Spending plan and split transactions: a duplication issue

Hi Ursula. There is only one transaction. It is a bank deduction of, let's say, $1000, that is categorized using the split transaction function: $700 go to Interest and $300 become a Transfer to the Mortgage account (so that the debt decreases by $300). Yes, I would select one or the other in the spending plan if there was a way to do it with split transactions, but since I want to track the money out side, there is no way to tell Simplifi to track the expense and not the transfer. If I could, it would work but through a bug, because the spending plan should only recognize as a bill the portion of the split transaction that is effectively assigned to the Interest expense. I believe something like this can be done in Quicken. Quicken would even calculate each payment interest and amortization over time when you define an interest rate and number of payments.

@SRC54 Hey Steve. Thanks for answering. I'll implement the workaround for now.

I hadn't noticed the other "fun thing" you explain, I just checked other split transactions and it happens as you describe. I believe this is a big issue, because it can lead to significant errors when using the spending plan as a decision making tool. And it can be overlooked and escape detection unless we are manually adding things to check. Maybe split transactions shouldn't be allowed until this is fixed because there is no warning this can happen. And, as you pointed out, it can be an issue with some of the most basic and relevant transactions we deal with: a net paycheck that already has automatic deductions of insurances, taxes and retirement investments, or liabilities such as mortgages, which tend to be important.

I'll contact support so that this is pointed out by more people. Thanks.

@Coach Natalie

Regarding the posts you suggested:
1. Amounts displayed on transaction lists: yes, I've seen this, but it is different. When I study the bubbles that appear in the "Other spending" section and there are some split transactions, the full amount is shown, but only the part assigned to the category is added. It's confusing but I see no sum errors.
2. Ability to ignore part of a split transaction: yes I believe this is part of the issue and a nice to have. When you have a mixed expense & transfer split, sometimes you want to ignore the transfer in the spending plan, but consider the expense. It would be useful in that case. In my case it would become a workaround that shouldn't work, haha. If I could ignore the transfer part (which I don't want to ignore) the total would be considered once (in the bills section). That would be good for the totals, but it is still wrong, since it would still be considering the total amount as a bill. I believe the current issue is that in the view I show in the picture, splits are not added correctly for the Bills, Suscriptions and Transfer sections. As you can see, I had to set up a Custom transfers total, because the split bill/expense in question was being deducted twice.

3. Link Part of a Split Transaction to a Recurring Bill: Yes please! And not only this, allow split recurring bills. And to nail it all, let us create a rule that recognizes a Payee and then categorizes the transaction using a split rule (like, x amount or x percentage goes to this category and the rest to that other one). In Quicken, when I created a Liability account it would let me create a series of recurring bills that would show the same total monthly payment, but would already have a split defined using amortization rules. That was neat!
4. #TipTuesday: Using splits in the Spending Plan: great article BTW! This almost gets to the issue I found. All of that works as it is stated, and I think everything works ok until a part of the split goes to Transfers. That's where something is broken for me. Could you try and reproduce the error I'm seeing?
a. Create a recurring monthly bill for $1200 that is categorized as any trackable expense (let's say Interest)
b. Manually enter this month's transaction for $1200, categorized as that same expense.
c. If they are not linked automatically, link them. The transaction should appear as paid in the spending plan for this month.
d. Now go to the transaction and split it. Half will still be Interest, and the other half will be a transfer to a specific account. Make sure that this transaction is not ignored in Spending Plans or Reports.
e. Now, go back to this month's spending plan and manually check the totals for Bills and for Transactions. If you get the same issue that I get, the bills total will include the full transaction total and the Transfers total will include it again. Your "Income after Bills and Savings" will show an error of -$1200 and it will show also at the "Left at the End of Month" This is specific to this section, I don't see the problem in reports, where splits are managed accurately, or in the "Other Spending Section." Although, according to @SRC54 the issue persists with split transactions that have one part in the Planned Spedning and another part landing in the Other spending sections.
I'll create a dummy account to show this.

There's an issue with split transactions in the Spending Plan that given certain user actions can create serious errors in the reported distribution of expenses and transfers, as well as the totals for the month.

Look at these values? Do you see something wrong? There is only one (split) transaction for $1200.

I created a dummy account with just one transaction to show the issue. Here are the steps I followed:

1. Create a new Simplifi account and add two accounts, a Bank account with $10,000 and a Mortgage account for only $5000.

2. Create a recurring monthly bill for $1200 that is categorized as Loan Interest

3. Manually enter this month's transaction for $1200, categorized as that same expense.

4. They are not linked automatically, so link them. The transaction should appear as paid in the spending plan for this month.

So, the spending plan for this month only shows a bill for $1200. Since there is no income, this was a really bad month.

5. Now go back to the transaction and split it. Half will still be Interest, and the other half will be a transfer to the Mortgage account. This is how Liabilities should be handled when treated as accounts. 

So, as you can see here, the Mortgage liability is reduced by the amortization amount ($600) and the bank account by the total transaction amount. The rest is Interest expense.

6. So far so good. Now, make sure that this transaction is not ignored in Spending Plans or Reports. Why? Because I want to be sure that I consider the total transfer for the payment each month, even though a part of it is, deep down, just a reduction in an amount owed. Simplifi by default marks the full transaction as ignored the moment I add a Transfer, which in itself can be problematic if you want to track at least the the expense part. So uncheck the exclusion.

7. Now, go back to this month's spending plan and manually check the totals for Bills and for Transactions. Look at the values to the left and to the right. The only one correct is the one down to the right.

So, in the bills section, it should be-$600 and in the transfers section, it should be -$600. So that the total below to the right is -$1200 (the only one that checks out). In the left pane you can see the amount is duplicated (-$2400) all the way to the available amount.
So, this is a bug, and one that may go unnoticed.

Hi @Coach Kristina .

The credit (mortgage) account is set as a liability. Because you owe the money to the bank. There's also an asset, of course, the house in itself, that now is yours. I didn't include the asset in the example, because it is not necessary to explain the issue. The asset would only change if sold, if appreciated over time or because of depreciation. Both the asset and the liability should exist until the credit is fully paid. The liability decreases each month. So, as you make each monthly payment, your net worth increases. You own more of the house, so to speak.

Strictly speaking, every time you are making a liability monthly payment, a portion of that payment is an expense (the interest, or the cost of money you owe over that month) and the rest is the actual payback of the money you initially received (called amortization). Amortization is not an expense and is not subject to taxes in general. It is literally a transfer, a payment of money owed. Regarding the 1/2, It's not half and half in reality, that's just something I did to illustrate the issue. Unless you sign up for custom types of credits (such as the ballon payment kind), usually, each month's interest is aprox. the monthly interest rate times the amount you still owe. The rest is amortization. You can't apply the full monthly payment to the mortgage because that would imply there is no interest (Unless you use the future value of the money to create the liability but that would yield an inaccurate current net worth).

So, to give you an example, let's say I get a loan of $100,000 at an annual interest rate of 5% that I should pay in 120 months. Using Excel's PMT function, I get a monthly payment of $1,060.66.
So, the first month I owe $100,000. After one month the interest I owe is $100,000x(0.05/12)=$416.67. So when I make my first payment of $1,060.66, the bank will take $416.67 and apply it as interest paid, and the rest will reduce the amount owed (1060.66-416.67=643.99). So 100,000-643.99=$99,356.01 → that's how much I owe after the first payment. Next month the interest will be $99,356.01x(0.05/12)=$413.98, and the amortization 1060.66-413.98=646.67, and I will owe 99,356.01-646.67=$98,709.34, and so on until it is paid after 120 months. (See the attached spreadsheet with the full amortization table). This is what most banks do under the hood. Sometimes other fees are added, and of course, there are also insurances, but let's keep it simple.

The root cause I see is that Simplifi treats the full transaction as both a bill and as a transfer. In coding terms it is as if there are two separate For-Next loops, one for bills, another one for transfers that both look for transactions that meet the criteria to be added, and since this transaction is seen as both a bill and a transfer, adds up in both sections. This will be solved, I think, if in the case of Split Transactions, Simplifi examined the subtotals, adding only the part that applies.

Yes, what you asked at the end is correct.