Mortgage doesn't show up in budget


C

cloch

Hello. Although I have tried my best to find the answer to my question in the
FAQ and on the web I still cannot find it so I hope that you can answer it
here.

We just bought our first home (4 months ago) and can't seem to get the
mortgage payment to show up in the budget.

We have entered the mortgage into the system as a new mortgage account
(including payment, interest rate, number of payments, etc).

Everything works fine except I can't get the payments to show up in the
budget. I've added every category to the budget that I can think of that the
mortgage might be under.
 
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D

Dick Watson

It's a complex matter.

But first some theory. The mortgage payment has two components (maybe more
if escrowed expenses are involved). The first is a principal
transfer--reducing the amount of cash you have in your left pocket and the
amount of liabilities in your right pocket--the second is an interest
expense component. Budgeting is all about Income and Expenses. Income makes
you richer. Expenses make you poorer. The transfer from one pocket to the
other does not make you richer or poorer. Therefore it isn't normally
something you create a "budget" for. (Since you will hit the number exactly
assuming you don't violate the loan terms, there is nothing to be gained
from setting a budget and tracking performance to it.) The interest is
something that makes you poorer. Therefore, one might think it should be
budgeted. Either way, the principal+interest payment is not something that
you have much discretion to control. Budgeting is generally a more useful
approach to controlling discretionary expenses. (E.g., did I spend more on
movie rentals last month that I really should have?)

Regarding the Loan Payments to Loan Accounts vs. the Budget Planner, Money
works yet another way. (Assuming Advanced Budget and recent versions.) It
**should** reflect the total amount of your monthly obligations for loans in
the DEBT section under Expenses. Do you see such a section in your budget?
(Money doesn't let you modify this--it just adds it for you.)

Your real concern is probably Cash Flow--given your income and expenses and
debt service, is the cash net flowing in or out? Put another way, can you
sustain the expenses given the income and the debt service? For this,
Forecast Cash Flow may be a better tool in the Money arsenal.

This is a long and poor answer. I hope it helps.
 

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