Comments on: Questions http://www.bretwhissel.net/blog Curiosities of a Rambling Mind Fri, 27 Jan 2012 06:34:00 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Scott Yost http://www.bretwhissel.net/blog/calculator/more-questions/comment-page-3/#comment-369 Scott Yost Fri, 27 Jan 2012 06:34:00 +0000 http://www.bretwhissel.net/blog/?page_id=76#comment-369 Okay, now that I've thought about it, I think you're right about the interest compounding. I was able to get the calculation to run using the RATE() function in excel or in google docs. Thanks for all your work, it has been really helpful. Okay, now that I’ve thought about it, I think you’re right about the interest compounding. I was able to get the calculation to run using the RATE() function in excel or in google docs. Thanks for all your work, it has been really helpful.

]]> By: Bret Whissel http://www.bretwhissel.net/blog/calculator/more-questions/comment-page-3/#comment-368 Bret Whissel Thu, 26 Jan 2012 12:53:46 +0000 http://www.bretwhissel.net/blog/?page_id=76#comment-368 Hi, Scott. Interesting idea, but you're right: the calculator doesn't allow for negative payments. My intuition suggests the math isn't quite right for an investment scenario either, because interest is not compounded. But I need to think about this for a bit with paper and pencil to verify that notion. Hi, Scott. Interesting idea, but you’re right: the calculator doesn’t allow for negative payments. My intuition suggests the math isn’t quite right for an investment scenario either, because interest is not compounded. But I need to think about this for a bit with paper and pencil to verify that notion.

]]> By: Scott Yost http://www.bretwhissel.net/blog/calculator/more-questions/comment-page-3/#comment-367 Scott Yost Thu, 26 Jan 2012 06:56:01 +0000 http://www.bretwhissel.net/blog/?page_id=76#comment-367 Hi! I use this calculator all the time to compare and contrast various ways to pay down debt. I'm easily able to see which method is more effective to pay down a debt, but now I'd like to calculate the effective interest rate of these solutions, so I can compare paying down the debt against investments. For example, if paying an extra $100 on my debt saves me $10,000 after five years, I'd like to compare that to investing $100 for five years and whether it would be better to invest the money. I think this calculation comes down to a negative amortization case along with a negative monthly payment. I tried putting the total money saved as the balloon payment and putting the monthly contribution (negative) in as the payment, hoping that I could then solve for the effective interest rate, but it looks like the calculator doesn't accept negative payments. (it sets my payment to 0 and changes other parameters) Is there a way to do the calculation I'm trying to do using the calculator as it stands? Hi! I use this calculator all the time to compare and contrast various ways to pay down debt.

I’m easily able to see which method is more effective to pay down a debt, but now I’d like to calculate the effective interest rate of these solutions, so I can compare paying down the debt against investments.

For example, if paying an extra $100 on my debt saves me $10,000 after five years, I’d like to compare that to investing $100 for five years and whether it would be better to invest the money.

I think this calculation comes down to a negative amortization case along with a negative monthly payment. I tried putting the total money saved as the balloon payment and putting the monthly contribution (negative) in as the payment, hoping that I could then solve for the effective interest rate, but it looks like the calculator doesn’t accept negative payments. (it sets my payment to 0 and changes other parameters)

Is there a way to do the calculation I’m trying to do using the calculator as it stands?

]]> By: Bret Whissel http://www.bretwhissel.net/blog/calculator/more-questions/comment-page-3/#comment-357 Bret Whissel Mon, 12 Dec 2011 04:21:03 +0000 http://www.bretwhissel.net/blog/?page_id=76#comment-357 Hi, Iowan. The other piece of information you would need will be the periodic payment amount. Since you know the term of the loan, you will be able to directly calculate the total P&I, which is just the number payments times the payment amount. You can also start working backwards from the last payment. If you have an annual interest rate and you're making monthly payments, then the periodic interest rate will be i%/12. If we call the payment amount 'x', then the final interest payment will be i%/12 times x (call this amount I_f). If you subtract I_f from 'x', you'll get the final principal payment. For the next-to-last payment, we would have to pay the same interest as on the final payment, since the final principal would still be outstanding. So if we subtract the final interest payment from the payment amount 'x', the remaining amount must be the P&I for the next-to-last payment. The interest part would be i%/12 * (x - I_f); and the principal part would be (x - I_f). Keep the same pattern going until you've run to the beginning of the term. I hope that gets you started. If you look through the PDF documents on the derivations, you'll find other formulae which will help you calculate P&I for each payment directly, if you prefer. Hi, Iowan. The other piece of information you would need will be the periodic payment amount. Since you know the term of the loan, you will be able to directly calculate the total P&I, which is just the number payments times the payment amount. You can also start working backwards from the last payment. If you have an annual interest rate and you’re making monthly payments, then the periodic interest rate will be i%/12. If we call the payment amount ‘x’, then the final interest payment will be i%/12 times x (call this amount I_f). If you subtract I_f from ‘x’, you’ll get the final principal payment. For the next-to-last payment, we would have to pay the same interest as on the final payment, since the final principal would still be outstanding. So if we subtract the final interest payment from the payment amount ‘x’, the remaining amount must be the P&I for the next-to-last payment. The interest part would be i%/12 * (x – I_f); and the principal part would be (x – I_f). Keep the same pattern going until you’ve run to the beginning of the term.

I hope that gets you started. If you look through the PDF documents on the derivations, you’ll find other formulae which will help you calculate P&I for each payment directly, if you prefer.

]]> By: originaliowan http://www.bretwhissel.net/blog/calculator/more-questions/comment-page-3/#comment-356 originaliowan Sun, 11 Dec 2011 20:47:13 +0000 http://www.bretwhissel.net/blog/?page_id=76#comment-356 Hi Bret, brilliant calculators. I am attempting to write an Excel worksheet which assists me to calculate a "Debt Service"....essentially a backwards amortization. Thus, I know the interest rate, and term in years, but would like to know the total amount paid in P&I over the course of the loan. Your calculator provides this information, but I would like to incorporate it into my worksheets. Any advice or direction would be most highly appreciated. Hi Bret, brilliant calculators. I am attempting to write an Excel worksheet which assists me to calculate a “Debt Service”….essentially a backwards amortization. Thus, I know the interest rate, and term in years, but would like to know the total amount paid in P&I over the course of the loan. Your calculator provides this information, but I would like to incorporate it into my worksheets. Any advice or direction would be most highly appreciated.

]]> By: Bret Whissel http://www.bretwhissel.net/blog/calculator/more-questions/comment-page-3/#comment-346 Bret Whissel Fri, 14 Oct 2011 13:59:09 +0000 http://www.bretwhissel.net/blog/?page_id=76#comment-346 Hi, Ecker. The calculator is not designed to handle this sort of irregularity. Even the spreadsheet would need to be modified to handle a "partial" first payment correctly, but it could be done. Hi, Ecker. The calculator is not designed to handle this sort of irregularity. Even the spreadsheet would need to be modified to handle a “partial” first payment correctly, but it could be done.

]]> By: Ecker http://www.bretwhissel.net/blog/calculator/more-questions/comment-page-3/#comment-343 Ecker Tue, 04 Oct 2011 02:21:27 +0000 http://www.bretwhissel.net/blog/?page_id=76#comment-343 I have made a loan where the borrower because of his cash flow wanted a 5yr loan with semi-annual payments on 6-30 and 12-31 for 5 years but the first one to start this Dec 31 or just 97 days in 2011. We agreed to a payment of $2043.89 on 12-31-2011 and then 10 payments of $3514.08 plus a last cleanup one. How can I get that first payment into the amortization table ? I have made a loan where the borrower because of his cash flow wanted a 5yr loan with semi-annual payments on 6-30 and 12-31 for 5 years but the first one to start this Dec 31 or just 97 days in 2011. We agreed to a payment of $2043.89 on 12-31-2011 and then 10 payments of $3514.08 plus a last cleanup one. How can I get that first payment into the amortization table ?

]]> By: Bret Whissel http://www.bretwhissel.net/blog/calculator/more-questions/comment-page-3/#comment-328 Bret Whissel Tue, 09 Aug 2011 21:42:41 +0000 http://www.bretwhissel.net/blog/?page_id=76#comment-328 I am no accounting genius either, Shar: I'm sure they get paid more than I do. :-) Unfortunately, the spreadsheet is not set up to do what you need it to do. You have a negative amortization situation for at least part of the loan, and bending the current spreadsheet to your will may be more trouble than starting afresh with something much simpler. I am no accounting genius either, Shar: I’m sure they get paid more than I do. :-)

Unfortunately, the spreadsheet is not set up to do what you need it to do. You have a negative amortization situation for at least part of the loan, and bending the current spreadsheet to your will may be more trouble than starting afresh with something much simpler.

]]> By: Shar http://www.bretwhissel.net/blog/calculator/more-questions/comment-page-3/#comment-326 Shar Tue, 09 Aug 2011 20:41:06 +0000 http://www.bretwhissel.net/blog/?page_id=76#comment-326 Hi Bret, Thanks for the site. I am receiving a loan (100K) at 3%. I would like to make a $250 a month payment each month until the loan is paid off and one time each year, I would make a payment of $10,000 on the principal. I played around with the spread sheet you provided, but I'm no accounting genius. Any help would be appreciated! Hi Bret,
Thanks for the site. I am receiving a loan (100K) at 3%. I would like to make a $250 a month payment each month until the loan is paid off and one time each year, I would make a payment of $10,000 on the principal. I played around with the spread sheet you provided, but I’m no accounting genius. Any help would be appreciated!

]]> By: kay simonds http://www.bretwhissel.net/blog/calculator/more-questions/comment-page-3/#comment-311 kay simonds Wed, 29 Jun 2011 03:09:16 +0000 http://www.bretwhissel.net/blog/?page_id=76#comment-311 Thanks Bret, I will. Thanks Bret, I will.

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