Budgeting - Let's decide what we want!

[Jack McKinney]

Big Brother tells me that Phil wrote:
> >This is even better when you have to pay $900 for your car insurance
> >every six months.  By putting $75 into your car budget every paycheck,
> >then you'll have your $900 after six months.
> 
> You seem to be describing payables, not budgeting.  Every month (or payday) 
> you incur an expense, but instead of crediting cash you credit accounts 
> payable.

    No.  When I get the bill in, I add a transaction:

2004/02/10 2004H1 Auto Insurance Bill
      Expense.Cars                                         $900.00
      Liabilities.Accounts Payable.Acme Insurance         -$900.00

    Then, just before 2/1, my Car subacconut of Cash In Checking should
have $825 in it.  On 2/1, I get paid again, and put another $75 into it,
bringing it up to $900.  I can then send the payment off (due on 2/10)
and credit the Car subaccount of Cash In Checking.
    It has to be this way, because you don't always know how much the bill
is going to be in advance.  For example, the electric bill will vary from
month to month (higher bill with A/C in the summer, etc.).  Suppose it
averages $100.  I can't put $50 each paycheck into L.AP.Joe's Electricity,
because I don't really owe Joe $50.  Instead, I put it into A.CinC.Utilities,
and then there will be $100 in it when the bill is due.  When the bill comes
in, it is only for $73, so I credt L.APl.J's E $73, indiciating that I owe
him $73.  When the bill is due, I pay it out of my utilities budget, leaving
$27 in there.  Over the winter, this excess accumulates, so that I have $300
in that account in the summer, when my bill is around $150/month.  The A/C
will slurp the extra in the budget back down to zero.

> By using payables, you can compare your actual revenue and expense account 
> activity with your budget.  Then, you can tell whether you're in the black 
> or red.  You're right - you can't tell by looking at your cash account 
> balance whether you have money to spend or not.

    "compare" == after the fact.
 
    A lot of people seem to want after the fact budgetting.  I don't
understand it because I can live with it; no one is going to force me to
use it!
    However, providing mechanisms for both is not difficult.  All the
before-the-fact envelope method needs is the ability to present all of the
uncleared transactions at once.   Gnucash does not really provide this in
a useful way.
    Specifically, the only way to use it is to actually use the statement
reconciliation feature with the subaccount checkbox.  I never use this.
Every day I check with my bank online to find cleared transactions.  As
long as Gnucash displays the cleared balance for me, I can reconcile it
by spending five minutes going over my books.
    However, I cannot mark a transaction as cleared until I find it, which
means I have to go through several accounts or use the General Ledger, which
is harder to use to find transactions.
    I'll try to get my web-based accounting system onto my public web site
today to demonstrate my solution to the problem.

-- 
"There is no parameter that makes it impossible        Jack McKinney
     for you to perform still more excellently."       jackmc at lorentz.com
   -Mario Cuomo, on the lack of a clock in baseball    http://www.lorentz.com
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