💰 Financial

Saving a deposit on a $320,000 first home

A household earning $68,000 a year saves $900 a month for three years and reaches $32,400, then adds a gift of $31,600 to clear a 20% deposit of $64,000. The mortgage is $256,000 at 6.25% over 30 years, which is $1,576.24 a month and $567,445 in total, so $311,445 of it is interest. Dropping to a 10% deposit would remove a year of saving but add mortgage insurance and raise the payment.

Worked with: Mortgage Calculator, Savings Calculator

Clearing a $5,000 card at $250 a month

A balance of $5,000 at 22.9% APR, paid at a fixed $250 a month instead of the 2% minimum, clears in 26 months and costs $1,358 in interest. The same balance on the minimum payment alone would take more than double that time, because the required payment shrinks as the balance falls. The fixed payment is the whole difference.

Worked with: Credit Card Calculator, Debt Payoff Calculator

Finishing a car loan 16 months early

A $18,000 car loan at 7.5% over five years has a scheduled payment of $360.68 a month and $3,641 of interest. Adding $100 a month clears the balance in 45 months instead of 61 and cuts the interest to $2,702. The saving is $939 and 16 months of payments, which is money that can go to the next goal.

Worked with: Auto Loan Calculator, Loan Calculator

A pay rise that loses ground to inflation

A salary of $60,000 rises 4% to $62,400 in a year when prices rise 5.5%. In the money of the earlier year the new salary buys $59,147, so the household is $853 a year worse off in real terms while the payslip shows an increase. Track the two rates side by side rather than the headline figure.

Worked with: Salary Calculator, Inflation Calculator

Starting retirement savings at 45

Someone who reaches 45 with $45,000 saved and adds $700 a month at 7% a year ends up with about $546,392 at 65. A 4% withdrawal rate on that balance is about $21,856 a year. Starting the same contribution at 35 would roughly double the balance, which shows what the missing decade costs.

Worked with: Retirement Calculator, Compound Interest Calculator

A £5,000 card balance: the 2% minimum against a fixed £250

A household carries £5,000 on a credit card at 22.9% APR and pays the 2% minimum each month, which shrinks as the balance falls. They want to know what happens if they switch to a fixed £250 a month instead.

Inputs: Balance £5,000 at 22.9% APR. Path one: the 2% minimum with the card's £25 floor. Path two: £250 a month, fixed.

Result: The minimum path does not clear the balance inside the calculator's 1,200-month ceiling, and books £69,459.53 of interest by that point. At £250 a month the same balance clears in 26 months with £1,358.22 of interest, so £6,358.22 is paid in total.

What it means: The first £100 minimum pays £95.42 of interest and reduces the balance by £4.58, which is why the payment level decides the cost rather than the balance.

Worked with: Credit Card Calculator, Debt Payoff Calculator

Two £12,000 loans that differ only in the fee

A borrower is offered £12,000 over 36 months at 5.5% with a £250 arrangement fee, against a second lender quoting 5.9% with no fee. The headline rate points at the first offer.

Inputs: £12,000 over 36 months. Offer A: 5.5% plus a £250 fee. Offer B: 5.9%, no fee.

Result: Offer A has a monthly payment of £362.35, an APR of 6.92% and a total cost of credit of £1,294.63. Offer B has a payment of £364.52, an APR of 5.9% and a total cost of credit of £1,122.71.

What it means: Once the fee is priced in, the cheaper headline rate costs £171.92 more over the term, so the APR is the number that ranks the two offers correctly.

Worked with: APR Calculator, Loan Calculator

A three-year fund return against a savings account

£8,000 goes into a fund and is worth £11,600 three years later. The same £8,000 could have sat in a savings account paying 4.5% a year. The question is which return was better.

Inputs: Cost £8,000, value after three years £11,600, alternative rate 4.5% a year.

Result: The fund returned 45% in total, which is 13.19% a year once it is annualised. The savings account turns £8,000 into £9,129.33, a gain of £1,129.33, or 14.12% over the same three years.

What it means: A 45% gain over three years and a 14.12% gain over three years describe the same kind of arithmetic until both are expressed as an annual rate, which is the only form that compares.

Worked with: ROI Calculator, Compound Interest Calculator