Tuesday, November 27, 2012

Financial Calculators I Use to Help Us Save

I’ve been a long time fan of financial calculators. These helpful tools have led me find all sorts of valuable savings or ways to save, and they have assisted me in making a variety of financial decisions for our family. In fact, I’ll venture to say that various financial calculators have helped to save and/or make us thousands of extra dollars over the years.

The following are some of the financial calculators that we’ve used and how they’ve managed to save us some serious cash as well as helped us plan for the future.

Once we had obtained our mortgage, we could use the amortization sheet that our lender provided us with to help determine what we would pay over time. However, before this point, we wanted to know what we were looking at for costs when it came to different mortgage amounts, interest rates and time frames.

Utilizing mortgage calculators to figure out interest costs over time helped us cut thousands of dollars in interest off our loan amount. Rather than going for a 30-year, fixed-rate mortgage on a higher loan amount, we instead put more down on our home, and took on a 15-year mortgage.

While the monthly payment amounts were higher with this type of mortgage, by taking on a shorter term mortgage, we would effectively be able to cut the interest we owed over the course of the loan’s life in half. And knowing that by taking on a 15-year mortgage, we could cut our interest rate by nearly a full percent compared to a 30-year mortgage, we realized that we could shave thousands more off our mortgage costs over time.  Eventually, such knowledge allowed us to become mortgage free altogether.

Social Security
I’ve recently started a spreadsheet to track our annual earnings and in turn make keeping up on our Social Security estimated benefit calculator a little easier. The calculator into which I plug our income information is found at the Social Security Administration’s website (ssa.gov), and it requires data such as our dates of birth, age at retirement, how we’d like our estimates presented to us (either in today’s dollars or future dollars that have been adjusted for inflation), and income information.

This way we can get a good feel for what our benefits could be upon retirement, and plan for a reduction in those benefits by a possible 24 percent or more should the system not be “fixed” in several decades.

Self-Made Calculators
I have several calculators that I’ve created myself to help me determine and better plan for various aspects of our personal finances. The first of these calculators is a tax calculator. While this isn’t so important for my wife, it is important for me as a self-employed individual. Using this calculator allows me to keep an eye upon how much in self-employment taxes I owe at any given moment, and it keeps me from falling too far behind in accruing extra cash to make such payments.

The second self-made calculator is one that tracks our net worth. It not only breaks down available secure assets such as savings, bonds, certificates of deposit, and cash, but it also includes non-guaranteed assets such as our retirement accounts, loans to family members, and home equity (when we owned our home), and factors in any liabilities such as our mortgage (again, when we owned our home), and any outstanding debt.

The secured assets comprise one total, the non-guaranteed assets another, and then we have a combined total for an overall net worth once our assets totals are relieved of any liabilities. We update this calculator regularly, and it allows us to stay apprised of our overall financial situation at a moment’s notice.

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