Hi, Tanja, See my comments below...
> > Hello, > > I got paid again (yay ;) ) so I went to allocate money and it went > very nice and smooth. I do have a question, to clear something up that > I think does not work as I expected. > > A little background info that may or may not clear things up: > I get paid on the 25th, and then pay my mortgage on the 28th. On the > 3rd of the following month I pay the life-insurance linked to my > mortgage and on the 15th I get a monthly refund because I can deduct > part of the interest of my mortgage. I have both the mortgage and > lifeinsurance set up as costs in my 'mortgage' bucket. I have the tax- > return set up as a scheduled deposit on that same bucket. > When I go to allocate my income, MoneyWell seems to ignore the deposit > and shows only the previously allocated money in the 'allocated' > column in the Allocate Income window. MoneyWell doesn't consider deposits throughout the month as allocations. The allocations in your Allocate Money panel are blind deposits--I say "blind" because they do not look at or care what the amount is that is in the bucket. If you said allocate $1000 into Mortgage, it will do so, every month, as long as you have money to do when you allocate money, regardless of how much you have. So, I would reduce your monthly Mortgage allocation by your monthly refund (make you allocation = Mortgage payment - refund). This is your "out of pocket" expense for you mortgage. > This does make sense, but counting my refund as an amount > automatically allocated to the bucket also makes sense (to me, at > least ;) ) > > I could ofcourse have these deposits (I have several) go into some > income bucket and allocate the full amount of my mortgage, but I kinda > see them as a negative spending of the appropriate bucket. You could do this, but it may complicate your document, and may be unnecessary. I think that it's natural to have "negative spending." When I return an item I bought, I don't put the deposit in an income bucket and then move back to the appropriate expense bucket, I just credit the refund back to the appropriate expense bucket directly. Your mortgage refund seems similar to this situation. > Then again, I probably should get into the state where it functions as > a buffer on the bucket. As I still am in the process of paying down > debt, I'm not entirely sure how to handle this so I appreciate > anyone's thoughts on this. I have found that when trying to prioritize buffers, paying down debt, and maximizing savings it is best to tackle one at a time--in the order of most urgent to least. I've been facilitating Dave Ramsey's Financial Peace University at my church for the last few weeks, and he recommends starting with a $1000 buffer. Then pay down your debt using a snowball approach (be aggressive about debt payments/reduction so you can be out of debt as soon as practical). Then work toward savings (3-6 months of expenses). Here's how I'd approach your situation. As we start February, ensure that the amount of money in your Mortgage bucket is the amount of your full Mortgage payment. When you make the Mortgage payment, your bucket will go to 0. Then, you'll receive your refund, and you will have an amount available in the bucket as we go into March. Before allocating the March income, reduce your Mortgage allocation to the difference between the Mortgage payment and the refund. Then when you allocate your income in March, the full amount of your Mortgage payment will again be available to you as you begin the month (the reduced allocation plus the refund forwarded from the previous month). I think it will help to not try and use your Mortgage bucket to create a buffer. Instead, use an Emergency Savings bucket, and grow your buffer in that bucket. You can use the extra money available in your monthly allocation from reducing your Mortgage allocation and put it into Emergency Savings and build your buffer. When you are comfortable with your buffer, don't grow it anymore, but instead apply the extra money toward paying down your debt using a snowball method. When you have no debt left (credit cards, car loans, and in some cases, home equity loans) excluding your mortgage, take the big chunk of money you have (from debt payments, plus what you had from Mortgage) and build your Emergency fund to 3-6 months savings (depending on the volatility of your income and the potential for emergencies on the horizon). After you have a fully-funded emergency fund, invest that money toward retirement, then college, then your house payment. One note about Emergency Savings bucket--I prefer to make it an expense bucket. Some say, and they think more conceptually, that it should be an income bucket. However, making it an expense bucket allows me to automatically allocate money towards it using the Allocate Income tool in MoneyWell. Grace to you, Blair --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups "No Thirst Software User Forum" group. To post to this group, send email to no-thirst-software@googlegroups.com To unsubscribe from this group, send email to no-thirst-software+unsubscr...@googlegroups.com For more options, visit this group at http://groups.google.com/group/no-thirst-software?hl=en -~----------~----~----~----~------~----~------~--~---
