Money Left to Allocate does not match money in account after credit transfer

[SpiralOcean]

Just set up new accounts today. A checking and a credit card.

I put in an initial balance in the checking and credit card. For
example purpose:
Checking $400
Credit Card $100

I took my initial starting balance in my checking account and placed
it into the income bucket of salary.
Salary $400

I created buckets, assigned monthly allocations, and flowed the cash.
The amount of money in the Salary bucket went down as expected:
Salary $200.

Checking $400
Credit Card $100
Salary $200

I paid off my credit card by dragging from my checking into the credit
card:

Checking $300
Credit Card $100
Salary $200

This is a bit scary to me because my Salary staid the same. But I
should have $100 left to allocate in the Salary?

I went to the transfer smart bucket, and dragged that transfer to my
salary bucket and the salary bucket went down by $100. But only if I
dragged the transfer from my checking account. If I dragged the
transfer from my credit card account then my salary went up $100.

This is scary to me because I don't feel I can trust how much money is
in the salary bucket to allocate?

Is there something I did wrong here?

[Kevin Hoctor]

If you have a balance on your credit card that you are paying off, you
should use a bucket like "Debt Repayment" and flow your outgoing
payment (transfer) through that. This way you'll have to flow money
from your Salary bucket to that expense bucket.

If you purchase something on the credit card and that purchase gets
assigned to a bucket and you have filled that bucket with money from
the Salary bucket, then your payment (transfer) doesn't need to be
assigned to any outgoing bucket because you are just moving money from
one account to another and the categorizing of that payment was done
with the purchase.

So in summary:
1. Payments on credit cards for existing balances need to be
assigned to an expense bucket because they are not for a current
purchase, whereas…

2. Payments on credit cards for current purchases do not need a
bucket assignment because the purchase is tracking the cash flow.

Peace,

Kevin Hoctor
ke...@nothirst.com
No Thirst Software LLC
http://nothirst.com
http://kevinhoctor.blogspot.com

[SpiralOcean]

Checking $400
Credit Card -$100
Salary $200

So you are saying,
to pay off a balance on a credit card:
Create a transfer from checking to credit card (I dragged checking to
credit card).
Checking $300
Credit Card $0
Salary $200

Go to the Checking Account, look for the transfer, drag it to a bucket
called Credit Card Balance Payment.
Checking $300
Credit Card $0
Salary $200
Credit Card Balance Payment Bucket $-100

Go to the Salary income, drag it to the Credit Card Balance Payment to
pay out of my salary so that the Credit Card balance Payment has a $0
balance.
Checking $300
Credit Card $0
Salary $100
Credit Card Balance Payment Bucket $0

This gave me the correct amount.

There are a lot of steps there, and it concerns me that I may forget
to do something and not know that I have less money in my checking
account than I thought I did.

If transfers should always be flowed from the outgoing payment, a
suggestion is to show the outgoing transfer as 1 transaction in the
Unassigned smart bucket. This would help me remember that I need to
do something with that transfer, otherwise my money may be off.

Thank you for the assistance.

[Jaysen]

Kevin,

The slow guy is behind again. Can we try an example for the idiot on
my end of the line?

So I have a CC balance that predates MW. I go to the grocery store and
spend $100 and put it on the CC. in MW I put this purchase in the
groceries bucket. I get my statement and send the CC company $200 as
check number 4321, $100 for the groceries charge and $100 toward the
interest and principle of the previous balance.

How would you suggest I manage this transaction?

[Blair Watkinson]

Spiral,

It looks like you have the concepts down, but MoneyWell can simplify
things for you.

I'm assuming that you're just getting started and the credit card
balance is for last month's expenses. I'm also assuming that you've
paid off the balance, you don't have any debt that you're paying down,
and that you'll use your card for everyday purchases that you have
planned to make in accordance with your Spending Plan. If so, what
you did to get to started isn't what you'll have to do in the future
(even if it's not, it's still simple, it's just that the info here
doesn't apply--let me know, and I'll address the other case).

I'll explain. Now that your credit card has a balance of zero on it,
whenever you make purchases in the future, you'll assign those credit
card transactions to the appropriate buckets. When you buy groceries
with your credit card, you'll need to assign the transaction to your
Groceries bucket.

When it's time time pay your credit card bill, you'll just make the
transfer from checking to your credit card. You won't have to move
any more buckets around. And you won't assign this transaction to a
bucket.

I've found that getting MoneyWell started in a dynamic financial
situation (multiple accounts, statements closing out on different
days, and usually not aligned with the beginning and end of the month)
is much more difficult that using it day to day once everything is
established.

Blair

[SpiralOcean]

> I've found that getting MoneyWell started in a dynamic financial  
> situation (multiple accounts, statements closing out on different  
> days, and usually not aligned with the beginning and end of the month)  
> is much more difficult that using it day to day once everything is  
> established.
>
> Blair

A good point Blair. It's like that with any financial software.

[Karen]

Spiral, maybe I'm not understanding your predicament but I think you
might be making it more complicated for yourself. i.e. Every month the
bank credits me with my salary. That goes into the income bucket. When
I pay a credit card payment, I don't use transfers, (but then again, I
don't download credit card statements as I'm trying to pay them off).
When I make a cc payment, I'm in my regular checking account. When I
have the bank download for that account, and find a cc payment, I make
the Payee the credit card name, the type is "withdrawal," the bucket
is "Debt Repayment" and then a Memo if I use it for that account. That
amount comes out of what I have budgeted for debt repayment, out of
that bucket and its total goes down. Perhaps if you try using
Transactions rather than transfers/dragging, it'll make more sense.
I'm not planning to use the transfer ability until I have a better
handle on the basics. I hope I'm making sense.

Karen

[SpiralOcean]

I think the problem I was having was with setting up the accounts for
the first time.

I had a starting balance in my credit card of -$100.

I had already done my cash flow, which means the starting balance of
my checking account was in my Salary bucket. $400.

I made a credit card payment and my salary bucket did not go down.

If I had made the credit card payment (transfer) and then did my first
cash flow, the salary bucket would have had the correct amount.

I have a credit card that I use for all my day to day purchases, I
then pay off that credit card every month.
All these day to day charges will be put into my different buckets.

When I make my credit card payment, I'll need to transfer the money,
because the money has already been taken out of a bucket.

Example:
$500 Checking Account
$000 Credit Card Account
_________________
$500 Total Real Money

-buckets-
$300 Income: salary
$100 groceries
$100 Debt Repayment
__________________
$500 Total Bucket Allocation

I spend $100 with my Credit Card and place it in the groceries bucket.
Example:
$500 Checking Account
-$100 Credit Card Account
_________________
$400 Total Real Money

-buckets-
$300 Income: salary
$000 groceries
$100 Debt Repayment
__________________
$400 Total Bucket Allocation

When it's time for me to pay off my credit card, I need to make a
transfer that does not affect any of my buckets.
Example:
$400 Checking Account
$000 Credit Card Account
_________________
$400 Total Real Money

-buckets-
$300 Income: salary
$000 groceries
$100 Debt Repayment
__________________
$400 Total Bucket Allocation

This is different than repaying my debt because I already took the
amount out of the groceries bucket.
Here is what happens if enter a single transaction from the Debt
Repayment bucket and do not transfer
Example:
$500 Checking Account
-$000 Credit Card Account
_________________
$500 Total Real Money

-buckets-
$300 Income: salary
$000 groceries
$000 Debt Repayment
__________________
$300 Total Bucket Allocation

I now think I have more money than I do.

I think you always need to transfer when making a payment to a credit
card from a bucket.

[SpiralOcean]

> This is different than repaying my debt because I already took the
> amount out of the groceries bucket.
> Here is what happens if enter a single transaction from the Debt
> Repayment bucket and do not transfer
> Example:
>  $500 Checking Account
> -$000 Credit Card Account
> _________________
>  $500 Total Real Money
>
> -buckets-
> $300 Income: salary
> $000 groceries
> $000 Debt Repayment
> __________________
> $300 Total Bucket Allocation
>
> I now think I have more money than I do.
>
> I think you always need to transfer when making a payment to a credit
> card from a bucket.

Need to revise that statement.
Whenever you are paying a credit card, it needs to transfer from your
Checking to the Credit card. Otherwise you will get the above
scenario.

[SpiralOcean]

One more correction...
There are two options:
The first option is to have two separate transactions.
one withdrawl in the checking for payment to the credit card, the
checking should have your bucket assignment.
and one deposit in the credit card from the checking.
This is where a problem occurs. You cannot assign the deposit in the
credit card account to a bucket. And so it will remain in the
unassigned smart bucket. I like to use that bucket to make sure I've
processed all my transactions.

Or, you have a transfer, with the bucket assignment in the checking
side.
The credit card side will say transfer for the bucket.

This thread touches upon the above statement:
http://groups.google.com/group/no-thirst-software/browse_thread/thread/c021d6e5d8398ffe#

[Karen]

Ah, that's it. No, you don't assign a bucket on the cc side. I don't
mind that my payment on the credit card side is unassigned as I know
those round numbers are a CC payment. I assign a bucket when the
purchase is made. You're not as confused as you think. ;-)

Karen

[Tannie]

On Jan 2, 1:00 am, Karen <kar...@gmail.com> wrote:
> Ah, that's it. No, you don't assign a bucket on the cc side. I don't  
> mind that my payment on the credit card side is unassigned as I know  
> those round numbers are a CC payment. I assign a bucket when the  
> purchase is made. You're not as confused as you think. ;-)
>
> Karen
>

Oh, that's exactly what I do do :)

Mine is set up roughly like this:

-accounts-
checking: $500
cc: - $300

I have a bucket 'debt', which says -300.

When I make a payment to the cc, I'll just make a transfer and go to
the cc-side of the transfer and set the bucket to 'debt'.

The accounts will change to:
checking: $400
cc: - $200

and the bucket will look like:
debt -200

I should add that the cc isn't really a cc (long story ;)) and that I
don't use it for day to day purchases. I could, but then I would
assign the correct bucket to the outgoing money. I set it up like the
above because it was debt accumalated before starting to use Moneywell
and I just didn't want to go back and add all those purchases to
buckets.
I basically attempted to start from scratch, so I could start
budgetting immediately and not worry too much about overdraft and
such. I'm not entirely sure how I set it up exactly. I think I made a
spending plan, added all my accounts and then allocated my income
(which was only part of a regular income due to me starting halfway
the month). Then I checked what buckets still needed filling despite
the empty income-bucket and filled those up from the 'debt' bucket
manually (because I already had an overdraft and even though income >
expense I'd end up with a bit of overdraft still, which is debt). By
the end of the month I'll take the money from still filled buckets and
transfer that to the debt bucket (mostly meaning I have less overdraft
than expected, yay).

The total of the buckets and my accounts remain in sync this way. I
usually put the debt bucket on hidden...
Not sure if I use it the right way around though :)

cheers,

Tanja

[Kevin Hoctor]

On Jan 1, 2009, at 6:00 PM, Karen wrote:

> Ah, that's it. No, you don't assign a bucket on the cc side. I don't
> mind that my payment on the credit card side is unassigned as I know
> those round numbers are a CC payment. I assign a bucket when the
> purchase is made. You're not as confused as you think. ;-)

Karen is right and I think this is all getting too complicated.

If I buy an gas with my credit card, then I assign that transaction in
my credit card account to my automobile bucket. When I pay that off
with my checking account (using a transfer assuming I track both
accounts), I don't assign a bucket to either side of the transfer. If
I did, I'd be spending the same amount twice.

If I have a balance on my credit card when I start using MoneyWell,
then I assign a bucket (mine is Debt Repayment) only to the
transaction on the checking account side. This is done because I am
spending the money on debt reduction.

The simple rule is that you assign a bucket when you are dealing with
the final recipient of the cash. In the first example, the gas station
was the end of the transaction. In the second, the credit card company
was the end. It's just one step to assign a bucket.

I hope this helps.

Peace,

Kevin Hoctor
ke...@nothirst.com

[Jaysen]

> If I buy an gas with my credit card, then I assign that transaction in  
> my credit card account to my automobile bucket. When I pay that off  
> with my checking account (using a transfer assuming I track both  
> accounts), I don't assign a bucket to either side of the transfer. If  
> I did, I'd be spending the same amount twice.
>
> If I have a balance on my credit card when I start using MoneyWell,  
> then I assign a bucket (mine is Debt Repayment) only to the  
> transaction on the checking account side. This is done because I am  
> spending the money on debt reduction.

Still working on wrapping my head around this. Let me ask another
question about the actual payment. When I write a check to the CC
company, how would you account for it the various amounts? Do you
split XXX from debt repayment and not categorize the rest? Are you
writing 2 checks?

Not questions the theory, but looking for implementation.

Thanks.

Jaysen

[The Watkinson Family]

Jaysen,

Yes, you would split the amount paid to the credit card. You wouldn't
two write two checks (you could, but there is no need to). One part
of the split would be assigned to Debt Repayment, and the other part
would not be assigned.

The trick would be to figure out what's Debt Repayment, and what has
been spent according to my spending plan this month? MoneyWell can
help determine this. If you go to your credit card account, and
select all transactions from a given month, the total of those
transactions appear in the lowest part of the window. This amount
should be the amount that is not assigned in the split.

Anything you pay to the credit card company beyond that is Debt
Repayment.

Does this make sense?

Blair

[Karen]

I think I might be being a little dense.... When you pay for your gas
with a credit card, doesn't that amount come out of your "Gas" (or
whichever) bucket and that's that? When you make the cc payment from
your checking account, that amount goes towards the "Debt Repayment,"
doesn't it? Why would you need to split?

Karen

[Kevin Hoctor]

On Jan 2, 2009, at 10:37 AM, Karen wrote:

> I think I might be being a little dense.... When you pay for your gas
> with a credit card, doesn't that amount come out of your "Gas" (or
> whichever) bucket and that's that? When you make the cc payment from
> your checking account, that amount goes towards the "Debt Repayment,"
> doesn't it? Why would you need to split?

Karen,

I think that's because I said the debt repayment part of a credit card
payment does have a bucket assignment but the gas purchase does not so
he's splitting the two portions up.