I'm hopeless when it comes to math with interest

**mateosbaby** · 12-30-2009, 04:54 PM

OK, help me out here. I love algebra, but when you start working with percentages, I get lost.

My husband has a nice sizable chunk of money from his side business he's quitting to put into our emergency fund for all the moving, etc, (see siggie) so that's why I'm looking into this. We're trying to figure out if we should pay off SM, or pay that EM fund first. Either way, we're OK, I believe. He has $400 less than what SM has left, but he also has an outstanding bill out there that someone hasn't paid yet (hopefully very soon!). Then he'll have enough, plus a nice chunk left over.

So I want to put a min. of $500 a month on my Sallie Mae student loan (again, see siggie). The interest rate changes every 3 months, but right now it's at 3.75%. I think it only went up the first year or 2 I had it (my first payment was due Jan. 3, 2003, or something like that, since I graduated in May 2002), and every 3 months the payment has gone down a few cents to a dollar. Right now my min. payment is $50.62, but I just finished a 3-mth cycle, so that could go up or down a bit. Right now, I have $406.07 already in our savings that I can put toward SM instead, plus I had planned another $510.79 this month to savings, but I would divert that to SM, as well.

So if I do this, how fast could I pay that off? I may actually be able to do $550 a month, so how much faster would that pay it off? (And if you have a nice simple formula I could steal from ya, that would be really awesome!

)

I hope I didn't confuse anyone...

**Luckybustert** · 12-30-2009, 07:27 PM

If you use Excel, here's a link to Loan amortization and Loan analysis templates that are very easy to use and understand: http://office.microsoft.com/en-us/ex...346401033.aspx

Be careful with Sallie Mae....they have some practices that seem rather questionable. When my loans first went into payback I'd go online and they'd say you owe this much, I'd pay it, and a couple days later I'd log back in and they'd show that I'd paid, but now it says I owe a different amount and I'm 57 or some ridiculous number of days delinquent and of course this all comes with additional fees/interest tacked on, right? I very recently consolidated my student loans and that paid SM off, but haven't received the notice yet on who will be servicing the new loan. Praying up one side and down the other that it won't be SM!!!

**never2late** · 12-30-2009, 10:24 PM

Sara,

I found this debt calculator on Dave Ramsey's website. Hope it helps.

https://www.mytotalmoneymakeover.com...ContentId=4715

**Greebo** · 12-31-2009, 06:35 AM

The way I set up to determine how long a debt will take to repay is in excel.
I create the following columns for each debt:
Date
Balance
Rate
Payment
Interest
Extra
Principal
New Balance

You need to enter the right formulas for each cell. That means doing one row correctly, then copying the entire row down to the next row, and so forth. Some cells get numbers, not formulas, and those cells get changed on the way down.

Date - Enter the date of each payment in this column. You can get fancy and use formulas to calculate future dates, but its not necessary.

Balance - Row 1 is the starting balance of the debt. Row 2 and beyond you make it equal the new balance from the previous row. To do this, you click on the cell, push =, then click on New Balance from the row before.

Rate - Enter the annual interest rate as a decimal - 1% = 0.01, 3.5% = 0.035, etc.

Payment - enter the MINIMUM payment here.

Interest - now this is a bit tricky. Your formula needs to be the annual interest rate divided by 12, times the existing balance. It will look like this - and NOTE the parenthesis! =(Rate/12) * Balance Rate is the rate cell from the same row, and balance is the balance cell from the same row

Extra - here you enter any extra money you put towards the loan

Principal - This will be =Payment - Interest + Extra

New Balance - and this is =Balance - Principal

Do this for each debt and you'll be able to predict how long it will take you to get each new balance to 0.

**stinkbug** · 12-31-2009, 09:34 AM

Greebo....

I was trying to follow that, but my head exploded!

**Greebo** · 12-31-2009, 01:21 PM

Originally Posted by stinkbug

Greebo....

I was trying to follow that, but my head exploded!

Hey, you know, if you wanna tell me where you got lost, I'll be happy to go into greater detail.

Otherwise, hope that head exploding works out for ya...

**lisettelovebug** · 12-31-2009, 01:23 PM

http://www.whatsthecost.com/snowball.aspx

that is a snowball calculator that can tell you how long it will take to pay off one bill, or many bills

**mateosbaby** · 12-31-2009, 01:25 PM

Well, luckily, I have a little bit of experience in Excel, but not a lot. I have my budget all set up in Excel, and I had to learn a few tricks to get those sheets to work together. Thank goodness husband is a techie! Of course, he doesn't know these math formulas like he knows how to link sheets... Oh-well. But this is great, Greebo! I think I can get it to work based on your explanation.

I'll let you know what I figure out.

**Greebo** · 12-31-2009, 01:30 PM

Originally Posted by mateosbaby

Well, luckily, I have a little bit of experience in Excel, but not a lot. I have my budget all set up in Excel, and I had to learn a few tricks to get those sheets to work together. Thank goodness husband is a techie! Of course, he doesn't know these math formulas like he knows how to link sheets... Oh-well. But this is great, Greebo! I think I can get it to work based on your explanation.

I'll let you know what I figure out.

If you have problems, PM me for my email, and send me the spreadsheet, and I'll help ya out.

**mateosbaby** · 12-31-2009, 03:07 PM

OK, I ran the numbers, and if we stick with this, $500 extra now on Sallie Mae every month, and then snowball the car and then my student loan, we will be debt-free (except the house) in April 2012! Woo-hoo! Thank you so much, Greebo, for that excellent shortcut with Excel! Worked like a charm! The nice thing is, I can switch the extra amount higher or lower for each individual month depending on what life throws at me. Most online calculators only let you do it with one number for the entire length of the loan.

Thank you, thank you, thank you! I have renewed hope, which of course is always a good thing!