and Windows 7!

**THE SCENARIO**

Several years ago I borrowed some money to buy a condo. Today, still owe $66,924.65 on this mortgage, with payments of $352.16 per month, at a rate of 3.875%.

If I suddenly came into a pile of money and decided to pay off this mortgage today, how much interest would I avoid paying over the remaining life of the mortgage by doing so?

For simplicity, assume that there’s no partial-month interest to satisfy and no pre-payment penalties involved.

**THE SOLUTION**

This problem is a three-stepper.

- The first thing we need to do is figure out how many payments are left on the mortgage.
- Then we need to figure out how much the total payments over that number of months would have been.
- Then we need to subtract the amount I’d pay today to satisfy the mortgage from the total payments I’d make if I didn’t pay off the mortgage today.

Let’s get to it.

Step 1:

First things first, make sure the calculator is using 12 Payments per Year.

N: (this is what I’m trying to find)

I/YR: 3.875

PV: 66,924.65

PMT: -352.16

FV: 0

When I plug these numbers into the calculator, I find that I have 295 payments left to make on this mortgage.

Step 2:

If I paid off the mortgage today, I’d avoid 295 payments, each of which is $352.16.

295 months times $352.16 per month is $103,887.20 I can avoid paying over the next 25ish years by paying $66,924.65 today.

Step 3:

I owe $66,924.65 which means any amount I pay above that is interest on the loan. My payments will add up to $103,887.20 so the amount of interest I’ll be paying on the loan over time will be $103,887.20 – $66,924.65 which is a total of **$36,962.55**. If I pay off the loan now, I’ll save **$36,962.55** in interest over time.

Note that doing this problem doesn’t tell me whether it’s a *good idea* to pay off the mortgage today, it just tells me how much interest I’d save if I decided to do so.

and Windows 7!

**THE SCENARIO**

I recently got a letter from the company that manages the 401(k) accounts at the place I used to work. They said that if their projections are correct, then when I retire (in 23 years), my account should provide $48,000 per year in income (amounts have been changed to protect the innocent). Wow, $4,000 per month to live on! Sounds great! (Actually, it sounds a little thin to me if that’s all the income I have, but we’ll go with it for now.)

However, I’ve heard of inflation, so what I want to know is ‘How much buying power, in today’s dollars, will that $4,000 per month have in 23 years?’

To keep things simple, I’ll use monthly compounding, and an inflation rate of 3.7%. (This is about what the average annual inflation rate has been in the United States for the past 40 years.)

If you don’t like my 3.7% number, feel free to use one you think better matches reality, or that better predicts the future. I got my figure here. Keep in mind that if you decide to use a different inflation figure, your answer will turn out different than mine.

**THE SOLUTION**

First things first, make sure the calculator is using 12 Payments per Year.

23 years is 23 x 12 months, which is 276 months.

N: 276

I/YR: 3.7

PV: (this is what I’m trying to find)

PMT: 0

FV: 4000

When I plug in the numbers, I find that my monthly stipend beginning in 23 years has the same buying power as **$1,710.19** today.

If I was questioning my living comfort after retirement on $4,000 per month, I’m *seriously* questioning it at less than half of that figure.

You may wonder ‘why does the calculator return a negative number for PV?’ (The calculator says that PV is -1,710.19.) The answer is that another way to consider this scenario is to ask yourself the question ‘How much would I have to invest today at 3.7% to get me $4,000 in 23 years?’ Since I’m going to *get* $4,000 in the future, I need to *invest* (i.e. pay out) some money today, so PV is represented as a negative number.

and Windows 7!

**THE SCENARIO**

If you’ve been [literally anywhere], you’ve no doubt run across people claiming that gold is the best investment, that the US Dollar (or most other currencies you could name) is a ‘fiat currency’, and that ever since the US fully went off the Gold Standard in 1971*, our money’s been worthless because it’s not backed by a metal you have to dig out of the ground… but that metal has *real, intrinsic, inherent* value.**

But let’s say that you had the foresight to buy an ounce of gold long ago, and you wanted to sell it today. How good would your return be?

A quick Internet search reveals that on March 13th 1975, gold was selling for $178.00 per ounce. I was just about to be born at the time, so let’s say that my parents bought me an ounce of gold to make me rich when I got older.

On May 14th 2017, it was going for $1,228.60.

If we use monthly compounding, what’s your return on investment if you bought an ounce of gold back in March of 1973?

* If you want to know more about gold as an investment, and about how and why the US and other countries left the gold standard, check out this awesome set of podcasts from NPR’s Planet Money.

** In case it’s not clear from my tone here, I don’t buy this argument for a second, and when I hear it, I wonder what the person making the claim is trying to sell me (or buy from me). Hint: if they’re willing to trade their ‘valuable’ gold for your ‘worthless’ dollars… maybe they’re not giving you the straight story. Anyway, enough editorializing. Back to the math.

**THE SOLUTION**

First off, we have to figure out how many months are between March 1975 and May 2017. Quick math reveals that there are 42 years and 2 months between those two points, which is 506 months. First thing first, we make sure the calculator is set to use 12 Payments per Year.

So we enter into the calculator:

N: 506

I/YR: (This is what I’m trying to find)

PV: -178.00

PMT: 0

FV: 1,228.60

Running the calculation, we find out that the return that lump of shiny yellow metal gave us is **4.37%** per year. Knowing that, does your opinion of the impressiveness of gold as investment change at all?

Knowing that inflation between 1975 and 2017 averaged 3.73%, does that change anything?

Anyway, good investing! See you next time!

]]>and Windows 7!

**THE SCENARIO**

I’ve got a beautiful, timid, half-feral little beast who loves to purr and be pet while she’s eating. I’m quite fond of her, but I got to thinking this weekend ‘How much does Whimsy cost me?’

I ran across this post in trying to get a rough answer to this question: http://www.peteducation.com/article.cfm?c=1+2137&aid=1542

Since I’m trying to answer the question, but I don’t want to think too hard about it, I’ll just assume that I’m the author of that post, and I’m going to assume that there’s no variance between year-one cost and the cost of subsequent years. In totaling the costs of food, litter, cat-sitting, veterinary care, and so on, the author came up with an average annual cost of $527 per year to own her little fur-beast. She then estimated that her cat would live for 14 years, multiplied $527 by 14, and came up with the figure that her cat will cost her $7,713 over its lifetime.

Using my financial calculator, however, I suspect that I can prove that my cat is *much* more valuable than hers.

The first thing I’m going to do is assume that my cat costs the same as hers per year, and that its costs are uniform throughout each year. So I pay $527 / 12, or about $44 per month.

I know that 14 years is 168 months.

I also know that if Whimsy were to not be making my life the heap of smiles and accidental scratches that it is today, I could invest that money and earn a 10% annualized return.

So the question is, how much is Whimsy worth to me?

**THE SOLUTION**

Making sure my Payments Per Year setting remains at 12, I set up the problem like this:

N: 168

I/YR: 10

PV: 0

PMT: -44 (I could invest the money I’m currently spending on the little furball)

FV: [This is what I’m trying to find]

Now, you may ask me why I’m solving for FV and not PV. The reason is that I’m trading the future money I would have had if I’d have invested the money instead of pampering my little crazy ball of teeth and claws.

When I plug everything in, I determine that Whimsy is worth **$16,007.60** to me. Who’s a good kitty? YOU ARE! *purr, purr, purr*

*Wordventure!* is now available on Google Play! The beloved word-game has enjoyed a long run on iOS and is now finally available for Android.

A fun and FREE word game that helps you learn different types of words!

It’s lots of fun for kids and adults alike. Kids can learn about parts of speech and have a wonderful time doing it!

This is how it works: First, choose a Wordventure! story. Pick Nouns, Verbs, Adjectives, Adverbs, etc., save your completed Wordventure and then read YOUR hilarious story!

You can play alone or with friends to share all of the great times.

3 Wordventures are included for Free and tons of new Wordventures are available for download.

New Wordventures are added over time so check back to join in the new fun!

Special thanks go to Noel Trivedi and Jin Yang for their assistance in creating *Wordventure!* for Android!

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Gary and Clyde are actually the people who taught us how to use a financial calculator! Then we applied our Nerd skills and developed the 10bii Financial Calculator app for iOS, Android, Windows, and Mac.

- Do you want to be financially free?
- Are you tired of running the rat race?
- Are you tired of living paycheck to paycheck?
- Are you tired of being in debt?
- Are your “investments” no longer working?
Learn the key principles on how to become truly financially free. The lessons you will learn are a must if you plan on being wealthy and getting out of the rate race. You will gain total confidence on how to make better investment decisions and creating a better financial future. Over 3 days, you will build your personal wealth plan and move towards the future you desire. Anyone can master these skills quickly and easily.

They offer classes on the West and East Coast, so please do yourself a huge favor and go to this class! The information you’ll learn will pay for itself many times over!

Financial Freedom Principles by Gary Johnston and Clyde Wilson

]]>My name is Bill Tan & I’ve been a Real Estate Investor for

over 25 years. I have successfully completed over 400 deals in the last ten years alone. One thing that has made me successful is knowing what the numbers mean and what they mean toYour Bottom Line–Your Real Estate Deals are based on specific calculations and learning the easy to learn fundamentals will Turn you into an Overnight Seasoned Pro!

Bill offers classes in southern California, so check them out!

]]>Do you want to run the best financial calculator program on Windows 7?

If so, you’re in luck!

We’re pleased to announce that our 10bii Financial Calculator is now available for Windows 7! Moreover, if you have Windows 8, Windows 8.1, or Windows 10, you can run the program on those versions of Windows, as well!

It costs less than $20, and *includes* the advanced 10bii+ features such as Bond, Breakeven, and Trigonometric functions.

On Thursday, August 25th, Kyle’s going to be speaking with Gerald Lemoine of The Lemoine Group at FIBI Long Beach. The topic of the meeting is **Using Leverage to Maximize your Return on Investment**.

If you want to learn about how to improve and evaluate your investments’ quality and yield, come to The Grand and listen, then take part in a Q&A to follow the presentation.

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