BUG: Lifetime Planner not modeling Debt Reduction Plan Correctly
I was looking at how Quicken’s debt reduction planner (DRP)
works in Lifetime Planner. I’ve not
used DRP before – so no expert here,
albeit looks basic.
The issue…..when a debt reduction plan is setup and turned on in Lifetime Planner, the increased debt reduction payment is incorrectly applied to the original projected payoff time frame, rather than the new payoff time frame. See baseline and updated debt reduction plan results (in LTP), below.
I would have expected to see the new increased debt payment reflected against the new time frame in LTP.
This has the effect, in Lifetime Planner, of a potentially substantial (and incorrect) reduction in LTP ending balance. In my test file, the extra expense resulted in a $283K reduced balance at end of plan. YMMV, but in my example, not unsubstantial.
Am I looking at this wrongly? If not, can the Quicken product team have a look at this aspect of the LTP model?
Steps to recreate:
STEP 1 - Open and create a debt reduction plan baseline.
Original debt plan (no DRP applied)
STEP 2: Turn on Debt Reduction Plan in Lifetime Planner then inspect all years in Lifetime Planner for correct reporting of baseline plan time-frame and correct "debt payment." NOTE, at this step you will not have created a "what if" payoff scenario, yet.
What it looks like in LTP in Year 2021 – CORRECT RESULT
Note 2020 will show a reduced, pro-rated expense in LTP
What it looks like in LTP in Year 2024 – CORRECT RESULT
Note 2025 will show a reduced, pro-rated expense in LTP
STEP 3: Open Debt Reduction Planner and create a "what if" payoff scenario that significantly increases the monthly payment and reduces payoff time-frame.
DEBT REDUCTION PLAN SCENARIO
Increased payment from minimum (baseline) $1013 to new plan payment of $2000 results in a reduced payoff time frame from 2025 to 2022
I would expect to see the new debt payment ($2000) and new time frame (2020 to 2022) in LTP.
STEP 4: Now, go into Lifetime Planner then inspect (again) all years in Lifetime Planner for correct reporting of the "What if" payoff scenario created in Step 3. Here-in lies the problem....
What it looks like in LTP Year 2024 – INCORRECT!
Increased debt payments ($2000) continue to be applied to the plan’s BASELINE debt plan - 04.2022 through 08.2025.
Increased debt payment of $2000 should only be applied in LTP from 2020 to 2022.
Instead, the debt payments extend 3 additional years (at the new increased monthly payment) to the original plan date of 2025!
In my test file, the extra expense resulted in a $283K reduced balance at end of plan.