Money left in account, but no cash available for flowing?

[HenrikWL]

Ok, there's weirdness.

I currently find myself in the situation that all my expense buckets
are empty, yet I have money left on my spending accounts. All incoming
transactions to these accounts have been allocated to income buckets,
and all outgoing transactions have been allocated to expense buckets
(except transfers between them that have been purely administrative),
and to my mind, I should still have allocateable money so long as I
have money in my spending accounts.

The account balances in MW match the account balances in my bank, so I
have not left out any transactions so far as I can see.

Where do I even begin to investigate?

[Patrick Burleson]

Check your "Starting Balance" transaction for the accounts and make
sure they were assigned to an income bucket. That'd be my guess.

Patrick

[HenrikWL]

The thing is, there was no "starting balance" for the accounts. I
started using MW at the same time I changed banks, so all of my
accounts had zero balance in them. I guess the closest thing to a
"starting balance" transaction was the couple of deposits of money
that were transferred from my old bank, but the way I assigned these
to an income bucket was via the "Change money flow start date" and set
the starting cash flow amount there.

I have tried setting this amount to zero and assigning the initial
transactions to income buckets, but the whole thing ends up exactly
the same.

The only way I can think that this kind of thing has happened was if
we recieved cash that we forgot to register in Moneywell, but rembered
to register when we used them. And while we're on the subject of cash,
I have no way of knowing if the cash balance is correct. I find the
cash account to be impossible to keep track of, what with the two of
us (me and my wife) receving and spending cash from a number of
different sources, and with cash lying around the house, in pockets,
in the car, etc. :S

But still, I would think that this lack of control would lead to the
opposite problem: that there was no money in our accounts, yet still
more to spend in our income buckets. :S

Oh well. The amounts in question aren't vast, so I guess I could just
transfer them into the savings account (which is never available for
spending anyways) and then just pull the missing spendable amount back
into the spending account, registering the transaction in an income
bucket.

On Jun 7, 3:58 pm, Patrick Burleson <pburle...@gmail.com> wrote:

[HenrikWL]

Ok, I've managed to get things aligned, but something doesn't sit
right with the way I did it.

What I basically did, was transfer an amount of money equal to what
was overspent in my expense buckets from my savings account,
registering this in an income bucket. I allocated the money to the
expense buckets, and then transferred all of the money back to the
savings account.

I basically conjured up spendable money out of nothing. :S I'm
confident that the fault lies with my bookkeeping and not with me
actually overspending, but I'm still interested in finding out where
my logic fails here.

The one thing I've done that I'm unsure of, is this: every month, I
transfer a fixed amount of money into my savings account, assigning it
to the "Savings" expense bucket. However, this month I had to pull
some money out of the savings account due to unforeseen expenses
(that's what the savings account is there for after all). I
transferred money from the savings account into the spending account
assigning this transaction to the "Emergency dip into savings" income
bucket, allocated the required amount of money to the "Unforeseen
expenses" expense bucket and payed off the expense, registering this
with the same expense bucket.

Is this the right way to go about such a use of savings money?

I'm feeling incredibly dense here, so if anyone could set me straight
here, even pointing out the obvious, I'd be grateful. :S

[Druzyne]

> What I basically did, was transfer an amount of money equal to what
> was overspent in my expense buckets from my savings account,
> registering this in an income bucket. I allocated the money to the
> expense buckets, and then transferred all of the money back to the
> savings account.
>
> I basically conjured up spendable money out of nothing. :S I'm
> confident that the fault lies with my bookkeeping and not with me
> actually overspending, but I'm still interested in finding out where
> my logic fails here.
>
> The one thing I've done that I'm unsure of, is this: every month, I
> transfer a fixed amount of money into my savings account, assigning it
> to the "Savings" expense bucket. However, this month I had to pull
> some money out of the savings account due to unforeseen expenses
> (that's what the savings account is there for after all). I
> transferred money from the savings account into the spending account
> assigning this transaction to the "Emergency dip into savings" income
> bucket, allocated the required amount of money to the "Unforeseen
> expenses" expense bucket and payed off the expense, registering this
> with the same expense bucket.
>
> Is this the right way to go about such a use of savings money?

Henrik,

I'm not sure if this will correct your issue, but there's a different
way I handle having to pull out of savings. When transferring the
money into your spending account, I would have assigned the deposit to
your Savings bucket, thereby negating what you spent by moving into
savings earlier. Then, the money that is in your Savings bucket you
can flow to the expense bucket where it is needed.

I may be wrong, but when you assigned the transfer back to your
spending account to an income bucket, it was like printing yourself
another paycheck, which might have thrown things off. It's better to
look at this type of transaction as "unspending" on Savings, rather
than as income.

//Drew

[HenrikWL]

Good thinking, Drew. In fact, it's excellent thinking. Thanks, stuff
just suddenly clicked into place here! :D

I do believe you solved my problem. I kinda had the nagging feeling
that assigning account transfers to an income bucket felt "wrong"
somehow, yet I couldn't quite explain to myself how. You just did. :)
With a new paycheck coming this friday, I now feel confident that I'll
be able to get it right this time. ;)

[The Watkinson Family]

There must be something else going on here....

Adding money to a savings expense bucket has the same net effect as adding money to an income bucket.

Look at this way...  I could "unspend Savings" and put the money back into the Savings bucket that I took out.  Or I could put the money into an income bucket and then move it to the Savings bucket--either way has the same net effect.

Here's another area where the problem may lie.  There are two sides to each transfer--the withdrawal, and the deposit.  In MoneyWell, it is possible to assign either side of the transfer (or even both sides) to a bucket.  While each transfer presents three options for assigning the transfer to a bucket (withdrawal side, deposit side, and both sides), these three options do not produce the same results.

Let me try to step through the process that you should be using to track your Savings:

1. When Allocating Income each month, you should be assigning money to your Savings bucket.  This bucket represents the amount of money that you plan to transfer into your Savings account.
2. When you are ready to transfer funds from checking to savings, you'll create a transfer  from Checking to Savings, assigning the withdrawal side of the transfer to your Savings bucket.  At this point, your Savings bucket should be at 0 (you don't have any more money to transfer to Savings)
3. If you need to use money from Savings, you'll transfer the money from your Savings account back into Checking, assigning the deposit side of the transfer to a bucket.  There are merits to using income buckets or expense buckets, but the choice is up to you.  Using an income bucket allows you to use the Allocate Income feature to disburse the money to expense buckets.

Here's how I set up my MoneyWell document in order to keep all this stuff straight:

1. First, I decide how much cash I have on hand to fund my spending plan.  Some people might prefer to include Savings accounts balances in this formula, others may not.  You would also include the balance on certain kinds of credit cards.  Any credit card that you use on a recurring basis each month, paying the balance each month should be included in this formula as well.  I refer to these as Spending Plan Accounts.  I might also refer to it as cash on hand/cash available.
2. Second, I decide how many other accounts I want to track in MoneyWell.  This could include additional Savings accounts, money market accounts, credit cards (accounts I don't pay off each month), auto loan balances, retirement accounts, home mortgage, etc.  These accounts affect my net worth and are of enough concern to me to track on a monthly basis, but they do not contribute to the money that I have on an on-going basis to pay for groceries and other monthly expenses.
3. I'll set up the MoneyWell document like this:

Spending Plan Accounts

---------------------------------

Other Accounts

Note:  The -------------------------- above is an account that I use as a divider between the two types of accounts that I simply provide the name of multiple dashes.

Setting up MoneyWell in this way provides a quick reminder to me how I should assign to transfers to buckets.  There are three rules to follow:

1. When transferring funds on the same side of the line, do not assign the money to a bucket on either side of the transfer
2. When a transfer crosses the line in a downward direction (from a Spending Plan Account to an Other Account), assign the withdrawal side of the transaction to an bucket.  This money is treated as though it is being "spent" by your cash available on your other other accounts
3. When a transfer crosses the line in the upward direction (from an Other Account to your Spending Plan Account), assign only the deposit side of the transfer to a bucket.  This money is being treated as income from your other accounts into your cash available.

There are two rules for spending money:

1. When spending or depositing money from/to an account that is above the line, you always assign the transaction to a bucket.
2. When spending or depositing money from/to an account that is below the line, you never assign the transaction to a bucket.  In MoneyWell, you'll need to select "make bucket optional" on the transaction so that it isn't identified as an unallocated expense.

Let me provide a few practical examples.  Here is your setup.

Checking Account

Credit Card 1

Savings Account 1

------------------------------------

Savings Account 2

Credit Card 2

Auto Loan

Retirement Account

Home Equity Line of Credit

Note that at all times the total amount of money in all your buckets (income and expense) should equal the amount of money in the accounts above the line (Checking Account, Credit Card 1, Savings Account 1)

Examples:

1. You buy groceries that you have accounted for in your spending plan with you Checking Account debit card.  You'll assign this transaction to a bucket (Spending Rule 1)
2. You go to movies using Credit Card 1.  You've planned for this expense in your spending plan, and you'll assign this transaction to a bucket (Spending Rule 1)
3. Your retirement account grows in value--you will not assign this deposit to a bucket.  The money you have to spend on a monthly basis has not changed, only your net worth has changed (Spending Rule 2)
4. Interest is assessed against your Home Equity Line of Credit.  You will not assign this expense to a bucket.  This has not effectively decreased the amount of money you have to spend each month (though you may need to consider making adjustments and increasing how much you allocate towards debt reduction).  Spending Rule 2
5. You make a credit card payment from Checking Account to Credit Card 1.  You should not assign either side of the transfer to a bucket (you didn't cross the line).  The amount of money that you had available to spend during the month hasn't changed.  You still have the option to make monthly expenses on your Credit Card 1 or your using your Checking Account (Transfer Rule 1)
6. Why do I have two credit cards?  One credit card you might be using and paying off each month (Credit Card 1).  The other credit card (Credit Card 2) may have a balance that you'll pay-off over time.  You'll treat this account like a loan account and use a debt reduction expense bucket to track allot payments to it.  You would not want to use Credit Card 2 anymore for your spending plan purchases.  Treat it like a loan and just pay it off, but do not charge anything on it.  When you make a payment towards Credit Card 2, you'll need to assign the withdrawal side of the transfer to a bucket.  You may need to adjust balances inside of Credit Card 2 to accurately reflect the outstanding balance after interest is applied (Transfer Rule 2)
7. You set aside money from Checking Account to Savings Account 2.  You assign the withdrawal side of the transfer to a bucket.  This effectively reduces the amount of money that you have available to spend in the month (Transfer Rule 2)
8. You make a car payment from checking.  You assign the withdrawal side of the transfer to a bucket.  You may have to additional adjusting your Auto Loan account to accurately reflect the amount by which your auto balance has decreased (Transfer Rule 2)
9. Why do I have two Savings Accounts listed above?  In order to take advantage of higher interest rates, you might have a Savings Account 1 that you use to make frequent money transfers during the month, but you consider the money in this account available for monthly expenses and you track it using your spending plan.  I use such a Savings Account for Christmas Gifts, Insurance premiums, tax vouchers.  In general, any type of expense that I need to save for multiple months, I'll set aside in a Savings account.  Since I want to track the money that I have in Savings with buckets, I'll keep it above the line.  I estimate how much money I actually spend on a monthly basis, and I transfer what ever is left to Savings Account 1.  This transfer is not assigned to a bucket.  If I make an insurance payment, I might need to transfer some money back to my Checking Account to cover the amount.  This transfer is not assigned to a bucket (Transfer Rule 1)
10. When you make an investment into your Retirement Account from Checking, you'll assign the withdrawal side of the transfer to a bucket, reducing the amount of money you have to spend (Transfer Rule 1)
11. When you retire and are ready to start paying yourself from your Retirement Account, you'll transfer money from Retirement Account to Checking, assigning the deposit side of the transfer to a bucket.  This will increase the amount of money that you have to spend (Transfer Rule 3)
12. When you increase your Home Equity Line of Credit balance in order to pay for an emergency, you'll create a transfer from your HELOC to your Checking Account.  This effectively increases the amount of money you have to spend, and you'll assign the deposit side of the transfer to a bucket (Transfer Rule 3)

I hope this helps clarify things.

Grace to you,

Blair Watkinson

[HenrikWL]

Wow... I can't tell you how much I appreciate you putting all that
effort into such an excellent and informative post. Things are, very
much, crystal clear now.

Your setup is conceptually similar to what I was trying to achieve,
but I got confused by all the buckets and I most certainly violated
some of the rules you stipulated. I know for certain that I on at
least one occasion transferred money from "below the line" to "above
the line" without assigning the transaction to any buckets. Too late
to fix now, what with all the juggling I performed in order to align
things again (I wouldn't know where to even begin to undo it all), but
now that everything's aligned I'll most definitely keep this in mind
going forward.

So, once again, thanks! :D

> ...
>
> les mer »

[The Watkinson Family]

No problem... another way to summarize all the rules would be:

Always assign deposits/withdrawals in accounts that are above the line
to a bucket. Never assign deposits/withdrawals in accounts that are
below the line to buckets.

This general rule would apply whether the transaction is a part of a
transfer or simple debit or credit.

Grace to you,
Blair Watkinson