[SPAM] Re: How can I do something like the "Envelope System"

[Dennis Muhlestein]

On Jan 3, 2009, at 12:10 PM, John R. Carter, Sr. wrote:

>
> On Jan 3, 2009, at 11:24 AM, Dennis Muhlestein wrote:
>
>> I guess I'm working on a variation of this where you don't have a  
>> separate account you can use just for your budget.  In this case,  
>> after I deposit money in the checking account, there is no real  
>> liability account to deposit the budget into.  I'm playing around  
>> with putting the budget accounts as a liability sub-account under  
>> the checking account.
>
> Don't tell your accountant you did that. An accountant would never  
> put a Liability account under an Asset account.

I'm not doing this in real life actually.  I was only trying to make  
your method work with my banking situation in a set of test accounts.   
In real life, I'm budgeting for my own purposes and not for a  
business.  I don't have an accountant other than myself.

>
>
>> (If you don't do this, you can't reconcile your account.)  This  
>> works to see the balance of the checking account on the main  
>> accounts page but if you look at the register, it's somewhat messed  
>> up when compared to your bank statement.
>
> I think this should tell you why you shouldn't do it that way.

We agree here.  Again, this was in my test accounts.

>
>
>> Also, when you reconcile your checking account, you have to make  
>> sure you check the "include subaccounts" checkbox.  There could  
>> possibly be quite a number of transactions that aren't on your bank  
>> statement depending on how often you use a separate account  
>> though.  It seems to be working otherwise though.
>
> More evidence that this is the wrong method to use.
>
>> I'm not sure which method I like better so far.  I know which I  
>> make more mistakes with, but that could simply be that I'm used to  
>> the way I did it the 1st time.
>
> Right! Once we get started doing something, even if it's wrong we  
> tend to keep doing what we have become comfortable with.
>
>
>> I do have one issue I haven't solved really though.  I have more  
>> than one checking account.  Sometimes I regularly deposit money in  
>> both.  With the way I set up the virtual budget account, this isn't  
>> a problem since the budgeted cash goes into the virtual budget  
>> account.   With subaccounts, I have to have budget liability  
>> accounts under each checking account but that isn't very practical.
>
> Not practical because of the chart of accounts method you have  
> chosen. All liability accounts go under Liabilities, all asset  
> accounts go under Assets. Don't mix them together.

I agree again.  In my real set of accounts, I haven't mixed any assets/ 
liabilities.  The problem is that without an additional real account  
used explicitly for a budget account, I created a virtual asset  
account to balance the budget against.  This is the problem that needs  
solved still and I don' t know a good way to do it.  I can't to  
transactions from my real bank account to a virtual budget account  
because then my real bank account really won't reconcile.  I don't  
want to go open a real savings account to use for a budget account  
because I currently store my budget money in an equity account earning  
interest but that account is already tracked in GnuCash separately and  
I'd have the same issue with sub-accounts and reconciling if I started  
to use that account as my budget account.

Perhaps the only solution to my situation is to have the budget  
accounts be sub-accounts of my checking account like this (all assets):

Assets:
.Checking
..budget-food
..budget-misc
..budget-spent-money (used when spending on a credit card or something)
Liabilities
  credit card

etc.

This still has the same reconciling problem though.  (I'm actually not  
convinced it's really that much of a problem though.)  Currently, with  
the dummy asset budgeted cash account, I don't have any problems  
reconciling or transferring funds and I don't have any confusing sub- 
accounts.  I only have an additional asset account that isn't  
represented by any real asset is the problem.

-Dennis