Using Microsoft Money 2005 to Track a Home's Value or Other Asset

Ask most homeowners what their most valuable asset is, and they'll say their house. But ask them how much equity they have in that house, and you usually get a much less definitive answer — if you get an answer at all. And you would probably get the same response if you ask about other tangible assets, such as art collections, baseball cards, or office equipment. Money can help you peg the value of your assets.

Read on to find out how to track the equity in a house or the value of tangible assets, such as art collections, baseball cards, office equipment, and other property that you can sell.

Setting up an asset or house account

A Money house account and a Money asset account work exactly the same way. Setting them up is easy. Follow these steps to set up a house or asset account:

1. Click the Banking tab to go to the Account List window and click the Add a New Account link under Common Tasks.

2. In the Choose an Account Type window, select the Other option button; then click Next.

You see the first of several windows for setting up new accounts.

3. Select the Asset or Home option and click Next.

You see the Choose Level of Detail window.

4. Tell Money whether you want to simply track the value of the property or asset, or you want to associate the account with a loan or mortgage you are tracking with Money.

If all you want to do is record how the value of the property or asset fluctuates over time, choose the first option; if you want to associate the account with a home or mortgage account so that the principal portion of loan payments counts toward the value of the property or asset, choose the second option.

Tracking the value of the property or asset value: Click the Just Track the Total Value option, enter a name for the Account in the Account Name text box, enter the value of the property or asset, and click the Finish button.For the value, enter its value as of today if you just acquired it or if you don't want to track its growth since the time you acquired it. If you want to track how the asset or property has grown or shrunk in value since you acquired it, enter 0. Later, you can go into the account register and enter dates and values to show how the value of the property or asset has increased or decreased over time.

Associating the property or asset with a mortgage or loan: Click the Track Transactions and Other Details option, and click the Next button. In the ensuing dialog boxes, you are asked to name the account, enter the value of the property or asset, and declare whether you want to associate a loan or mortgage with the property or asset. You can transfer the principal portion of a loan or mortgage payment to an asset or house account. By doing so, you can track how much the value of the asset or the equity in the house increases each time you make a loan or mortgage payment.

• To track value or equity increases this way, click the Yes button when Money asks whether you would like to associate a loan account with the asset or house. When you click the Next button, you see a dialog box for selecting loan accounts. From the drop-down list, select the loan account from which you will transfer the principal portion of the loan payments.

Home equity loans should be associated with a house. When you take out a home equity loan, you use your house as collateral. Even if you use the money from the loan to buy a car or boat, for example, associate the home equity loan with your house, not with the asset you purchased with money from the loan.

Recording changes in the value of an asset or house

After you set up the asset or house account, you can record changes in its value simply by opening the account register and entering amounts in the Decrease or Increase column. However, if you associated the asset or house account with a loan or mortgage account, changes in value are recorded automatically each time you make a loan payment. Follow these steps to record a change in value by hand:

1. Open the register of the house or asset account.

2. Click the New button or the Update Current Value link.

You see the Adjust Account Balance dialog box.

3. In the New Ending Balance text box, enter what the value of the asset or home is as of the date you will enter in the next step.

4. Enter the date of the change in value in the As of Date text box.

5. Categorize the change in value in the Category for Adjustment drop-down list.

For example, you could create an income category called Increase Mkt Value (Increase Market Value) to record an increase in value, or a category called Decrease Mkt Value (Decrease Market Value) to record a decrease in value.

6. Click OK.

In the Decrease or Increase columns of the account register, Money enters the amount by which the asset or home increased or decreased in value.

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