Including debt payments with expenses proved to be the top requested improvement in a spring survey of advisors planning with Silver. This improvement, along with additional changes requested by advisors planning with Silver, is available now, making Silver even easier for advisors to develop and deliver big-picture financial planning to clients.
Rather than making a rule change for all plans, which would impact client planning projections, an option has been added allowing advisors to include debt payments in expenses per plan. The option is controlled by a new checkbox located next to the debt payment information.
Prior to having this option, debt payments were included as part of the clients overall living expenses, entered in the Expenses section of the data input. The budget worksheet includes line items for loan payments.
When using the new option to include debt payments with expenses, make sure the payment expenses of are not included in the living expense entry to prevent overstating client expenses.
Online Edition: The checkbox to include debt payment with expenses is the first item under the “Debts” section of the data input in the online edition.
Desktop Edition: The checkbox to include debt payment with expenses is the last item under the “Additional Assets/Debts” section of the data input in the desktop edition.
Reports – Debt Payments Included with Expenses
When debt payments are included in expenses, the payment automatically stops when the balance is paid, reducing the client’s expenses. The duration of the loan is determined by the program, using the balance, interest rate, and current monthly payment.
Debt payments display in the “Less Living Expenses & Taxes” column on the Cash Flow Illustration. Debt payments are included on the Cash Flow Summary graph in the “Expenses” line. When debt payments continue into retirement, the payments are included in the “Retirement Spending Needs” column of the Retirement Capital Analysis.
Below are the Cash Flow report pages for an example case with debt payment information provided, and the box checked to include debt payments with expenses.
To provide transparency to the debt payments, no regular living expenses (or other data items) are entered in this case. The expense amount decreases, dropping payments as the corresponding loans are paid off.
Reports – Debt Payments Not Included with Expenses
When the option to add debt payments to expenses is not checked, the reports will work the same way as before this option was available. The projections will not be impacted by the debt payment information, with the exception of the debt-freedom reports. Any debt payments will need to be included with personal expenses.