05 05 14 Understanding Credit Card Debt

hello again this is Mr. Solis from
advance quantitive reasoning and we’ll be talking about understanding
credit debt and how we pay it off we have this particular situation
where we have a debt of ten thousand dollars said a credit card an APR 25.94% interest your make sure put percentage it is it’s
a percentage and we have t equal to three years so this is what we’re going to be doing
right here we’re gonna do something called an amortization table to analyze what is going on
with our debt as we pay it off what happens
seldom wanna start out with their months old if
we have three years census is a monthly bill this is actually gonna be 36 months now our date did in advance and its big n just to let you know that’s a total
number love a over periods are going by so ray here wanna do isn’t gonna go
ahead and use my TV Emery done this so I know I am what challenges but four
hundred dollars another go ahead and find out what payment I need to make to
be able to go ahead and pay this off within 36 months so he taps go into TV and solver of course and I start this
allister putting and 36 I don’t have to do three times 12 but I could you know it
doesn’t really matter twenty 5.94 percent interest I of course the PV is 10,000 that’s a positive 10,000 remember now
we’re doing debts were or pain this of future value is zero
because we want to go in pit of 12 periods in each year so there was a and
I need to make sure that it said and if it’s in it if it’s
not in and I have to put in an end sonya find out with my pay mystically
and pay this offer than 36 months that’s 400 two dollars and 50s 9 cents self 402 so the the payment to make PMT is for all to .5 9 and double check and make sure for 25 90 s so this is how you start number one
you gonna start out with a month so we have first month second month now we start
out with their belts ten thousand dollars now for interest how much interest for
getting charged remember this is a monthly so what we have to do is that we take
our balance multiply that by the percentage was going to go ahead
and increase this by which is going to be point to 5 94 we also divide this by 12 because
we’re gonna go ahead and divide this amongst all payments and said one year
so we’re going in the monthly amount solo this tree here concert to be so originally its 10,000 times point 25 94 whatever that interest is divided by
12 really should they use a formula form for this one right here go ahead and do that so that’s interest divided by 12 and so they hear this is only half so 10,000 she times point 25 94 divided by 12 so its gonna go in the interest only get
charged is going to be two hundred sixty dollars and 17 cents
to sixteen-point seventy and that’s gonna
be subtracted from what ive so this can be added onto my knee I’ll to my balance so my principle that I’m
pandering going to go ahead and pay of fun to the principal that’s based off
the interest plus my payment so basically English
take payment and subtract the interest so let’s see my payment is
right here for old 2.59 minus the interest which is to 16.17 sheesh which came from right here so 402 point 59 minus 216 what’s point 17 that becomes 182 forty 186 forty-two and that’s how much money I’m going to
be taking away from my balance because right now I’m since the
reading on interest rate here since we’ve added on interest witnesses are steps back in our we only
pay off certain amounts right now we go ahead and pay this payment we go ahead and pay that plus you know we’re paying off the interest
first and then we’re going after the principal this is our principal really this is
what we’re going to be pulling out over there so now we go
ahead and take our balance and subtract the principal subtraction so this is going to be 10,000 minus 18 6.42 certs 10,000 minus while and then 86 points 42 so that’s 9800 %uh thirteen dollars in 58 cents which now becomes our balance over here
9800 thirteen dollars and 50 8 cents then we start the whole process over
again tell ray here we take nine 18 13.58 times point 2594 divided by 12 with again someone to do this for two months now
and show you one more way of doing it using the computer 98 13.58 times point 5825 night for developmental now the interest that is
honest 200 twelve dollars and thirteen cents to twelve-point 160 check that their
concerns know it’s actually fourteen cents for
roundup and of course in a straight there from
our payments so that their pain is 400 two dollars and 59 cents minus 20 to Thunder it twelve dollars
and fourteen cents 402 point 59 minus 12 are 2 1/2-point 14 so now its 190 point forty-two it incurred forty-five which was anxious to track now from our
principal again for Meyer balance so it’s 9 H 13 .5 8 -1 ninety point 45 saw 98 13 .5 8 minus 190 point 43 45 and that’s nine 6 23 point 30 now if I wonder what’s happening here
each time we go ahead and make a payment were
paying off the party the principal are interest rates go down we started
with 216 ray here and now we’re going down to 212 so the
interest has gone down it’s time to make a payment they’ll go
down and part overpayment one known as this as the interest goes
down when our prints posters coming back up
so that means eventually we’re going to be paying pure
principle of and that’s what happens with so as our
as our balance goes down the less for paying into the into the into the old the principal %uh tomorrow then leaping into the
entrance the to the them to the principal and I’ll just come
out that way after one and let me show you one more trick one
more thing before I finish go ahead and grab my anything I have my
balance remember where balance was ten thousand dollars this is what I’m gonna be doing interest is going to be this is equal to this
10,000 mmm times point 2594 divided by 12 now we have our principal member payment
was a payment go and take a look me that’s smaller so this is equal to 40 to point 59 minus where interest was the Seas is we’re
doing and now we have a new balance which
should be equal to this minus the principal and so there we go then it follows is
same exact things and I just need to go and do this equal to this insists its everything we hear wanna go
and bring this down for this one supporting that you go ahead and do that
first before you do this little trick because as you can see I have everything
ready here I have the months balance interest
principal New Balance it’s on a gravel this double-click and they will go Letterman
and modernization and oldest know what that means when you
have those print the seas around that they needed you overpaid miss you can
get a check for 18 cents which is exactly what they have to do
alright so you see this it wouldn’t be discussing this morning
class I it’s gonna be a lot of the neat stuff like this I find this
fascinating out the entirety days later all right
bye bye

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