The Personal Finance Calculator doc

[...]... people, a home mortgage is their largest single debt outstanding The amount to include is not the original amount of the loan but the current outstanding balance The reason is because a part of the monthly payments made to the lender over the duration of the mortgage reduce the outstanding balance of the loan The current outstanding balance of the loan may be obtained directly from the lender or from mortgage... statements from the lender You can also determine the balance yourself See the financial calculator in section 20, which explains how to determine your mortgage balance Add up all the amounts owed to others and you have the total of your liabilities Net Worth Your net worth is the difference between the totals of your assets and liabilities In other words, if you sold all your assets for the values stated... is one of the most important concepts in personal finance decision-making Money does not have the same value over time due to the fact that it earns interest Consequently, a dollar today is not the same as a dollar in the future even if it is the same physical dollar bill note that is presented Investing that dollar today yields an amount greater than the dollar in the future Put another way, the rate... decision as to whether to take a lump sum now or receive a series of payments into the future The impact of the time value of money is dependent on the following three factors: 1 The amount of money 2 The annual rate of interest 3 The length of time Assessing Your Current Wealth 21 No doubt you are familiar with these factors from your school days when you used them to determine the simple interest... be different from every other book on the market There are no basic money management books that provide the tools and resources to determine and quantify answers to personal financial situations and most people’s pressing financial problems There are countless personal finance books on the market, but many do not address how to quantify the specifics of each situation to make the decisions that will help... always the same as those projected By recording the actual amounts and comparing them with the budgeted amounts, you can immediately see the differences, called variances Spending more than a budgeted amount for one item can be offset by spending less than the budgeted amount for another item Similarly, if actual income exceeds actual expenditures, there is a surplus, which means additional cash The opposite... conservatively valued so as not to overstate their value In an actual sale of these items, you might get far less than the estimated values Add the estimates of the value of all the items that you own and you will have the total of your assets Liabilities Begin by listing your most current debts, such as utility bills, telephone bills, and others Next, list the balances outstanding on your credit card... are short-term goals while others are longer term It is often easier to concentrate on the short-term goals and neglect longerterm goals By assigning priorities to each of the goals and quantifying their cost, you can determine the amount of savings needed to fund them Figure 3.2 contains an example of Mr and Mrs X’s goals and the amounts needed to achieve them Column 1 shows the estimated amount of money... your budget for several months into the future There are many personal finance software programs, such as Quicken and Microsoft Money, that make it easy to compile a budget using your personal computer A budget can be drawn up in six easy steps: 1 Estimate your future net income for the period of the budget 2 Determine your expected expenditures during the period of the budget WORKSHEET 3.1 How to develop... provide you with an estimate of the value of your house The value of cars can be obtained from used car price guides such as the N.A.D.A Official Used Car Guide and the Kelley Blue Book (www.kbb.com) These guides can be found in most public libraries, or you can obtain the price of your car from your bank, which should have copies of these guides Household furniture, clothing, and personal effects should be . overstate their value. In an actual sale of these items, you might get far less than the estimated values. Add the estimates of the value of all the items that you own and you will have the total. arranged in order of liquidity; that is, the ability to convert them into cash without losing much in the conversion. The most liquid are at the top of the list and include cash, checking accounts,. be different from every other book on the market. There are no basic money management books that provide the tools and resources to determine and quantify answers to personal financial situations