Personal Finance Advice

Before making a major purchase on credit you should always take the time to see how this new monthly debt obligation will cost.  You want to make sure that you can afford to buy whatever it is you want to purchase, because your personal finances will certainly suffer if you go ahead and make a major purchase without realizing that there actually isn’t room in your budget to make the monthly payments.  You’re asking for trouble if you just assume that you can cover the cost of a new mothly debt.

One of the great things about the Internet is the myriad calculators available online.  For almost any personal finance question there is a corresponding calculator to help you estimate how much something will cost.  These tools can really help when you would rather not sit on the phone on hold for long periods of time waiting for a customer service representative to help you figure out a monthly payment or if you would rather not try to estimate payments on your own using a pencil and a calculator.  After all, estimating interest can be a little tricky, and if you try to figure it out on your own without assistance you might wind up with a totally incorrect estimate.

What can you use online calculators for? There are several instances when you can hop online and figure out how much payments will be or whether one financial decision is better than the other:

Estimate a payment.  Whether you are looking to figure out how much a mortgage payment will be or if you would rather estimate a potential auto loan payment based on the total amount borrowed and the interest rate, there are plenty of online calculators available.  This is a valuable tool because you might be shocked to discover how much money you’ll owe per month based on a loan that you may have assumed you could easily afford.

Estimate your earnings. If you want to know how much money you need to save in order to reach a certain goal then use an online calculator to figure it out.  Maybe you want to know how much money in interest your certificate of deposit will earn at a certain interest rate, or perhaps your goal is to become a millionaire before you retire.  Whatever the goal, using an online calculator will spell out what you need to do in order to make it happen.

Estimate the time it will take to reach your goal.  If you have a lot of credit card debt you may wonder how much you should pay toward it every month in order to have it all paid off within a few years.  An online calculator can take into account the amount of your debt as well as the interest rate that you are paying on the debt and then reveal how much money you need to put toward the debt monthly in order to reach your eventual goal of a zero balance. 

Figure out which financial decision is best.  Should you rent a home or buy one? Should you buy a car or lease one? These questions can be mathematically analyzed by an online calculator and show you which option is better with regards to the money it will cost you in the long run.

Figure out how much insurance to buy.  Insurance calculators can help you figure out how much coverage you should purchase based on your personal factors.  Instead of just choosing an arbitrary number for the amount of coverage you need - or just accepting whatever an insurance representative says as the best option - do your own homework to find out what amount of insurance you need.

With so many tools at your disposal, why not go into a purchase decision as informed as possible?