Savings / Regular Assets Discrepancy
I have discovered what appears to be a discrepancy in how ESP handles Savings and thus Regular Assets in the current year.
In my ongoing attempt to model negative current assets and plan for 2009, I have settled on making whatever adjustments are necessary to force a 2008 starting point for Regular Assets equal to my actual number. I figure ESP can take it from there. I have done this by two ways that I think should be equivalent, but get significantly different answers for Regular Assets.
I started by adding a Special Expense for 2008 in an amount that forces the beginning Regular Asset number where I want it. I am happy with the result.
But there is another way to do that, which would be to use the Current Savings tab and make the adjusting entry under "Less new borrowing aside from new mortgages."
To compare these two approaches, I took $10,000 out of Special Expense and put it into "Less new borrowing ..." The results differed by about $10,000 in the 2008 Savings space, which translated to a similar difference in the Regular Assets column from 2008 forward. In other words the recommendations from the two approaches to the same modelling problem don't agree.
A bug, or am I missing something?
Lynn Grubb
RSS
Hi Lynn,
You are missing something. I respond below. best, Larry
In my ongoing attempt to model negative current assets and plan for 2009, I have settled on making whatever adjustments are necessary to force a 2008 starting point for Regular Assets equal to my actual number. I figure ESP can take it from there. I have done this by two ways that I think should be equivalent, but get significantly different answers for Regular Assets.
I started by adding a Special Expense for 2008 in an amount that forces the beginning Regular Asset number where I want it. I am happy with the result.
But there is another way to do that, which would be to use the Current Savings tab and make the adjusting entry under "Less new borrowing aside from new mortgages."
WHAT YOU ENTER FOR CURRENT SAVING DOESN'T CHANGE OUR RECOMMENDATIONS OR CALCULATIONS AT ALL. IT JUST CHANGES WHAT WE INFER TO BE YOUR CURRENT CONSUMPTION.
THE PROGRAM DOESN'T CARE WHAT YOU SAY YOU ARE SAVING WHEN IT COMES TO DECIDING WHAT YOU SHOULD SAVE. IF YOU'VE TAKEN A HIT ON THE STOCK MARKET, YOU NEED TO ENTER A SMALLER VALUE OF INITIAL REGULAR ASSETS. YOU CAN DO WHAT YOU ARE DOING, NAMELY NOT LOWER YOUR REGULAR ASSETS AND PUT IN A SPECIAL EXPENDITURE, BUT THE STRAIGHTFORWARD THING IS JUST TO PUT IN YOU CURRENT REGULAR ASSET VALUE. IF YOU ARE TRYING TO MODEL A POSSIBLE SHORT-RUN CAPITAL LOSS YOU BEYOND WHAT'S OCCURED ALREADY, YOU COULD SIMPLY ENTER A SMALLER INITIAL LEVEL OF REGULAR ASSETS. USING SPECIAL EXPENDITURES IS OK FOR THIS AS WELL. HOPE THIS HELPS. LARRY
To compare these two approaches, I took $10,000 out of Special Expense and put it into "Less new borrowing ..." The results differed by about $10,000 in the 2008 Savings space, which translated to a similar difference in the Regular Assets column from 2008 forward. In other words the recommendations from the two approaches to the same modelling problem don't agree.
Larry,
What I am hearing is that entries in the Current Savings screen have no or little impact on the results, at least as far as determining Regular Assets. That's counter-intuitive to me, but I appreciate the explanation.
I would dearly love to take the "straight forward" approach as suggested and lower my initial Regular Assets to the real number, but ESP won't let me because mine are negative and ESP won't allow it. So I am left with trying to "game" the program, using Special Expenditures, to create a negative starting point for Regular Assets.
ESP allows, in fact can produce, negative Regular Assets for any year, if there is a non-zero borrowing limit. Except for the current year. I just want to tell ESP I am starting out in the hole.
Regards,
Lynn Grubb
Larry,
I took your advice and put the payments for my current liabilities in as Special Expenditures over several years. So my current Regular Assets are now positive because I handled the liabilities separately as you suggested.
There is not much difference in the results. Actually the recommended consumption increased a bit, probably because my interest rates are lower than the rate assumed for assets.
The downside is that the liabilities are not reflected in Regular Assets, which are thus overstated in any year by the remaining amount of the liabilities. I just have to think about recommended borrowing (negative Regular Assets) as being in addition to the current liabilities. Once the liabilities are paid off, the Regular Assets are slightly better than before, probably also reflecting the good relative interest rates.
I presume that, if and when loans are handled, then the liabilities will be reflected in Regular Assets.
Thanks for your help.
Lynn