Posts Tagged "loan payment"

Leverage Part 1: What is Leverage?

Posted by Preet on Aug 1, 2007 | 0 comments

Leverage: Think of it as using “other people’s money” to make money more quickly. Probably another topic that is best explained with an example. Greg has $1,000 a year to invest for 10 years. Assuming a rate of return of 10%, at the end of 10 years he will have $17,531. BUT, we know from the post on the magic of compound growth that TIME has a large effect on growth.  The philosophy is that if you could instead take all that $10,000 over 10 years and just put it in now, you will have more money than by putting it in over 10 years. Okay, let’s look at a simple use of leverage: Greg only has $1,000/year, so he can afford a loan payment of...

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Refinancing your home Part 2: An Example

Posted by Preet on Jul 27, 2007 | 2 comments

Okay let’s show how an actual couple ended up freeing $915.80/month by refinancing their home. I’ve rounded the numbers, but they are from a real life scenario. We’ll begin with a snapshot of what their financial situation was BEFORE: Home Value: $250,000 Mortgage: $150,000 balance, 20 years left, 6% interest rate = $1,070 Monthly Payment Credit Card Debt: $10,000 balance, 18.8% interest rate = $500 Monthly Payment Vehicle Loan: $26,000 balance, 8% interest rate = $500 Monthly Payment Department Store Charge Cards: $5,000 balance, 28.8% interest rate = $250 Monthly Payment In this case, they have a total debt obligation of $191,000 and total...

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