Sumslip

Guides

These notes explain the ideas behind the calculators. They are not a substitute for the contract or the tax rule that applies to you.

  1. 01How compound interest worksCompound interest is interest earned on interest. The practical question is which balance the rate touches, and how often.
  2. 02How loan interest is chargedOn an installment loan the interest each month is a slice of the balance you still owe, not a slice of the original amount forever.
  3. 03How to compare two ratesTwo percents are comparable only when they describe the same kind of balance for the same length of time.
  4. 04What is inside a housing paymentA housing quote is several bills added together. Only some of them shrink as you repay the loan. When you compare two quotes, change only one of price, down payment, rate, term, tax, or insurance. The gap in the payment and in total interest is then the effect of that one choice. Changing several fields at once hides which one moved the bill. The sample amounts on the page are not a quote from a bank, a card issuer, or an employer. Replace them with the figures on your statement and run the page twice to see which field moves the result.
  5. 05Paying a card balance downCard interest is charged on the balance you still owe. A payment that only covers interest never reduces the debt. Keep the balance and the rate the same and change only the payment. The change in months and in interest is the effect of the fixed payment. Leave new purchases out of that balance. The sample amounts on the page are not a quote from a bank, a card issuer, or an employer. Replace them with the figures on your statement and run the page twice to see which field moves the result.
  6. 06What an extra payment doesExtra principal reduces the balance that next month's interest is calculated on. The gain from an extra payment is the interest saved minus any early-repayment fee. Looking only at the interest saved overstates the gain when the contract charges a fee. Write the fee down before you compare it with the loan page. The sample amounts on the page are not a quote from a bank, a card issuer, or an employer. Replace them with the figures on your statement and run the page twice to see which field moves the result.
  7. 07Nominal money and today's moneyA savings result is in future currency. Inflation restates that amount in today's buying power. Put the future amount from the compound page into the inflation page if you want today's buying power. Reversing that order applies inflation twice or not at all. Keep the nominal result and the inflation result labeled. The sample amounts on the page are not a quote from a bank, a card issuer, or an employer. Replace them with the figures on your statement and run the page twice to see which field moves the result.
  8. 08Months of expenses, not a round targetStart from one month of necessary spending, then multiply by the number of months you want covered. The target is one month of necessary spending times the number of months. Money already set aside goes in the current field, not on top of the target. Adding both in one field makes the required deposit too large or too small. The sample amounts on the page are not a quote from a bank, a card issuer, or an employer. Replace them with the figures on your statement and run the page twice to see which field moves the result.
  9. 09Three different percent questionsRead the question before you pick the mode. The same 20 can mean a share, a change, or the original price. Decide first whether you are asking for a share of a number, a change from an earlier number, or the original price before a discount. The same 20 gives a different answer in each mode. The sample amounts on the page are not a quote from a bank, a card issuer, or an employer. Replace them with the figures on your statement and run the page twice to see which field moves the result.
  10. 10Annual pay and an hourly rateThe salary page converts a yearly amount, a monthly amount, and an hourly rate using the hours and weeks you type. Equal annual pay can still mean different hourly rates when the hours or the weeks differ. The page result is gross. Do not compare it with money that lands in the bank until you subtract the deductions on the statement. The sample amounts on the page are not a quote from a bank, a card issuer, or an employer. Replace them with the figures on your statement and run the page twice to see which field moves the result.