[moneydance] still working on setting up my MD accounts and have a few questions...tnx

[Edward Reid]

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At 17:39 07/04/07 -0400, Yehudit Winiarz wrote:
>1. Is a CD an asset, investment, or bank account? Where do you enter
>the interest rate for such an account?

I don't think there's anything automatic, though I'm not sure. I would just 
treat it as a savings account (bank) and enter interest when I received a 
statement. That's how I handle interest-bearing savings accounts.

>2. If I want to have an expense for my savings (ie. I would put $X.XX
>in from every paycheck or month) and I would want it to show up in my
>budget, be deducted from my income and be credited to my savings
>account. How can I accomplish this?

Budgets are for transfers in and out of your ownership. When you transfer 
to a savings account, you still own the funds, so it's not represented in 
budgets.

The above is a statement of the current MD feature. There's been a lot of 
discussion about this here (A LOT) and you may find suggestions in the 
archives. Clearly some kind of cash flow projection is needed that's not 
strictly budgeting.

>3. Do I need to mark all of my main accounts (checking, savings,
>investments, loans, etc.) as children of the root account? What
>happens if I don't?

They have to be the child of some account. You can leave them all children 
of root -- most of mine are. Grouping them under some other account 
provides some additional features, such as showing the sum of the grouped 
accounts on the home screen and being able to reconcile them as a single 
account. (The latter applies when they are really one account at the bank 
and you maintain separate accounts for your own bookkeeping purposes.)

>4. I have a student loan I have been working on paying off. When I
>set it up, is the principal, the total outstanding, or just the
>principal? If just the principal, how does MD know how much interest
>has accrued before July 1st? Which type of account is the 'interest
>account' field for? What is an "Escrow Account", and is it applicable
>here?

IIRC, setting up a partly paid loan in MD is nearly impossible. "Total 
outstanding" is not a standard term. You want to set up the principal as 
the current payoff balance -- what you'd pay if you walked into the lender 
today and paid it off -- and the number of payments as the number of 
payments remaining.

I think that "interest account" is now labelled "interest category". It's 
just the category you want the interest charged to.

"Escrow account" applies to mortgages. Mortgage lenders usually have you 
pay monthly amounts, over and above principal and interest, to cover 
insurance and taxes. (PITI is the standard acronym for the total payment.) 
This is to protect the lender, though many borrowers find it convenient 
because they don't have to bother with the extra bills. Some excess balance 
builds up, and this is your escrow account, from which the tax and 
insurance bills are paid.

To reconcile that account, you have to not only set up part of your 
mortgage payment to be transferred to the mortgage account, but also enter 
the tax and insurance payments when the lender notifies you of them. If you 
don't want to bother with that -- and have no need to track the separate 
expenses paid from escrow -- then you can probably just put some 
miscellaneous expense category for the escrow. Your lender will provide an 
end-of-year statement detailing the payments, which you can use if needed 
for income tax -- in the US the property tax is usually deductible. 
(Currently I'm sitting on the fence. I'm maintaining the escrow account in 
MD ... and telling myself that someday I'll go back and enter those five 
years of payments. And meanwhile using the EOY statements for tax purposes.)

(As an aside, escrow accounts were once badly abused by many lenders, who 
forced borrowers to keep large amounts in escrow and didn't pay interest. 
Most places now regulate the amounts and interest rates on escrow accounts 
to avoid these abuses.)

But since you're not talking about a mortgage loan, you can probably ignore 
the escrow.

Edward
-- 
Art works by Melynda Reid: http://paleo.org