Meet Today's
Top Financial Tool --
The On-Line Calculator
by Robert K. Heady
Bank Rate Monitor
 I
have some smashingly good news for you. The Internet has taken almost all
the work of boring, complicated financial numbersso much so, in fact, that
you can now handle your own fiscal projections for everything from mortgages
to college costs.
You
can do it in the flick of an eyelash. Just by using any of the scores of
free calculators on the Internet.
You
don't need to know a blessed thing about mathematics, economics or the exotic
world of personal finance. Simply turn on your PC, hook up to the Internet,
type in a few numbers in the right boxes on the screen, click a button and
a calculator will give you key answers in a matter of seconds.
The
trick is knowing who offers which calculators and how to find them Here's
an example:
A
husband and wife wanted to know how fast a $100,000 30-year mortgage would
be paid off, and how much money they'd save, if they a) added $50 a month
to their payment, or b) put in an extra $100 per month.
An
associate of mine, who is a math expert with an economics degree, used a
hand-held Texas Instruments calculator to figure out the answer in just
under three minutes. When I gave the same problem to an electronic calculator
on Bloomberg's Web site (http:www.bloomberg.com/cgibin/ilpc.cgi), it gave
me the answer in 24 seconds.
The
couple would save $30,517 by adding $50 more, or save $48,823 with $100
more. And they'd pay off their loan up to nine years faster with the latter
strategy.
The
big advantage of using on-line calculators is they enable you to work with
a slew of instant "what-if" scenarios, to see which one best fits
your budget, lifestyle and goals. Imagine the drudgery or paying some expert
a few hundred bucks to do the same thing by hand.
Suppose
you want to know how much you'll save by refinancing your present mortgage,
or are wondering what price house you can afford based on a specific monthly
payment. In the first example, you'd simply plug in your old interest rate,
original loan amount and term, the number of months remaining on the original
loan, the new interest rate, and the loan amount and term.
Presto!
The calculator shows youto the pennythe remaining balance on your loan,
how your monthly payment will change, how much you'll save each month, and
the difference between your old total interest cost and the new one. It
could be tens of thousands of dollars.
Bottom
line: You quickly see the net amount
you'll save if you decide to refinance, and you can change any part of the
script to compare different scenarios. Mortgage Market Information Services
Web site at http://www.interest.com/calculators.html will even show you
how much you can deduct from your taxes for mortgage payments made year
by year, if you use itemized deductions on your tax form.
Trying
to decide between leasing or buying a car? Go to the calculator at http://www.obanet.com/shr-cgi-win/autoleas.exe?menu=3.
It'll even tell you the difference in average yearly cost.
If
you're agonizing over college expenses, author Mark Kantrowitz has created
an array of calculators that will make your job easier by clicking onto
http://www.finaid.org/finaid/calculators/finaid_calc.html. Kantrowitz helps
you determine the yields needed on investments to achieve the return you'll
need over a specific number of years, and his sources on financial aid are
excellent.
Some
Internet sites offer several calculators covering different subjects, such
as home, auto, retirement, college, etc. Others zero in on only one money
topic, like savings. If you can't find the calculator you need, go to a
search engine such as Excite or Yahoo. Plug in keywords such as "mortgage
calculator," and go from there. Many sites will try to peddle you stocks,
credit cards or home loans as they offer free use of their calculators,
so it's good rule to visit more than one site and ignore the hype.
Internet
calculators used to be few and far between, but now they're basic tools
used by just about every cyber-maven and Internet peddler in the business.
You'll learn as you use the calculators and tighten up your financial planning,
because electronics can empower the average guy to become a Captain Billy
Whiz Bang in making better decisions with his money.
You
no longer have to lean only on the experts to know what's best for your
wallet. By roaming the Internet and punching up a few numbers, you can prove
it to yourself without being a genius at math.
Give
the calculators a try.
Editor's Note: Robert K. Heady is the founding publisher of Bank Rate
Monitor and is the co-author of the book, "The Complete Idiot's Guide
to Managing Your Money." You can write to him in care of the Bull &
Bear or send e-mail to jrnl8888@aol.com. |
