Comments on: Since When Is Saving Considered An Expense

By: InRhodeIsland

InRhodeIsland — Mon, 27 Dec 2010 16:42:50 +0000

You can list it as an “expense” if you are trying to track where your money is going at the end of the month. This type of budget can be termed a “zero based” budget. Meaning that every dollar, better yet every penny, has a name. This way you always know where your money has gone -Where you have told your money where to go . So my belief is this: Even though it is not an expense, you should list it as such so that you won’t spend that cashflow throughout the month. If you are going to buy something, you save for it -end result is an expense. If you have an emergency, it’s an expense anyways. Some might get confused because of this and not save at all. THAT IS NOT GOOD! Have an emergency fund in place! Check out Dave Ramsey, pretty good stuff.

By: Jesse Michelsen

Jesse Michelsen — Thu, 29 Oct 2009 05:00:58 +0000

Well, I think you have something here because the way you put it, it’s a bill but without the negative spin that expense has. I agree that it is something you are billing yourself for, or making yourself do, but it’s not an expense like the water bill with a negative, I’m losing this money, feeling.

Way to stir the pot and keep us thinking

By: Lulu

Lulu — Wed, 28 Oct 2009 14:20:33 +0000

I am not sure how those people are thinking but I am in the middle on this one because I consider saving to be a 'bill'. Instead of an expense in the negative way, I treat my savings like a bill that I have to pay. So instead of saving what is left at the end of the month, I 'pay' my savings account (sub account in ING) on a regular basis just like the electric bill or a credit card bill. .-= Lulu´s last blog ..Disconnected: What An Overheard Conversation Taught Me About Finances =-.

By: Jesse Michelsen

Jesse Michelsen — Sat, 24 Oct 2009 23:54:23 +0000

I agree, I think in the case of the self-insurance it should be separated from emergency funds or savings, though I don’t think I would be incredibly strict with it. I would probably include it in my net worth, because in a worst case scenario, emergency fund drained, etc, I would use it.

I’m torn on the mortgage thing. You make a good point that pre-paying and saving impact the balance sheet in the same way, technically. For me, the mortgage takes a back seat to other debt and other savings goals. Once they are complete, then I would push towards paying off the mortgage but until then, I would consider the mortgage spending on low priority debt repayment’ as apposed to consumer debt which is high priority debt.

By: JoeTaxpayer

JoeTaxpayer — Fri, 23 Oct 2009 18:29:45 +0000

It’s not an expense, but for it to count as the “self-insurance” fund, I’d not keep it on the balance sheet, either. People have different takes on this and human nature isn’t going to comply with GAAP principles either.
My own dilemma – do you call pre-paying a mortgage savings or spending? Whether I send that extra $1000 to the bank against the mortgage or send it to a savings account, the balance sheet impact is the same $1000 to the better.