura Shepherd on 20 Jan, 2016 12:54 PM

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    Thank you ! This does allow what I need to happen and that is to see my
    expense on my credit card payments. By booking the extra deposit entry on
    the credit card page, then our cash (income) is overstated. How do you deal
    with this if at all? My initial thought was this:

       1. credit card payments from my checking account are recorded into:
       Bills:Credit cards
       2. then my deposit into the credit card I labeled as: Bills:Recognized
       payment
       3. then on my reports I uncheck the box for #2
       4. Overall on the summary page though, my income is overstated.

  10. 10 Posted by Dave S. on 21 Jan, 2016 04:50 AM

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    There should be a question in the budget manager or a checkbox selecting whether or not you want to budget all expenses or just cash accounts. If I could only just budget my cash accounts then this discussion thread never even happens.
    The more I thought about it, the more I realized that ANY purchases made on ANY credit card is just that...purchases on credit. My hypothetical bed that I bought...I DIDN'T BUY IT! Discover bought it! I in turn pay Discover monthly, a revolving amount, until my card is payed off. And these credit transactions shouldn't be included in budgeted amounts unless I tell Moneydance to do so.

    Infinite Kind Staff, thank you so much for your time and dedication to the development and maintenance of Moneydance for Linux. I've tried several different "free" finance programs written for Linux and I've found that not everything Linux has to be free. I financially support my Distribution and I'll financially support any software out there that's worthy of my support. And Moneydance is definitely worth my support. Of the several different finance programs out there (free and not free), Moneydance is the closest to Quicken I've found. I've payed for and used Quicken for more than 20 years and I'm very happy I no longer rely on MS Windows on any computer in my house (four of them) and no longer rely on Quicken to provide my home finance management needs. I'm just a bit disappointed that I've paid more for Moneydance than I have with Quicken and it can't get a simple budget to work. Does this mean that I'm dropping Moneydance and asking for a refund? Not at all! For the money people pay for Moneydance, we deserve software that works right.
    Please correct the issues that prohibit smooth and easy budgeting or provide an existing solution to effectively plan my cash spending.
    Again, I sincerely thank you,

    -- massq2

  11. Support Staff 11 Posted by Tom Freeman on 21 Jan, 2016 08:43 PM

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    In all honesty we have struggled with how to code the budgeting processes. I will pass on your feedback to the developers.

    Tom Freeman
    Infinite Kind Support

  12. 12 Posted by lizingalls on 13 Apr, 2016 08:15 PM

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    Just wanted to chime in and say YES! I am totally in the same boat and really struggling over whether to continue on with Moneydance over this very issue. I have used it for 10 years, but am finding that a budget that accurately represents credit card usage is vital. I am frustrated when I make a purchase at a store and then pay the credit card the next month, and Moneydance tells me I've spent that same amount of money twice. Even worse when I repay my card in the same month. My monthly budget gets totally messed up.
    And on a related note.....we REALLY need to be able to access our budgets on our smartphones these days as well. One of the reasons I want to take the time to make a budget each month is so that I can access my spending in real-time at the store. I am a loyal long-time user and really want to be able to keep on using it, just need these updates. Thanks for your consideration!

  13. 13 Posted by Kim on 17 May, 2016 04:13 AM

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    I too am perplexed at how to manage my budget utilizing credit cards. I do pay my credit bill in full each month, and would really like to avoid the cumbersome task of keying the splits to clarify the spending categories. The data is already loaded into the credit card register. I buy all groceries and gas on my credit card, so it is important to reflect the correct categorization in the actuals reporting so I can assess budget to actual performance. Suggestions?

    Thanks,

  14. 14 Posted by Ben Spencer on 17 May, 2016 01:52 PM

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    Kim

    You should not need to enter any spits when using a credit card in Moneydance. You should create an account of type credit card. You should enter or download transactions directly into that credit card account. When you make a payment to the card you enter a transfer from your bank account to the credit card. No splits needed.

    The recommended way of budgeting when using credit cards in Moneydance is to budget for the expense categories that you use on the credit card. It is not possible to also budget for the monthly payment to the credit card in Moneydance. Doing so would be double counting the money. I realize this is not ideal for the needs of some and I am sorry if it does not meet your needs.

    Ben Spencer
    Infinite Kind Support

  15. 15 Posted by Kim Hayes on 18 May, 2016 03:36 AM

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    Hi Ben,
    Thank you for the explanation. I have the account set up and have been
    downloading the the credit card transactions from Amex in one case, my
    credit union in the other. Transferring the payment to the account to
    cover the bill in the instance of the credit union, no problem. I can't
    quite see how that will be done for Amex. Presently, I initiate a direct
    ACH payment to Amex from my primary checking account and classify the
    expenditure as credit card payment. The actual recording of the payment in
    either account is noted in a subsequent download. What am I missing?

    Another problem I am seeing is the account balance is wrong month over
    month. I recall reading that one must correct the beginning balance
    periodically. How is the best way to do that?

    The other component of this is reviewing monthly expenditures, comparing
    budget to actuals. I suspect I don't have things set up properly. Can I
    also trouble you to advise how to correctly set this up?

    Thanks so much,

    Kim Hayes
    2430 North 1675 East
    Layton, Utah 84040
    801-599-5519

  16. 16 Posted by Ben Spencer on 18 May, 2016 11:38 AM

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    You should not categorize the payment to the credit card as the expense "credit card payment" instead in the category selector on the payment transaction in your bank account you should select the actual credit card. It will be up near the top of the list of categories. This will create a transfer from the bank account to the credit card account, including the balancing entry on the other side.

    You should not have correct the beginning balance every month you should only need to set the beginning balance once when you first download transactions into Moneydance. Assuming you do not make any errors entering transaction manually, or you do not have any duplicate you need to merge the balance should be correct.

    Ben Spencer
    Infinite Kind Support

  17. 17 Posted by Laura Shepherd on 18 May, 2016 12:47 PM

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    *​OLD Credit card balances:*

    Here's what I do so that I can track payments that relate to OLD credit
    card balances.

    It is a 2-step process:
    1) on my
    ​credit card account for my ​
    MasterCard
    ​, ​
    I put in the payment as

        $20.00 zzzzz payment to old debt

    2) in my checking account, I show $20 to MasterCard
    ​and select that credit card "master card"

    I make sure that when I run reports, I do not select the category "zzzz
    payment to debt" to be included w/in my reports.

    *​Budget reports*
    The budget platform and budget reporting function has a lot of room to
    grow. Maybe look at quickbooks or another system like that and see how
    they handle budgets.
    Basically,
    ​ it should work exactly like the operating/actual #'s.

  18. 18 Posted by Curtis Hodge on 04 Aug, 2016 09:09 AM

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    This comment was split into a new discussion: Credit card account and Point of sale systems

    Hello!
    How I can check credit card balance throughout this POS terminal? What's the difference between POS terminal and bank credit payment?
    new-york-pos.com/

  19. System closed this discussion on 03 Nov, 2016 09:10 AM.

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