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TIME VALUE OF MONEY

How much does the value of money change with time? This model is about a lump-sum of money and how its value changes with time, assuming a fixed interest rate.

The Payments Caclulator allows you to explore financing opportunities.  Do "what if" scenarios. Change interest rates, payment frequency, and payback time.   Determine and compare the size of payment and amount of interest you pay in different financing scenarios.  The model allows you to set up as many as three examples for side-by-side comparison.

How does a loan get paid off?  This calculator follows the expected payments during the life of a loan.  It will show you the balance after each payment, right up to the final payment.  It also shows you how much of your money was used to pay interest on the loan.  Be sure to check out the printer friendly page to see details for each payment.

How does saved money build up?  This calculator shows how your money will grow in a savings account.  It is the other side of Balance Paying Down.  Again, be sure to check out the printer friendly page for details.

This is where you will find links to forms mentioned elsewhere on this site, or in the book Spend Joyfully. Go ahead and browse.

Comments about the accuracy of these calculators:

Each of these modules makes calculations based on how money changes its value as time passes.  While the results shown here are accurate, they may not be the exact same method used by your bank, or credit source.  That does not mean anything is wrong.  There can be different assumptions made before doing the math.  Their results, and our results should be very close to the same number.  If the results appear to be wrong, reconsider the possibility of origination fees, monthly participation fees, account maintenance fees, or other charges that have not been considered when you put data into our module.

Some assumptions that might cause variation include:

• We assume there are 360 days in the year, with 30 days in each month.  You can see that February might see a little too much impact from interest since it really only has 28, or 29, days.  But the whole year will still see the correct impact of the interest rate.  This assumption is very common in calculations of this type.
• In the case of Paying Down a loan balance, or Saving Up in a savings account, we assume there are no management fees, or other charges assessed to your account.
• Our tools do not provide daily compounding of interest rate.  Rather, the compounding period is the same as the frequency of the payment.  One exception to this is in the module Time Value of Money, where the compounding period is monthly.