How to handle expenses with monthly payments?

[francocalvo]

Hey!

So, in my country we can pay stuff like clothes and many other things in interest-free (sometimes) payments from 3 up to 18 months in some cases.

For example, I bought two t shirts for ~10.000 ARS. I'll pay them in three installments of 3333 ARS each.

As my currency has high inflation, the actual cost of acquisition is lower than 10000 ARS (would be ~8800 ARS), I'd like to have my expenses be monthly. I know I could do:

2023-07-28 * "Buy t shirts"

  Liabilities:CreditCard      -10000 ARS

  Expenses:Clothes             10000 ARS

But I'd like to do it in a way that when I see my expenses for the months, the expense in clothes is 3333 ARS, not 10000 ARS.

I thought about something like:     

2023-07-28 * "Buy t shirts"

  Liabilities:CreditCard                               -10000 ARS

  Equity:CreditCard:FutureInstallments    6666 ARS

  Expenses:Clothes                                      3333 ARS

I don't have an accounting background, and I'm not sure if using the Equity account would make sense in this case. When the second installment comes around, I'd do:

*balance would be 3333 ARS*

2023-08-26 * "Paying off balance"

  Assets:Checking                                       -3333 ARS

  Liabilities:CreditCard                                 3333 ARS

  Equity:CreditCard:FutureInstallments    -3333 ARS

  Expenses:Clothes                                       3333 ARS

Would that be ok? It would show me the correct amount of money that I owe, and the correct money I spent in a given month. I'm not sure if I'm not shoving the problem down to Equity in this case.

[Red S]

Yes, except use Liabilities: instead of Equity: since you owe the 6666 ARS.

That's what this plugin automates: https://github.com/redstreet/beancount_reds_plugins/tree/main/beancount_reds_plugins/effective_date#readme

[francocalvo]

Could you show me some transactions on how that would work? I was under the assumption that if I used another Liabilities account it wouldn't show how much I owe correctly

[Martin Michlmayr]

* 'francocalvo' via Beancount <bean...@googlegroups.com> [2023-07-28 16:37]:

> So, in my country we can pay stuff like clothes and many other things in
> interest-free (sometimes) payments from 3 up to 18 months in some cases.
>
> For example, I bought two t shirts for ~10.000 ARS. I'll pay them in three
> installments of 3333 ARS each.

I feel like there's a conflict in what you're trying to do. There are
different ways to model this transactions depending on what's really
happening, but the way I see it, you're mixing up two incompatible
ways.

In the first way, you say that you incur 10.000 ARS expenses but can
pay over 3 months. This means that the *expenses* of 10.000 are
up-front (for example you receive all t-shirts) but the *payment* of
3333 is spread over several months.

This would be:

2023-07-28 * "Buy t shirts"

Expenses:Clothes 10000 ARS
Liabilities:PrintingCompany -10000 ARS

2023-07-28 * "Pay printing company with credit card, payment 1/3"
Liabilities:PrintingCompany 3334 ARS
Liabilities:CreditCard -3334 ARS

2023-08-28 * "Pay printing company with credit card, payment 2/3"
Liabilities:PrintingCompany 3333 ARS
Liabilities:CreditCard -3333 ARS

2023-09-28 * "Pay printing company with credit card, payment 3/3"
Liabilities:PrintingCompany 3333 ARS
Liabilities:CreditCard -3333 ARS

(and somewhere you need a transaction to payy of the credit card.)

> I'd like to have my expenses be monthly.

...

> But I'd like to do it in a way that when I see my expenses for the months,
> the expense in clothes is 3333 ARS, not 10000 ARS.

But in the example you gave, the *expenses* are NOT monthly. They are
up-front. You incur 10k expenses up-front and pay over 3 months.
Maybe you're mixing up expenses and cashflows. You want to see your
cashflows of 3333 per month? But these are not expenses.
(Understanding this requires getting used to accounting terminology
and practices; I used to find it confusing too.)

If course, there could be a *different* scenario in which you incur
expenses monthly. Let's say you pay 10k to the printing company
up-front and then you get some t-shirts every month for 3 months. Now
you have an expense of 3333 per month and a 10k pre-payment that
becomes smaller as you pay it off.

For example, I often pre-pay electricity and then my balances
decreases every month as I have electricity expenses.

But this is completely different to the scenario you outlined where
you incur 10k expenses up-front and pay them off over 3 months.

You can have one or the other (depending on what the business
transaction looks like), but not the other. I think what you're
looking for are the monthly *cashflows*.

The transactions for this second scenario would be as follows (but I
don't think it represents the scenario you told us about):

2023-07-28 * "Pay deposit to printing company"
Assets:Prepayment 10000 ARS
Liabilities:CreditCard -10000 ARS

2023-07-28 * "Buy t-shirts, 1/3"
Expenses:Clothes 3334 ARS
Assets:Prepayment -3334 ARS

2023-08-28 * "Buy t-shirts, 2/3"
Expenses:Clothes 3333 ARS
Assets:Prepayment -3333 ARS

2023-09-28 * "Buy t-shirts, 3/3"
Expenses:Clothes 3333 ARS
Assets:Prepayment -3333 ARS

--
Martin Michlmayr
https://www.cyrius.com/

[Matias]

Hi Franco! I'm from Argentina too, and a beginner with beanacount.

I came to the mailing list with the same question. I was looking something like "Buy now pay later", as a I think americans says.

I will follow instructions to register "cuotas", as I use them very often

[francocalvo]

Hey Matias! I have a big test tomorrow, so I'll post in the weekend how I'm handling it now and try to explain why this is important for financial tracking to Martin in a high inflation context as ours (12.4% monthly inflation now! wow).

A quick overview would be Red S answer tho!