budgeting

[Josh Sled]

On Sun, Sep 30, 2001 at 05:06:00PM -0700, nigel_gnucash-devel@unos.net wrote:

| FWIW, I don't personally care to know *where* my budgeted money is - I
| have to manage my *physical* account balances separately from my
| *logical* bucket system anyway.

I think some people will care where it is, especially as it influences
how accessible it is.

I think for medium-to-long-term savings goals, it makes sense to take
advantage of accounts available, such as moving savings out of my BofA
savings account [at like 1% or whatever it is] and into a money-market
[at like 4%]... or into a mutual fund which expects to get 10% over time...

| the grocery store and charge it to my credit card. Now there's $435 left
| in my grocery bucket...
|
| ... but no physical transfer of funds has taken place, nor is one likely
| to take place for some time.  

Well, there's a change in your available credit, which may be interesting
for other calculations.  As well, there's the change in the 'used' amount
of the budgeting category/bucket.

| This will generate two *physical* transactions (Savings -> Checking,
| Checking -> Credit Card) which, in turn, won't affect the buckets at
| all.

Well, the Savings -> Checking doesn't, but the Checking -> Credit Card
does affect the available credit.  If the bucket has the two values
"allocated" and "used", then yes: the bucket is only affected when
the charge is made.  If the bucket has the three values "allocated",
"used:held" and "used:disbursed", then the charge moves $65 from
"allocated" to "used:held", and the Checking -> Credit Card xfer moves
it from "used:held" to "used:disbursed".

If we can do more interesting analysis with those three distinctions,
we should have them.

| So there doesn't seem to me to be a natural mapping between budgets and
| physical accounts.

Certainly.  There's a set of mappings, and none of them natural... otherwise
we wouldn't be talking about creating a tool to make our lives easier. :)

| But this is really going to have to be managed by the user.  Short of an
| expert system, I don't see a really good way of implementing this.

I don't think that it's _that_ hairy, but I acknowledge it may be so...
I'm just throwing the idea out.  If we find it's too hard, then we don't
do it... but I think we should think about it, because if we can pull it
off, it's a tremendously useful thing.

| However, if the budget subsystem is doing it's job, then I, as the user,
| should know *exactly* how much money is in my "Savings" budget,

Yes... and you should know that you're contributing $X/(week/mo/quarter)
to this savings goal because that's what will get the goal satisfied in
the relevant amount of time.

|  which
| will allow me to shift my physical monies between accounts as I see fit.

If you desire to do so, you should be able to.  However, my preference would
be "tell me what account to put the money in to maximize utility... and
better yet, schedule the transfers for me."  Maybe the former is in phase
II, and the latter in phase III... *shrug*.

[ As you say in the other mail, we have differing views of how the user
  and the budgeting system interact :) ]

| So, I spend $500/month on groceries, but
| that $500 is actually sitting in my savings account until the bill is
| due, so my grocery bucket generates $0.x of interest, which I will
| probably apply to the "savings" bucket.  I don't see a reason to re-assign
| that special income to the "grocery" bucket.

If it's really $0.x, then yes...  But $500 @ 5% is $25, which is a
tangible amount.  And, in the progression of saving towards a large goal,
the values involved may become less and less trivial over time.

If I were smart, I'd be saving $1,000/mo right now.  After 10 months,
that's $10,000; in a 5% money market, that's $500/mo interest income...
which is half of the $1000/mo contributions ...  there are two relevant
options, here:

1. Adjust payments to include interest income.
2. Don't, and allocate the interest income to some other purpose.

I want this system to help me make the right decision in that case.
The right decision is based on total income, other savings/financial goals
[for instance, I may want to let the interest income go toward the savings
goal after October, because a) it's already in the account and b) my
"normal" income will be going towards Christmas gifts].

...jsled