Budgeting prototype

[Matthew Vanecek]

On Sun, 2003-09-07 at 17:48, Phil wrote:
> On 07 Sep 2003 17:12:31 -0400, Derek Atkins <warlord at MIT.EDU> wrote:
> 
> > I think what we're really saying here is that we're talking about
> > budgeting the _delta_ within a budget period.  For example, if I
> > budget $250 for food, what I'm really saying is that "the sum of all
> > 'food' accounts would increase by $250 over the budget period".
> > Similarly, if I budget $1250 for my mortgage, what I'm really saying
> > is that "the sum of my mortgage liability, tax-expense, and escrow
> > accounts are going to change by $1250 over that period".
> >
> > So, I see no reason to really look at Income/Expense and
> > Asset/Liability accounts any differently if you consider budgeting in
> > the form of deltas (change over time).
> >
> > Is this an accurate summary?
> >
> > -derek
> 
> Maybe it doesn't matter - but just incase here's my 2 bits:
> 
> I budget my income and expenses.  I don't budget my balance sheet accounts. 
>  If I make or better my budget, the asset and liability accounts will take 
> care of themselves.  If I'll be able to do that with what's being discussed 
> then I won't add anymore unnecessary babble and I'll keep quiet :)
> 
> It's just that I keep picturing someone budgeting $2000 for cash and $2000 
> for salary and then expecting to see $4000 by month end ;-)
> 

You should be able to budget accounts from which money flows and
accounts to which money flows.  I have a savings account.  I budget $X
to go to my savings account each payday.  I have a liability--my
mortgage + assctd. expenses.  I budget a chunk to pay that
liability+assctd. each month.  I have a liability--my car payment (prin.
+ int.).  I budget a chunk each payday to pay my car payment.  Notice
that only the assctd. items and the car interest are expenses.  The rest
is liability and assets. (loans & savings).

Under your plan, then, of only budgeting income and expense accounts,
would I be able to budget for my liability pay down or for my savings
goal (inc. stock purchase, 401K, savings account, etc.)?

The key is in not budgeting cash flow, per se.  The key is budgeting
items to which you contribute cash (e.g., savings, stocks, food), and
items from which you derive cash (e.g., salary, investment income). 
Naturally I would not budget my checking account as a cash recipient,
since at the end of the period my checking balance should be $0.  But
that's because I'm studious about my finances and because I can apply a
little common sense to the process.  The system will naturally allow you
to enter $2000 income, and $2000 checking, for $4000 cash to spend.  But
the, so will a spreadsheet.  Any application can be misused.  Should we
then disallow the use of the application, so that users won't make
mistakes with it?


-- 
Matthew Vanecek
perl -e 'print $i=pack(c5,(41*2),sqrt(7056),(unpack(c,H)-2),oct(115),10);'
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