Financial Math Basics
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Thursday, February 17th, 2011Last week I was part of a rather heated discussion on facebook about Texas’ budget woes and proposed cuts to its education budget. One of the people involved in the discussion was a school adminstrator. I asked him how he would solve the supposed education cuts. He wrote this: “A .01% increase in taxes would [...]
Things to Think About Before You Refinance Your Mortgage
Wednesday, September 15th, 2010Larry Swedroe posted an interesting article on how to do the math on a mortgage refinancing to find out whether or not it’s to your benefit to refinance. He used the following example: • 12 years left on a 15-year mortgage. • Current mortgage rate is 4.75%. • Current monthly payment $1,369 • Current balance [...]
Question From a Reader: Paying Back a Debt After Twelve Years
Monday, August 30th, 2010I was cleaning out my email inbox and found this email from way back in July: Hello, I have a question. If a person owed money to someone in 1998, but did not repay that amount until 2010, how can he calculate what amount to return now (in 2010) considering that much inflation has taken [...]
The Basics: Setting and Reaching Financial Goals
Friday, August 6th, 2010One of the most important areas of personal finance is setting and reaching financial goals. Why are financial goals important? Without them, it’s likely you won’t save and invest your money wisely. Having goals tends to help us focus on what’s important. Without them, we tend to allow life to just happen to us. What [...]
Reader Question: How Do I Calculate the Periodic Return on a Negative Number?
Friday, July 16th, 2010Just received this comment on this post. The question: Came across this post and had a question….how do you calculate your PRR for the time period when the Annualized PRR is a negative number?? When you enter a negative number into the Excel IRR function you get an error because you can’t raise a negative [...]
Financial Formulas Everyone Should Know – How to Calculate a Loan Payment
Wednesday, May 5th, 2010Let’s say you want to buy a house. You need to finance $200,000 for 30 years and your interest rate is 5% per year. Do you know how to calculate your monthly payment? Sure, you could go to an online calculator but it’s also good to know the formula. To make this particular calculation, you [...]
“Why Would the Interest Portion of My Car Payment Fluctuate from Month to Month?”
Tuesday, May 4th, 2010I received this email last week: Hi, I was wondering if you could help me out and explain why each month the amount of my car payment applied to interest goes up and down as opposed to gradually going down? Does the time of the month you make your payment affect this? Or something else? [...]
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