Thoughts about applying depreciation to personal finance

[Zoran Zaric]

Hello everybody,

I thought about applying depreciation to devices in personal finance and wrote this draft of a blog post: https://gist.github.com/zoranzaric/a3b951848d85460df105ed19a3049e77 <https://gist.github.com/zoranzaric/a3b951848d85460df105ed19a3049e77>

What are your thoughts? Am I using accounting terms correct?

Any feedback is appreciated!

Thanks,
Zoran

[Francesco Ariis]

Hello Zoran,
what a nice article!

Post by Zoran Zaric
Hello everybody,
I thought about applying depreciation to devices in personal finance
and wrote this draft of a blog post: [...]
What are your thoughts? Am I using accounting terms correct?

Like yourself, I am a big fan of using market prices instead of linear
depreciation for consumer electronics, as the resale-value if often
quite unpredictable (and do not get me started about musical
instruments!).
I perform an assessment every year or every semester rather than monthly.

As for saving, every month I have journal entries like this one:

2018/07/01 Begin of month
Expenses:Electronics 30€
Liabilities:Reserves:Electronics

2018/08/01 Begin of month
Expenses:Electronics 30€
Liabilities:Reserves:Electronics

When I need to buy something I will input:

2018/08/20 Dragonbox Pyra
Assets:Cash -40€
Liabilities:Reserves:Electronics

This way I:
- do not have "spikes" in monthly expenses reports, as big expenses
are preemptively split on previous months
- I have a clear monetary representation of what I am allowed to spend
on a particular set of consumer goods. This invites less impulsive
buying choices.

Good blog post, I am sure many folks will find it useful
-F

[Robert Nielsen]

I can't answer in terms of if you are using accounting terms correctly as I don't have that expertise. However, I did find your article useful to read and reflect on. It even motivated me to do some reading in Wikipedia concerning depreciation!

It's often helpful to me to see how others are using hledger (or similar) to solve their needs. Thank you for writing this.

Rob Nielsen