0221-02 More Credit Card Buffer Info

 

                    TO: Interested Christians                                                                                         FROM: Jim Bramer, Retired CPA. 
                                                                                                                                                             FILE: 0421-02/01

                    RE: Envelopes Credit Card Buffer Bookkeeping                                                Originated:  September 2004                                           

        Below is a hypothetical Online Email thread (THRD) between any one of the following eEnvelope participates: John (Husband or non married male),  or Mary (Wife or unmarried female) and JimCPA@BCIDOT.ORG   Click here and go to List of threads (THRDs) at www.bcidot.org

 

FR: Mary

        Jim,  please explain what you mean when you talk BuyNoworPayLater Enabler matters or about Credit Card Buffer bookkeeping. From what I have read out there on  0400  it sounds kinda tricky. 

 FR: Jim Bramer, Retired CPA. 

        I trust you understand, Mary, that this whole subject, of course, relates to the use of the Envelopes System to help you control your personal spending.  Or you place your money upon receipt into Envelopes that represent different spending areas of your life and you spend therefrom until the money in that Envelope is gone. Once the Envelope is empty, then you obviously have reached your spending limit, etc.

FR: Mary:

        I understand this and I am successfully using the Envelope Spending Control System  , but I am not yet buying things with Credit Cards since I do not understand this whole BuyNoworPayLater Enabler, or Buffer matter.

FR:  Jim B.

        OK --- I can understand that;  the BuyNoworPayLater Enabler, or Buffer,  matter has to do with the use of Credit Cards, but it also includes the use of other plastic mechanisms used to buy things at various department stores, or it applies to all ways where you "buy now and pay later."  Accordingly, I will henceforth use the generic term "Charge Accounts". 
        Whenever you "buy now and pay later"  there needs to be some way to get the equivalent of money into those Envelopes in order to control this type of spending plus all of the other ways of spending money via the Envelope spending limits method.  

FR: Mary:

        I believe I grasp that -- am I saying this right? 
        "Buying things using Charge Accounts MUST be controlled.  or it is critical for us to control our Charge Account spending via this overall  Envelope spending limits method.  Or since I am spending money that I do not have, then this is a way to put money equivalent into the applicable virtual Envelopes  for such control purposes."

FR:  Jim B.

        Right on - sounds like you got the idea!! 
        To get this Buffer system started, you would first study the use of your Charge Accounts during the past 3 months as you get a feel for how you have used them in the past to "buy now and pay off a month later" .  Then you set up a Buffer asset account for the estimated monthly amount and then distribute estimated monthly amounts into the applicable virtual Envelopes. 

FR: Mary:

        I think I'm with you ---- but what happens when I have emptied my Spending Control Envelopes --- especially when I have spent from this Buffer source?  How do I get money into the Envelopes for future controlled spending?  Do I have to go through this  Buffer  process again ?

FR:  Jim B.

        No - you set up the Buffer only once, but it might require 'tweaking' to comply with the degree to which you pay off and use your Charge Accounts in the future. .
        Let's say that you have gone through the Buffer process as of the first of August.  You have done your spending during the month of August and you have been able to pretty much stay within your Envelope balances. Plus you have timely paid off all of your Charge Accounts balances.
        But you have discovered that you have found it necessary to kinda borrow from one Envelope and some have more than what was needed, so you transfer available Envelope balances around so that none are now over spent. 
        As you get money during August you place such receipts within applicable Envelopes as you plan in advance as to how you are going to spend your money using all methods (Charge Accts, checks, ATMs, debit cards, etc).

FR: Mary:

        I think I understand .....  do you have any samples?

FR:  Jim B.

        Yes ---  we highly recommend that you go through the applicable tutorial process below

        Via QuickBooks --    Please go to   0479  and go through this self help tutorial process.
        If you are using  Crown Ministries Money Counts, Quicken or some other software, please contact us at 0479@bcidot.org and we will share some info about them.      

FR:  Mary:

        Let's suppose that I want to write a check periodically, like weekly, and pay for my "buy now and pay off a month later" Credit Card purchases during the month (or as you say, my Charge Accounts)?  What are the merits in doing this?

FR:  Jim B

        Some prefer to do something along these lines.  Please go to  0410  where we discuss this process in some detail.

Fr:  Mary:

        I guess I should of asked this earlier -----  what are the real advantages is using Charge Accounts.... or why bother?

FR: Jim B

        It is prudent stewardship to buy very little using GREEN STUFF.  Why: because it can easily be stolen, it is not conducive to good buying record keeping; or why write a check every time you make a purchase.  For more details, please read the link contents found within  4040  on this topic. 
        Let me know at  0479@bcidot.org  if you have any questions or comments on any of this.

 FINIS:

               Please Click Here for a list of eEnvelope writings on www.bcidot.org.  Feel free to email me if you have any comments or questions about any of these matters.  Remember -- It is my desire to encourage you in your Christian walk and to be "Your Servant for Jesus Sake:" Thank you.   II Corinthians 4:5B.   This was updated last on: June 06, 2010   

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