Guides
In-depth explanations of the arithmetic and the assumptions behind the calculators. Every guide shows the formula, links to the primary sources, and carries a review date.
15 guidesBy Kostan Proff
Home and mortgages
How to Read an Amortization ScheduleEach column of a mortgage amortization schedule explained, from the payment split through to the final adjusted payment that closes the loan.Mortgage Rate and Term TradeoffsHow rate and term move a mortgage payment together, what a shorter term costs in monthly payment and saves in total, and how to read the tradeoff.Understanding APR and the Annual Percentage RateWhat APR includes that the interest rate does not, how a quoted rate and an annual percentage rate differ, and what to compare when you see both.Down Payment and Closing Costs ExplainedWhat a down payment does to a loan, what closing costs cover and how they are calculated, and why they change the number before the first month.Estimating Property Tax and Home InsuranceWhere property tax and homeowners insurance estimates come from, which inputs drive them, and why your own figures usually beat any published average.The Math Behind Extra Mortgage PaymentsHow an extra principal payment shortens a loan, why the scheduled payment does not change, and what the effect looks like over different horizons.Monthly Payment vs Total Cost of a MortgageA lower monthly payment can cost more over the life of a loan. Here is how to compare a payment against the total a mortgage actually costs.How Mortgage Amortization WorksWhy early mortgage payments are mostly interest, how the balance moves month by month, and what happens to the split as the loan ages over time.Mortgage Payment Calculator ExplainedHow the monthly mortgage payment is worked out, what PITI adds to it, and what the amortization schedule shows you about the first years of a loan.
Renting and owning
Common Mistakes in Rent vs Buy ComparisonsThe assumptions that quietly swing a rent versus buy comparison, from ignoring maintenance and transaction costs to treating appreciation as a promise.Rent vs Buy Calculator ExplainedHow the rent versus buy comparison is built, what the crossover month actually means, and which costs sit outside the calculation entirely in practice.
Investing
Inflation and Real Returns ExplainedWhy a nominal return and a real return are different numbers, how to convert one into the other, and what that means for a savings balance over time.How Compounding Frequency Changes ResultsWhat happens to a balance when interest is credited daily, monthly, quarterly or yearly, and how to read the effective annual rate it produces.Compound Interest vs Simple InterestThe difference between simple and compound interest, worked through with the same numbers, and why the gap widens the longer money stays put.Compound Interest Calculator ExplainedHow the compound interest projection is put together, what the effective and real rates mean, and where the arithmetic stops being simple to follow.
Missing something?
Guides are written around the arithmetic readers find hardest to follow. If a financial concept is not covered here, tell us which one and what about it is confusing.