I am skint.
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Paul Watson wrote: If you don't mind... I have heard conflicting advice, some people say pay off all your debts before you invest, others say invest if the debts are not too hectic. Pay off your debts first. Your saving nothing by paying someone else interest. Paul Watson wrote: My only debt is my car which is R1200 a month (out of a R8500 salary after tax.) Just reached the half way mark in paying it off (R22000 to go) and was wondering should I invest and keep on paying the montly installments or try and pay off the car as fast as possible? I don't know how much that is in American $$, but thats a big chunk of your monthly salary for a car. Maybe you should sell it and buy a less expensive model. That way you could focus on saving for a nice one. Paul Watson wrote: I found getting slips for absolutely everything (including that chocolate and coke the other night) and then "analysing" them at the end of the month/quarter/year is the best way to see what you REALLY spend your money on. We do that plus we have a monthly budget.
Jason Henderson
start page ; articles henderson is coming henderson is an opponent's worst nightmare * googlism *Jason Henderson wrote: Pay off your debts first. Your saving nothing by paying someone else interest. Might I add that I think priority in order of interest rate is better than amount ? I've had a hard time over the years convincing my wife that there is no point getting 3% while we pay 27% ( don't ask), and therefore it's also better to put more on the 27% loan than the 12% one. Christian No offense, but I don't really want to encourage the creation of another VB developer. - Larry Antram 22 Oct 2002 Hey, at least Logo had, at it's inception, a mechanical turtle. VB has always lacked even that... - Shog9 04-09-2002 Again, you can screw up a C/C++ program just as easily as a VB program. OK, maybe not as easily, but it's certainly doable. - Jamie Nordmeyer - 15-Nov-2002
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Paul Watson wrote: public transport does not exist for the white man, Why not ? Christian No offense, but I don't really want to encourage the creation of another VB developer. - Larry Antram 22 Oct 2002 Hey, at least Logo had, at it's inception, a mechanical turtle. VB has always lacked even that... - Shog9 04-09-2002 Again, you can screw up a C/C++ program just as easily as a VB program. OK, maybe not as easily, but it's certainly doable. - Jamie Nordmeyer - 15-Nov-2002
Christian Graus wrote: Why not ? Ok public transport here is bad as it is. Not many trains and busses. The main mode of public transport are by things we call black taxis (basically a VW microbus.) These taxis ferry workers in from the townships and other black areas into the CBD, industrial area and white suburbs (for maids, gardners etc.) Whites can use these taxis, but it is not very advisable. Even less advisable to use the trains, though busses are ok, just not very many of them. You may get mugged or worse raped. Obviously it is not a den of heathen sin going on, you just tend to stear clear of taxis, trains and busses to be safe. And of course there is no underground/tube.
Paul Watson
Bluegrass
Cape Town, South AfricaColin Davies wrote: ...can you imagine a John Simmons stalker !
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For many years we were incredibly poor, but since I became a programmer, mainly due to the period when I both coded and was a sales rep and the money from the odd article, we've managed to claw our way out of the circle of debt. What's more, I worked out I could save $1000 a month if I watched my spending. Then my wife got a job, so I imagined we'd soon be rich. Which is good, because we desperately need to buy a bigger house. So we started saving. I soon had $5,000 in the bank, but then a few things happened that cut it down to zero, not least buying a new PC, desk, chair and software for work my wife was supposed to get. That work has not happened yet. My wife continues to work, and at her insistence, our savings are in her bank account. I asked her how much was in there last night, thinking it was a paltry $3,000. It's $1,300. She has saved $300 in a year of working, and after buying all the gear I bought, I've only been able to save one lot of $1,000. That was two months ago, last month and this month coming are a write off for me because of a number of seasonal bills, mostly associated with Christmas. So now I am incredibly depressed. $300 is why I run home from work early every day and cook dinner, and do most of the housework so she can go to work ? And of course it's all going to be *my* fault, I can see it now. Christian No offense, but I don't really want to encourage the creation of another VB developer. - Larry Antram 22 Oct 2002 Hey, at least Logo had, at it's inception, a mechanical turtle. VB has always lacked even that... - Shog9 04-09-2002 Again, you can screw up a C/C++ program just as easily as a VB program. OK, maybe not as easily, but it's certainly doable. - Jamie Nordmeyer - 15-Nov-2002
It's a basic law of economics: your outgoings adjust in direct proportion to your incomings. You need some serious diversionary tactics to prevent this happening. Last time I got a rise I set up a standing order direct from my bank to my savings account, so I didn't actually get to see the extra money. It's not an easy matter to do this once you've got used to the idea of the extra income though: this takes strength of mind that most mere humans just do not have. You could always try one of those get-rich-quick spam methods that clog up my in-box. I could forward them to you if you like :laugh: Debbie
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It's a basic law of economics: your outgoings adjust in direct proportion to your incomings. You need some serious diversionary tactics to prevent this happening. Last time I got a rise I set up a standing order direct from my bank to my savings account, so I didn't actually get to see the extra money. It's not an easy matter to do this once you've got used to the idea of the extra income though: this takes strength of mind that most mere humans just do not have. You could always try one of those get-rich-quick spam methods that clog up my in-box. I could forward them to you if you like :laugh: Debbie
Debs wrote: I could forward them to you if you like If you read the lounge, you'll find I've started one of my own. You owe me a dollar. I like your profile: So I'm one of those sad people who can't wait to sit in front of my home pc after a day in the office. I do have a life, honest. Sounds like me, but I've stopped pretending to have a life.... Christian No offense, but I don't really want to encourage the creation of another VB developer. - Larry Antram 22 Oct 2002 Hey, at least Logo had, at it's inception, a mechanical turtle. VB has always lacked even that... - Shog9 04-09-2002 Again, you can screw up a C/C++ program just as easily as a VB program. OK, maybe not as easily, but it's certainly doable. - Jamie Nordmeyer - 15-Nov-2002
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You need a written budget if you don't have one already. Seriously! Make one in Excel or notepad, but just do it. That little extra discipline will help you save a lot more and spend a lot less. Plus, don't just put your money in the bank, buy mutual funds. BTW, are you completely out of debt? If not, I have some more advice. :)
Jason Henderson
start page ; articles henderson is coming henderson is an opponent's worst nightmare * googlism *Good idea - this is supposed to be a business so analyse it as such :) Would you like to meet my teddy bear ?
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Jason Henderson wrote: Pay off your debts first. Your saving nothing by paying someone else interest. Might I add that I think priority in order of interest rate is better than amount ? I've had a hard time over the years convincing my wife that there is no point getting 3% while we pay 27% ( don't ask), and therefore it's also better to put more on the 27% loan than the 12% one. Christian No offense, but I don't really want to encourage the creation of another VB developer. - Larry Antram 22 Oct 2002 Hey, at least Logo had, at it's inception, a mechanical turtle. VB has always lacked even that... - Shog9 04-09-2002 Again, you can screw up a C/C++ program just as easily as a VB program. OK, maybe not as easily, but it's certainly doable. - Jamie Nordmeyer - 15-Nov-2002
Christian Graus wrote: Might I add that I think priority in order of interest rate is better than amount ? Well, that's what I thought too, but its not. Its all about setting an achievable goal (quickly), so that when it is achieved, you get some positive reenforcement for your efforts. Most of the time, your high interest loans won't be the ones with the lowest balance so when you focus on them you are postponing that first goal (paying off a debt). When that first debt is paid it feels really good, believe me. Also, we want to knock off a debt quickly so we can add our payments to the next debt on the list. Its called the debt snowball method and here's an example: Say you have 3 debts: 1st Debt = $450.00 with a payment of $200.00/month 2nd Debt = $1000.00 with a payment of $100.00/month 3rd Debt = $5000.00 with a payment of $150.00/month
DEBT PAYMENT SCHEDULE 1ST DEBT 2ND DEBT 3RD DEBTDATE PAYMENT AMOUNT PAYMENT AMOUNT PAYMENT AMOUNT
12/2002 $200.00 $250.00 $100.00 $900.00 $150.00 $4850.00
01/2003 $200.00 $50.00 $100.00 $800.00 $150.00 $4700.00
02/2003 $50.00 $0.00 $250.00 $550.00 $150.00 $4550.00
03/2003 $0.00 $0.00 $300.00 $250.00 $150.00 $4400.00
04/2003 $0.00 $0.00 $250.00 $0.00 $200.00 $4200.00
05/2003 $0.00 $0.00 $0.00 $0.00 $450.00 $3750.00
06/2003 $0.00 $0.00 $0.00 $0.00 $450.00 $3300.00
07/2003 $0.00 $0.00 $0.00 $0.00 $450.00 $2850.00
08/2003 $0.00 $0.00 $0.00 $0.00 $450.00 $2400.00
09/2003 $0.00 $0.00 $0.00 $0.00 $450.00 $1950.00
10/2003 $0.00 $0.00 $0.00 $0.00 $450.00 $1500.00
11/2003 $0.00 $0.00 $0.00 $0.00 $450.00 $1050.00
12/2003 $0.00 $0.00 $0.00 $0.00 $450.00 $600.00
01/2004 $0.00 $0.00 $0.00 $0.00 $450.00 $150.00
02/2004 $0.00 $0.00 $0.00 $0.00 $150.00 $0.00Your debts will be paid off 1 year and 7 months sooner doing this. You could pay it off f
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Christian Graus wrote: Might I add that I think priority in order of interest rate is better than amount ? Well, that's what I thought too, but its not. Its all about setting an achievable goal (quickly), so that when it is achieved, you get some positive reenforcement for your efforts. Most of the time, your high interest loans won't be the ones with the lowest balance so when you focus on them you are postponing that first goal (paying off a debt). When that first debt is paid it feels really good, believe me. Also, we want to knock off a debt quickly so we can add our payments to the next debt on the list. Its called the debt snowball method and here's an example: Say you have 3 debts: 1st Debt = $450.00 with a payment of $200.00/month 2nd Debt = $1000.00 with a payment of $100.00/month 3rd Debt = $5000.00 with a payment of $150.00/month
DEBT PAYMENT SCHEDULE 1ST DEBT 2ND DEBT 3RD DEBTDATE PAYMENT AMOUNT PAYMENT AMOUNT PAYMENT AMOUNT
12/2002 $200.00 $250.00 $100.00 $900.00 $150.00 $4850.00
01/2003 $200.00 $50.00 $100.00 $800.00 $150.00 $4700.00
02/2003 $50.00 $0.00 $250.00 $550.00 $150.00 $4550.00
03/2003 $0.00 $0.00 $300.00 $250.00 $150.00 $4400.00
04/2003 $0.00 $0.00 $250.00 $0.00 $200.00 $4200.00
05/2003 $0.00 $0.00 $0.00 $0.00 $450.00 $3750.00
06/2003 $0.00 $0.00 $0.00 $0.00 $450.00 $3300.00
07/2003 $0.00 $0.00 $0.00 $0.00 $450.00 $2850.00
08/2003 $0.00 $0.00 $0.00 $0.00 $450.00 $2400.00
09/2003 $0.00 $0.00 $0.00 $0.00 $450.00 $1950.00
10/2003 $0.00 $0.00 $0.00 $0.00 $450.00 $1500.00
11/2003 $0.00 $0.00 $0.00 $0.00 $450.00 $1050.00
12/2003 $0.00 $0.00 $0.00 $0.00 $450.00 $600.00
01/2004 $0.00 $0.00 $0.00 $0.00 $450.00 $150.00
02/2004 $0.00 $0.00 $0.00 $0.00 $150.00 $0.00Your debts will be paid off 1 year and 7 months sooner doing this. You could pay it off f
Another approach that works better regarding your credit rating is to pay off until you hit about 40% on all credit cards, then work them down one-by-one from there. BW "I'm coming with you! I got you fired, it's the least I can do. Well, the least I could do is absolutely nothing, but I'll go you one better and come along!" - Homer J. Simpson
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For many years we were incredibly poor, but since I became a programmer, mainly due to the period when I both coded and was a sales rep and the money from the odd article, we've managed to claw our way out of the circle of debt. What's more, I worked out I could save $1000 a month if I watched my spending. Then my wife got a job, so I imagined we'd soon be rich. Which is good, because we desperately need to buy a bigger house. So we started saving. I soon had $5,000 in the bank, but then a few things happened that cut it down to zero, not least buying a new PC, desk, chair and software for work my wife was supposed to get. That work has not happened yet. My wife continues to work, and at her insistence, our savings are in her bank account. I asked her how much was in there last night, thinking it was a paltry $3,000. It's $1,300. She has saved $300 in a year of working, and after buying all the gear I bought, I've only been able to save one lot of $1,000. That was two months ago, last month and this month coming are a write off for me because of a number of seasonal bills, mostly associated with Christmas. So now I am incredibly depressed. $300 is why I run home from work early every day and cook dinner, and do most of the housework so she can go to work ? And of course it's all going to be *my* fault, I can see it now. Christian No offense, but I don't really want to encourage the creation of another VB developer. - Larry Antram 22 Oct 2002 Hey, at least Logo had, at it's inception, a mechanical turtle. VB has always lacked even that... - Shog9 04-09-2002 Again, you can screw up a C/C++ program just as easily as a VB program. OK, maybe not as easily, but it's certainly doable. - Jamie Nordmeyer - 15-Nov-2002
Don't ever get divorced. Marc Help! I'm an AI running around in someone's f*cked up universe simulator.
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Christian Graus wrote: Might I add that I think priority in order of interest rate is better than amount ? Well, that's what I thought too, but its not. Its all about setting an achievable goal (quickly), so that when it is achieved, you get some positive reenforcement for your efforts. Most of the time, your high interest loans won't be the ones with the lowest balance so when you focus on them you are postponing that first goal (paying off a debt). When that first debt is paid it feels really good, believe me. Also, we want to knock off a debt quickly so we can add our payments to the next debt on the list. Its called the debt snowball method and here's an example: Say you have 3 debts: 1st Debt = $450.00 with a payment of $200.00/month 2nd Debt = $1000.00 with a payment of $100.00/month 3rd Debt = $5000.00 with a payment of $150.00/month
DEBT PAYMENT SCHEDULE 1ST DEBT 2ND DEBT 3RD DEBTDATE PAYMENT AMOUNT PAYMENT AMOUNT PAYMENT AMOUNT
12/2002 $200.00 $250.00 $100.00 $900.00 $150.00 $4850.00
01/2003 $200.00 $50.00 $100.00 $800.00 $150.00 $4700.00
02/2003 $50.00 $0.00 $250.00 $550.00 $150.00 $4550.00
03/2003 $0.00 $0.00 $300.00 $250.00 $150.00 $4400.00
04/2003 $0.00 $0.00 $250.00 $0.00 $200.00 $4200.00
05/2003 $0.00 $0.00 $0.00 $0.00 $450.00 $3750.00
06/2003 $0.00 $0.00 $0.00 $0.00 $450.00 $3300.00
07/2003 $0.00 $0.00 $0.00 $0.00 $450.00 $2850.00
08/2003 $0.00 $0.00 $0.00 $0.00 $450.00 $2400.00
09/2003 $0.00 $0.00 $0.00 $0.00 $450.00 $1950.00
10/2003 $0.00 $0.00 $0.00 $0.00 $450.00 $1500.00
11/2003 $0.00 $0.00 $0.00 $0.00 $450.00 $1050.00
12/2003 $0.00 $0.00 $0.00 $0.00 $450.00 $600.00
01/2004 $0.00 $0.00 $0.00 $0.00 $450.00 $150.00
02/2004 $0.00 $0.00 $0.00 $0.00 $150.00 $0.00Your debts will be paid off 1 year and 7 months sooner doing this. You could pay it off f
Jason Henderson wrote: you get some positive reenforcement for your efforts. That's my wifes idea too, but apart from the whole mental part of it ( I feel good that I have one less debt ), I remain unconvinced that it is actually quicker to do this, pay more off the lowest debt while a higher one attracts interest at a higher rate. Jason Henderson wrote: Its called the debt snowball method and here's an example: I think this is the most significant thing, getting people to realise when they pay one debt off, it's not play money after that, but more to channel into another one. While I had two jobs and did it this way ( except that I prioritised by interest rate, in every other way I followed this method ), I found that was the best thing, the amount I paid every week on my biggest debt just grew and grew. Jason Henderson wrote: You do need to convince your wife that debts are bad too. You are in this together. She does not disagree, but the problem is not our debts, it's our need to save for another house. I cna handle our debts, and still save $1,000 a month. I found out she has actually lost the most significant of her jobs ( it was always temporary, and they made her a permanent offer but it was too many hours and she could not do it ), so she will have worked 20 hours a week for six months, and we have $300 to show for it. The real problem is for her to use the 'save first, pay later' approach. There are always bills, but I save money first, then pay bills with what is left. If there is not enough left, they can wait. Christian No offense, but I don't really want to encourage the creation of another VB developer. - Larry Antram 22 Oct 2002 Hey, at least Logo had, at it's inception, a mechanical turtle. VB has always lacked even that... - Shog9 04-09-2002 Again, you can screw up a C/C++ program just as easily as a VB program. OK, maybe not as easily, but it's certainly doable. - Jamie Nordmeyer - 15-Nov-2002
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Don't ever get divorced. Marc Help! I'm an AI running around in someone's f*cked up universe simulator.
LOL - never before has a post said so much with so few words. I've been divorced but there were no kids and we were so poor, there was no money to fight over. Christian No offense, but I don't really want to encourage the creation of another VB developer. - Larry Antram 22 Oct 2002 Hey, at least Logo had, at it's inception, a mechanical turtle. VB has always lacked even that... - Shog9 04-09-2002 Again, you can screw up a C/C++ program just as easily as a VB program. OK, maybe not as easily, but it's certainly doable. - Jamie Nordmeyer - 15-Nov-2002
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Christian Graus wrote: I did one. It leaves me with about $1100 a month, so I try to just put $1000 away as a first priority and live on the rest. It worked great for 5 months, then I needed to buy the new PC, and now Xmas is killing me. You should be saving about 15% of your income into mutual funds (you may not have them in NZ). From http://www.mfea.com[^]: A mutual fund is a company that pools the money of many investors -- its shareholders -- to invest in a variety of different securities. Investments may be in stocks, bonds, money market securities or some combination of these. Those securities are professionally managed on behalf of the shareholders, and each investor holds a pro rata share of the portfolio -- entitled to any profits when the securities are sold, but subject to any losses in value as well. My wife and I are quickly paying off our debts so we can save a bundle later. X-mas always hurts though. Christian Graus wrote: Home loan, car loan and a couple of small, temporary store accounts. Forget the home loan for now, just pay regular monthly payments on it until you eliminate your other debt. First you should focus on your smallest debt (not smallest interest rate, smallest balance). Pay it off as quickly as possible then apply its payment to the next smallest debt and so on until you have everything paid off. We are using this method and we will have over $20,000 in debt paid off in about 1 1/2 years if not sooner. Of course, if you have extra cash, throw it on the debt until its gone. You probably shouldn't save anything until your debt is gone either. After you are out of debt, don't get back into it. Use a debit card if your bank has one and cancel your credit cards. Next, you can focus on the house and save some real money. Christian Graus wrote: If it does not involve 4 $5 bills and sending lots of emails, I'm interested to hear it Just send me a personal check, I trust you. :-D
Jason Henderson
start page ; articles henderson is coming henJason Henderson wrote: Forget the home loan for now, just pay regular monthly payments on it until you eliminate your other debt. First you should focus on your smallest debt (not smallest interest rate, smallest balance). Pay it off as quickly as possible then apply its payment to the next smallest debt and so on until you have everything paid off. We are using this method and we will have over $20,000 in debt paid off in about 1 1/2 years if not sooner. Actually, the goal should not be to reduce the number of creditors as quickly as possible. The goal should be to pay the LEAST amount of interest (thereby saving the most money). This means ordering your debt from HIGHEST to LOWEST interest rates. Pay the minimum payment on all but the highest. Pay more than the minimum (whatever you can) on the highest interest rate. It may take longer to pay off some creditors, but you will save the most money in the long run. -Sean ---- Only two things are infinite, the universe and human stupidity, and I'm not sure about the former. -- Albert Einstein. I saw a woman wearing a sweatshirt with 'Guess' on it. I said, "Thyroid problem?" -- Emo Philips. Love is two minutes, 52 seconds of squishing noises. -- Johnny Rotten.
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LOL - never before has a post said so much with so few words. I've been divorced but there were no kids and we were so poor, there was no money to fight over. Christian No offense, but I don't really want to encourage the creation of another VB developer. - Larry Antram 22 Oct 2002 Hey, at least Logo had, at it's inception, a mechanical turtle. VB has always lacked even that... - Shog9 04-09-2002 Again, you can screw up a C/C++ program just as easily as a VB program. OK, maybe not as easily, but it's certainly doable. - Jamie Nordmeyer - 15-Nov-2002
Unfortunately, I've been divorced twice. The first time we both had a very pleasant split-up (sort of an oxymoron, isn't it???), but the second time cost me $10,000 in legal fees and $16,000 in alimony. Ugh. If there ever is a next time, it'll be with an iron clad pre-nupt in hand as we walk down the isle. Maybe the vows should be: "...to care for each other in sickness and health, and never to sue each other's asses when you get divorced". (note "when", not "if") Marc Help! I'm an AI running around in someone's f*cked up universe simulator.
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Jason Henderson wrote: Forget the home loan for now, just pay regular monthly payments on it until you eliminate your other debt. First you should focus on your smallest debt (not smallest interest rate, smallest balance). Pay it off as quickly as possible then apply its payment to the next smallest debt and so on until you have everything paid off. We are using this method and we will have over $20,000 in debt paid off in about 1 1/2 years if not sooner. Actually, the goal should not be to reduce the number of creditors as quickly as possible. The goal should be to pay the LEAST amount of interest (thereby saving the most money). This means ordering your debt from HIGHEST to LOWEST interest rates. Pay the minimum payment on all but the highest. Pay more than the minimum (whatever you can) on the highest interest rate. It may take longer to pay off some creditors, but you will save the most money in the long run. -Sean ---- Only two things are infinite, the universe and human stupidity, and I'm not sure about the former. -- Albert Einstein. I saw a woman wearing a sweatshirt with 'Guess' on it. I said, "Thyroid problem?" -- Emo Philips. Love is two minutes, 52 seconds of squishing noises. -- Johnny Rotten.
Sean Cundiff wrote: The goal should be to pay the LEAST amount of interest (thereby saving the most money). This means ordering your debt from HIGHEST to LOWEST interest rates. Pay the minimum payment on all but the highest. Pay more than the minimum (whatever you can) on the highest interest rate. I disagree. The mental/emotional side of debt elimination is very important. When you eliminate a debt, you feel liberated. If I were to try and pay off my car first, I'd feel like I wasn't getting anywhere plus I'd have other debts to pay off too. I couldn't focus only on the car. With each debt you eliminate, you need to add that payment to your next one. Sean Cundiff wrote: It may take longer to pay off some creditors, but you will save the most money in the long run. Interest compounds over time. If you pay off debts quicker, you won't have to pay as much interest. If it takes longer to pay off your debt using that method, then you aren't saving much.
Jason Henderson
start page ; articles henderson is coming henderson is an opponent's worst nightmare * googlism * -
Sean Cundiff wrote: The goal should be to pay the LEAST amount of interest (thereby saving the most money). This means ordering your debt from HIGHEST to LOWEST interest rates. Pay the minimum payment on all but the highest. Pay more than the minimum (whatever you can) on the highest interest rate. I disagree. The mental/emotional side of debt elimination is very important. When you eliminate a debt, you feel liberated. If I were to try and pay off my car first, I'd feel like I wasn't getting anywhere plus I'd have other debts to pay off too. I couldn't focus only on the car. With each debt you eliminate, you need to add that payment to your next one. Sean Cundiff wrote: It may take longer to pay off some creditors, but you will save the most money in the long run. Interest compounds over time. If you pay off debts quicker, you won't have to pay as much interest. If it takes longer to pay off your debt using that method, then you aren't saving much.
Jason Henderson
start page ; articles henderson is coming henderson is an opponent's worst nightmare * googlism *Jason Henderson wrote: Interest compounds over time. If you pay off debts quicker, you won't have to pay as much interest. If it takes longer to pay off your debt using that method, then you aren't saving much. OK, I'll give you this one. I have a mortgage and credit card debt. I certainly am not worrying about the home. However my goal is to get rid of credit card debt. To that end, I ordered my CC's by interest rate and used the method I discussed above. Jason Henderson wrote: Interest compounds over time. If you pay off debts quicker, you won't have to pay as much interest. If it takes longer to pay off your debt using that method, then you aren't saving much. Yes, but the point is you have a collection of debts (not just a single debt), which is accruing interest faster? The higher interest rate is. That means the faster you pay off the higher interest rate, regardless of balance, the more money you will save. This is a classic Linear Algebra problem (minimization/constraint). In other words, given various debts with associated interest rates, minimize the TOTAL amount of interest paid. The constraint is how much money you have to pay on the balances. Example: Debt 1 $1000 @ 5% min payment = $200/month Debt 2 $5000 @ 10% min payment = $600/month (just to keep things simple) $1000/month expendable cash ($200 for debt 1, $600 for debt 2, $200 to spread over the two debts) Your method: Debt 1 pay $400 month. (add extra to lower balance) Debt 2 pay $600 month.
Debt 1 (1000 @ 5%, $200 minimum payment)
Previous Balance Payment New Balance
$1,000.00 $400.00 $650.00
$650.00 $400.00 $282.50
$282.50 $296.63 $0.00Debt 2 (5000 @ 10%, $600 minimum payment)
Previous Balance Payment New Balance
$5,000.00 $600.00 $4,900.00
$4,900.00 $600.00 $4,790.00
$4,790.00 $703.37 $4,565.63
$4,565.63 $1,000.00 $4,022.19
$4,022.19 $1,000.00 $3,424.41
$3,424.41 $1,000.00 $2,766.85
$2,766.85 $1,000.00 $2,043.54
$2,043.54 $1,000.00 $1,247.89
$1,247.89 $1,000.00 $372.68
$372.68 $409.95 $0.00Debt 1 Paid Off: 3 Months Debt 2 Paid Off: 10 Months Total Payments: $9,409.95 Total Interest Paid: $3,409.95 My method: Debt 1 pay $200 month. Debt 2 pay $800 month. (add extra to higher interest rate)
Debt 1 (1000 @ 5%, $200 minimum payment)
Previous Balanc -
Jason Henderson wrote: Interest compounds over time. If you pay off debts quicker, you won't have to pay as much interest. If it takes longer to pay off your debt using that method, then you aren't saving much. OK, I'll give you this one. I have a mortgage and credit card debt. I certainly am not worrying about the home. However my goal is to get rid of credit card debt. To that end, I ordered my CC's by interest rate and used the method I discussed above. Jason Henderson wrote: Interest compounds over time. If you pay off debts quicker, you won't have to pay as much interest. If it takes longer to pay off your debt using that method, then you aren't saving much. Yes, but the point is you have a collection of debts (not just a single debt), which is accruing interest faster? The higher interest rate is. That means the faster you pay off the higher interest rate, regardless of balance, the more money you will save. This is a classic Linear Algebra problem (minimization/constraint). In other words, given various debts with associated interest rates, minimize the TOTAL amount of interest paid. The constraint is how much money you have to pay on the balances. Example: Debt 1 $1000 @ 5% min payment = $200/month Debt 2 $5000 @ 10% min payment = $600/month (just to keep things simple) $1000/month expendable cash ($200 for debt 1, $600 for debt 2, $200 to spread over the two debts) Your method: Debt 1 pay $400 month. (add extra to lower balance) Debt 2 pay $600 month.
Debt 1 (1000 @ 5%, $200 minimum payment)
Previous Balance Payment New Balance
$1,000.00 $400.00 $650.00
$650.00 $400.00 $282.50
$282.50 $296.63 $0.00Debt 2 (5000 @ 10%, $600 minimum payment)
Previous Balance Payment New Balance
$5,000.00 $600.00 $4,900.00
$4,900.00 $600.00 $4,790.00
$4,790.00 $703.37 $4,565.63
$4,565.63 $1,000.00 $4,022.19
$4,022.19 $1,000.00 $3,424.41
$3,424.41 $1,000.00 $2,766.85
$2,766.85 $1,000.00 $2,043.54
$2,043.54 $1,000.00 $1,247.89
$1,247.89 $1,000.00 $372.68
$372.68 $409.95 $0.00Debt 1 Paid Off: 3 Months Debt 2 Paid Off: 10 Months Total Payments: $9,409.95 Total Interest Paid: $3,409.95 My method: Debt 1 pay $200 month. Debt 2 pay $800 month. (add extra to higher interest rate)
Debt 1 (1000 @ 5%, $200 minimum payment)
Previous BalancYour interest accrual is way off. You won't be paying 5% per month in interest, but per year instead. After the first month of the $1000 total you would owe $4.17 more, not $50. Here's how the calculations should look (I think they are right with compounding interest and such.) : My method:
Debt 1 (1000 @ 5%, $200 minimum payment)
Previous Balance Payment New Balance
$1000.00 $400.00 $606.69
$606.69 $400.00 $207.55
$207.55 $207.55 $0.00
_____________________________________________
Debt 2 (5000 @ 10%, $600 minimum payment)
Previous Balance Payment New Balance
$5000.00 $600.00 $4483.68
$4483.68 $600.00 $3916.04
$3916.04 $792.45 $3149.62
$3149.62 $1000.00 $2167.53
$2167.53 $1000.00 $1177.26
$1177.26 $1000.00 $194.99
$194.99 $194.99 $0.00
_____________________________________________
All debts paid off in 7 months.
Total Payments: $6194.99
Total Interest: $194.99Your method:
Debt 1 (1000 @ 5%, $200 minimum payment)
Previous Balance Payment New Balance
$1000.00 $200.00 $807.52
$807.52 $200.00 $610.05
$610.05 $200.00 $430.55
$430.55 $200.00 $242.08
$242.08 $200.00 $42.26
$42.26 $42.26 $0.00
_____________________________________________
Debt 2 (5000 @ 10%, $600 minimum payment)
Previous Balance Payment New Balance
$5000.00 $800.00 $4277.02
$4277.02 $800.00 $3506.00
$3506.00 $800.00 $2728.55
$2728.55 $800.00 $1944.62
$1944.62 $800.00 $1154.16
$1154.16 $957.74 $198.06
$198.06 $198.06 $0.00
_____________________________________________
All debts paid off in 7 months.
Total Payments: $6198.06
Total Interest: $198.06Jason Henderson
start page ; articles henderson is coming henderson is an opponent's worst nightmare * googlism * -
Your interest accrual is way off. You won't be paying 5% per month in interest, but per year instead. After the first month of the $1000 total you would owe $4.17 more, not $50. Here's how the calculations should look (I think they are right with compounding interest and such.) : My method:
Debt 1 (1000 @ 5%, $200 minimum payment)
Previous Balance Payment New Balance
$1000.00 $400.00 $606.69
$606.69 $400.00 $207.55
$207.55 $207.55 $0.00
_____________________________________________
Debt 2 (5000 @ 10%, $600 minimum payment)
Previous Balance Payment New Balance
$5000.00 $600.00 $4483.68
$4483.68 $600.00 $3916.04
$3916.04 $792.45 $3149.62
$3149.62 $1000.00 $2167.53
$2167.53 $1000.00 $1177.26
$1177.26 $1000.00 $194.99
$194.99 $194.99 $0.00
_____________________________________________
All debts paid off in 7 months.
Total Payments: $6194.99
Total Interest: $194.99Your method:
Debt 1 (1000 @ 5%, $200 minimum payment)
Previous Balance Payment New Balance
$1000.00 $200.00 $807.52
$807.52 $200.00 $610.05
$610.05 $200.00 $430.55
$430.55 $200.00 $242.08
$242.08 $200.00 $42.26
$42.26 $42.26 $0.00
_____________________________________________
Debt 2 (5000 @ 10%, $600 minimum payment)
Previous Balance Payment New Balance
$5000.00 $800.00 $4277.02
$4277.02 $800.00 $3506.00
$3506.00 $800.00 $2728.55
$2728.55 $800.00 $1944.62
$1944.62 $800.00 $1154.16
$1154.16 $957.74 $198.06
$198.06 $198.06 $0.00
_____________________________________________
All debts paid off in 7 months.
Total Payments: $6198.06
Total Interest: $198.06Jason Henderson
start page ; articles henderson is coming henderson is an opponent's worst nightmare * googlism *Jason, OK, for arguments sake let's say 5%/year and 10%/year. Debt 1's monthly interest rate is then 5/12 % a month. Debt 2's is 10/12 % a month. Your calculations are off and you forgot to charge interest on the last payment in each category. :) Also, interest is charged before the payment is made and not after. (This is called 'begin mode', there is also an 'end mode' where interest is charged after the payment. Needless to say this is very rarely used.) New Balance = Previous Balance * (1 + monthly interest rate) - Payment So, for Debt 1: NB = PB * (1 + 5/1200) - Payment Debt 2: NB = PB * (1 + 10/1200) - Payment 1200 because % should be divided by 100 when used in a calculation.
Your Method:
Debt 1 (1000 @ 5%, $200 minimum payment)
Previous Balance Payment New Balance
$1000.00 $400.00 $604.17
$604.17 $400.00 $206.69
$206.69 $207.55 $0.00
_____________________________________________Debt 2 (5000 @ 10%, $600 minimum payment)
Previous Balance Payment New Balance
$5000.00 $600.00 $4441.67
$4441.67 $600.00 $3878.68
$3878.68 $792.45 $3118.55
$3118.55 $1000.00 $2144.54
$2144.54 $1000.00 $1162.41
$1162.41 $1000.00 $172.10
$172.10 $173.53 $0.00
_____________________________________________
All debts paid off in 7 months.
Total Payments: $6173.53
Total Interest: $173.53My Method:
Debt 1 (1000 @ 5%, $200 minimum payment)
Previous Balance Payment New Balance
$1000.00 $200.00 $804.17
$804.17 $200.00 $607.52
$607.52 $200.00 $410.05
$410.05 $200.00 $211.76
$211.76 $200.00 $12.64
$12.64 $12.69 $0.00
_____________________________________________Debt 2 (5000 @ 10%, $600 minimum payment)
Previous Balance Payment New Balance
$5000.00 $800.00 $4241.67
$4241.67 $800.00 $3477.02
$3477.02 $800.00 $2706.00
$2706.00 $800.00 $1928.55
$1928.55 $800.00 $1144.62
$1144.62 $987.31 $166.85
$166.85 $168.24 $0.00
_____________________________________________
All debts paid off in 7 months.
Total Payments: $6168.24
Total Interest: $168.24So once again my method saves money! It doesn't matter what the interest rate is per month. The fact of the matter is that pay
-
Jason, OK, for arguments sake let's say 5%/year and 10%/year. Debt 1's monthly interest rate is then 5/12 % a month. Debt 2's is 10/12 % a month. Your calculations are off and you forgot to charge interest on the last payment in each category. :) Also, interest is charged before the payment is made and not after. (This is called 'begin mode', there is also an 'end mode' where interest is charged after the payment. Needless to say this is very rarely used.) New Balance = Previous Balance * (1 + monthly interest rate) - Payment So, for Debt 1: NB = PB * (1 + 5/1200) - Payment Debt 2: NB = PB * (1 + 10/1200) - Payment 1200 because % should be divided by 100 when used in a calculation.
Your Method:
Debt 1 (1000 @ 5%, $200 minimum payment)
Previous Balance Payment New Balance
$1000.00 $400.00 $604.17
$604.17 $400.00 $206.69
$206.69 $207.55 $0.00
_____________________________________________Debt 2 (5000 @ 10%, $600 minimum payment)
Previous Balance Payment New Balance
$5000.00 $600.00 $4441.67
$4441.67 $600.00 $3878.68
$3878.68 $792.45 $3118.55
$3118.55 $1000.00 $2144.54
$2144.54 $1000.00 $1162.41
$1162.41 $1000.00 $172.10
$172.10 $173.53 $0.00
_____________________________________________
All debts paid off in 7 months.
Total Payments: $6173.53
Total Interest: $173.53My Method:
Debt 1 (1000 @ 5%, $200 minimum payment)
Previous Balance Payment New Balance
$1000.00 $200.00 $804.17
$804.17 $200.00 $607.52
$607.52 $200.00 $410.05
$410.05 $200.00 $211.76
$211.76 $200.00 $12.64
$12.64 $12.69 $0.00
_____________________________________________Debt 2 (5000 @ 10%, $600 minimum payment)
Previous Balance Payment New Balance
$5000.00 $800.00 $4241.67
$4241.67 $800.00 $3477.02
$3477.02 $800.00 $2706.00
$2706.00 $800.00 $1928.55
$1928.55 $800.00 $1144.62
$1144.62 $987.31 $166.85
$166.85 $168.24 $0.00
_____________________________________________
All debts paid off in 7 months.
Total Payments: $6168.24
Total Interest: $168.24So once again my method saves money! It doesn't matter what the interest rate is per month. The fact of the matter is that pay
My calculations may be wrong, I'm not sure. But the differences in the two examples is minor. Also, we are just talking about credit card debt. Regular loans have interest pre-calculated, therefore the faster you pay those off the less you have to pay in the long run. Frankly, either way is good, as long as you pay off the debt and keep it off.
Jason Henderson
start page ; articles henderson is coming henderson is an opponent's worst nightmare * googlism * -
For many years we were incredibly poor, but since I became a programmer, mainly due to the period when I both coded and was a sales rep and the money from the odd article, we've managed to claw our way out of the circle of debt. What's more, I worked out I could save $1000 a month if I watched my spending. Then my wife got a job, so I imagined we'd soon be rich. Which is good, because we desperately need to buy a bigger house. So we started saving. I soon had $5,000 in the bank, but then a few things happened that cut it down to zero, not least buying a new PC, desk, chair and software for work my wife was supposed to get. That work has not happened yet. My wife continues to work, and at her insistence, our savings are in her bank account. I asked her how much was in there last night, thinking it was a paltry $3,000. It's $1,300. She has saved $300 in a year of working, and after buying all the gear I bought, I've only been able to save one lot of $1,000. That was two months ago, last month and this month coming are a write off for me because of a number of seasonal bills, mostly associated with Christmas. So now I am incredibly depressed. $300 is why I run home from work early every day and cook dinner, and do most of the housework so she can go to work ? And of course it's all going to be *my* fault, I can see it now. Christian No offense, but I don't really want to encourage the creation of another VB developer. - Larry Antram 22 Oct 2002 Hey, at least Logo had, at it's inception, a mechanical turtle. VB has always lacked even that... - Shog9 04-09-2002 Again, you can screw up a C/C++ program just as easily as a VB program. OK, maybe not as easily, but it's certainly doable. - Jamie Nordmeyer - 15-Nov-2002
I feel your pain Christian. After 5 years of marriage we managed to not only blow £9,800 in equity but also run up £16,500 of loans - mainly down to Karen being much better at spending than I am at saving. :( I'm just glad it's over...and hope I can make a new start now. Anna :rose: "Be yourself - not what others think you should be"
- Marcia Graesch -
I feel your pain Christian. After 5 years of marriage we managed to not only blow £9,800 in equity but also run up £16,500 of loans - mainly down to Karen being much better at spending than I am at saving. :( I'm just glad it's over...and hope I can make a new start now. Anna :rose: "Be yourself - not what others think you should be"
- Marcia GraeschAnna :) wrote: I'm just glad it's over...and hope I can make a new start now. And the good news is that next time you're biologically excused to be the one spending !!! Christian No offense, but I don't really want to encourage the creation of another VB developer. - Larry Antram 22 Oct 2002 Hey, at least Logo had, at it's inception, a mechanical turtle. VB has always lacked even that... - Shog9 04-09-2002 Again, you can screw up a C/C++ program just as easily as a VB program. OK, maybe not as easily, but it's certainly doable. - Jamie Nordmeyer - 15-Nov-2002