Interpreting Spending Plan Amount Left

Flopbot
Flopbot Superuser ✭✭✭✭✭
edited July 11 in Using the Spending Plan
@Jedp

I have a question for you if you have the time.  I’m trying to understand the Spending Plan and how best to approach it.  You said awhile back in another post that you set down with your wife monthly to go over the Spending Plan together and that this is a good tool to guide your discussions.

Lets say that you found this Spending Plan…don’t laugh…



Most of our spending is paid on a CC that get paid off each month.  That includes many/most of the things that appear under Bills and Subscriptions.  Right now, the CC payment is scheduled under Bills with a recurring, default $1 transaction amount.  When I get the statement each month, I change the recurring transaction under Bills from $1 to the outstanding amount of $_____.

Question A:  Do you have a similar situation?

Question B:  If so, how do you handle your recurring CC transaction under Bills?  What amount do you use as default?

Question C:  If so, how do you view the (ex. $2,106.72) amount displayed by the Spending Plan when you discuss it with your wife?  Is it essentially the total amount you have to spend on the CC?

Thank you in advance for any wisdom!
Chris
Quicken Desktop user since 2014.
Brand new to Simplifi in 2021.
Tagged:

Best Answers

  • DannyB
    DannyB Superuser ✭✭✭✭
    edited May 23 Answer ✓
    I know this is addressed to @Jedp and I’m certain you will hear from him. But for what it’s worth here is how this works for me:

    Question A: My situation is similar.  93% of our expenses are paid with our credit cards.  When a charge is recorded by our cc bank and it shows up in Simplifi it is categorized appropriately and charged to the appropriate bill, subscription or planned spending category and as far as Simplifi is concerned that’s that.

    Question B: I don’t have a recurring transaction set up for my credit cards. For all intents and purposes our credit cards function as checking accounts with one significant difference, they are interest paying, i.e. 1%-4% rewards on all purchases (compared to the .001% our regular checking account pays).  A payment to my cc is recorded in Simplifi as a transfer between accounts, usually from one of our checking accounts to the cc account, and Simplifi appropriately does not see transfers as expenses.  For this reason I don’t include my cc payments in my spending plan since they are not separate expenses.  I don’t worry about having the funds to cover my cc payments since that money is sitting in our checking or savings accounts and is simply transferred to the bank that holds the cc at an appropriate time.

    Question C:  That number you are looking at, “Income after bills and savings,” (in your example $2106.72) is what’s left for you to budget for “Planned Spending,”  or it is money left over after you have set the amounts in all the above to do with as you wish (other spending).  The money you need to pay off your cc is all the money you have already designated for all your recurring bills, subscriptions and all your budgeted planned spending that is charged to your cc.  Again, think of your cc accounts as high yield interest bearing checking accounts and when you charge an expense to a cc it is like writing a check drawn on your checking account.  As long as you stick to your Spending Plan you will have what you need to pay off your cc every month.

    When my wife and I review or budget and expenditures we don’t look at the cc as an additional expense on top of our budgeted expenses for the reasons shared above.  The one number I do look at and wonder about is the amount that showsup in our Spending Plan as “Available.” As far as I can tell that is money that is surplus after all other budgeted spending and savings are accounted for.  My goal each month is to get that number to zero meaning that all our inflow is accounted for in a positive way and nothing is just floating around.

    Disclaimer-I’m not an accountant :smile: but this is how I use Simplifi to manage our budget… so far.
    I look forward to @Jedp ‘s reply.
    Danny 
    Simplifi user since 01/22
     Budget: a mathematical confirmation of your suspicions.” ~A.A. Latimer
  • Jedp
    Jedp Superuser ✭✭✭✭
    Answer ✓
    Hi @DannyB,

    My "work-around" is to pay off each credit card as soon as they have a balance, which to be honest is way more work than most people would want to do. I think the real answer until there is an option added to "include credit card balances in available cash flow" is to leverage the pie chart in the spending plan to avoid going over. If you've set up a reasonable budget with some buffer for extra spending you are not planning for the month. On the positive side, I can travel pretty much whenever I want for free lol! 

    @Flopbot not laughing but jealous! Great job with your surplus fundage! I have the same situation in that I use my credit card to pay for everything for the miles. I'm a big believer that if you set your spending plan correctly and account for what I call "one-off" spending, for example a big expense that you don't normally have, you can manage your month without having to have a balance on your credit cards.

    I do think to make the projected cash-flow accurate and useful for people like us we need (one day - I know y'all are busy ;)) to have an option to include the credit card balances in the cash flow. For example, if my credit card balance is $1,000 and my cash flow is projecting only $500, I am in trouble. I can't pay off my balance and still have a few bucks left for a Starbucks coffee. But, what I see shows I have the $500 so mentally I feel ok. 

    I think at the end of the day in the current state the pie chart in the spending plan is what we have to look at because once expenses, bills, income and savings are accounted for and you don't have a big surprise expense you should be ok on a monthly basis.

    Best,

    Jed

Answers

  • Flopbot
    Flopbot Superuser ✭✭✭✭✭
    Thank you so much @DannyB for jumping in!

    I'm going to come back and read through your post a few more times just to make sure I didn't miss anything, so don't be surprised if I ping you with a few more questions at some point in the future.  I really appreciate seeing how others are setting up their Simplifi accounts; lets me know if I'm on the right track or not.

    P.S. Looking forward to seeing you around in the Community as a Superuser!
    Chris
    Quicken Desktop user since 2014.
    Brand new to Simplifi in 2021.
  • Flopbot
    Flopbot Superuser ✭✭✭✭✭
    Hey @DannyB & @Jedp,

    I read through both your posts again...there's A LOT of valuable insight in there!  I'll be reading through them a couple more times to see what I missed!  Thank you both so much for taking the time to help!

    One problem I see with my current setup of the Spending Plan is that I have $0 set as the default amount for my Gas, Electric, and Water/Trash bills.  Each of these is typically $100-$150+ so it makes my "Income After Bills & Savings" amount ($2,106.72 in the screenshot above) look really great at the beginning of the month, but then it starts dropping as I enter the true amounts from the actual bills.  As the month goes on, the "Income After Bills & Savings" amount continues to drop.

    What do the both of you put as your default amount for bills like these that are not fixed monthly amounts?
    1. $0?
    2. The 6 or 12 month average?
    3. Some crazy high amount that it's likely never going to exceed?
    Thank you both for your time!  It's fun learning Simplifi from you!
    Chris
    Quicken Desktop user since 2014.
    Brand new to Simplifi in 2021.
  • DannyB
    DannyB Superuser ✭✭✭✭
    Hey Chris,

    I have an amount set for each of those recurring expenses.  Whether or not you set an amount you still know those expenses are coming and have to leave money in "Available" to cover them.  Setting an amount makes more sense for me as it gives me a better sense of what income is really available after bills, subscriptions and savings contributions are accounted for.

    We have a solar system so our monthly electric cost is a fixed rate (the cost of being connected to the grid) and is easy to budget for.

    City utilities is a fixed monthly amount and covers waste disposal, sewer and a few other city provided conveniences.

    Natural gas and water are my two variables.  Right now I use a 12 month average for default amounts.  To be more accurate I could look up my payments for the past 12 months, add a note to the recurring payment with each month/amount recorded then use that note to update the amount for each month.  Using an average for each month would be better if there was a roll over option since I would accumulate a surplus during the low usage months and use that surplus in the high use months while knowing month to month how much I need to set aside for the expense.
    Danny 
    Simplifi user since 01/22
     Budget: a mathematical confirmation of your suspicions.” ~A.A. Latimer
  • DannyB
    DannyB Superuser ✭✭✭✭
    Hi Jed, right now I’ experimenting with two recurring 
    Danny 
    Simplifi user since 01/22
     Budget: a mathematical confirmation of your suspicions.” ~A.A. Latimer
This discussion has been closed.