On 2005-03-15, Firegryphon <Firegryphon[at]discussions.microsoft.com> wrote:
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If the options that you're talking about all assume that you'll pay
off all of the debt before interest starts accruing, then you're
right. But if you're assuming that you'll start accruing interest,
I don't see how you're going to do this. Let's say that the loan
interest is 9%. Just to break even you have to find some investment
instrument that you're certain will pay at least 9%. If you can't
you're losing money. Breaking even while paying loan interest
can be very hard. The easiest way is to not pay the 9% interest.
That's done by paying off the debt before interest starts accruing.

I know of no way to use Money to create the functionality that you
want. But that may just be a result of my not using debt planner
at all. Still my recommendation to you (don't accrue interest)
is meant to be helpful. If it's not, my apologies. Feel free to
ignore my rambling.

Actually after rereading, I think you missed the point of my post. There is
enough money to pay it off in the time period, however the suggestion that it
be paid in a lump sum at the end might not be the best option depending on
how everything optimizes out. I will be the first to admit that the excel
optimization I did was primitive at best and lacked somewhat critical
functionality, such as interest accrued from money held in a savings account
of some type, though with the amount of money we are talking about here, the
amount of accrued interest on a normal savings account will be pretty minor
and probably not worth the trouble. So sure I'd love it to be able to handle
an "interest bearing account" as a holding area for the no interest same as
cash accounts, just to see how much it can money it can actually save you.
Though this would add a completely new layer of complexity to the problem,
and require another input method. What I'm looking for is the extension of
the input method of things that are already in the software.

In truth all of this is really just a toy. For the most part, I can handle
all of my finances manually without trouble. But if there is some optimal
answer that saves some money in the end as opposed to the level payoff
method, I would be stupid to not take advantage of it since the software came
free with the computer. And if someone actually knew how to use the full
functionality of the software and how to make it do arcane things, I figured
it would be someone here.

So, hope someone comes up with something interesting.

"Mark Horn" wrote:

- quote -

Nice rule to follow, however, the computer that has this somewhat cryptic
piece of software on it broke that rule, which was a replacement for a
computer that completely stopped working.

I have the skills and tools to write software that will do this specific
optimization (if you want to hold an optimization theory discussion, it would
be best left to another venue), however I have neither the time nor the will
to build it up, especially since someone else has given me a piece of
software that seems like it can do most if not all of this.

So your response is appreciated, however it is not value added.

Darren

"Mark Horn" wrote:

- quote -

On 2005-03-13, Firegryphon <Firegryphon[at]discussions.microsoft.com> wrote:
- quote -

I don't have a technical solution for you. But a third option is
not to buy the thing that you don't currently have enough money to
afford, and that you plan on not having enough money to afford when
the promotional period ends.

Just my $.02. Feel free to ignore.

In the debt planner there is a way to set the interest to a promotional rate
that ends at the specific period. However, I do not see a way to force it to
handle the promotional periods that many stores use which accrue interest in
a lump sum at the end of the promotional period if it is unpaid. Is there a
way to tell the optimizer in the debt planner this information? In the help
it says to just plan on paying the entire amount off just prior to this
interest period begins, and then gives a little blurb about treating it like
every other promotional interest card payment if it isn't possible to do so.
I have attempted to do this and the optimizer ends up going just past the
promotional end date and thus unknowingly violates the assumptions it is
using.

If you are unfamiliar with this form of credit plan, here is a short
explanation. Many stores will offer you a plan that for a specific time
period, such as 2 years, you will pay no interest as long as you pay it off
by the end of that time. If you do not pay the full amount in the time
period, depending on the specific wording of the plan, you might have the
following occur:

1) No penalty other than accrueing finance charges for the remaining amount
at the end of the period as if it were a normal bank card.
2) "Penalty" assessed equal to interest for original amount during the
promotional period added as a lump sum.
3) "Penalty" assessed equal to interest for the monthly amount during the
promotional period added as a lump sum.

As you can see in all cases but the first, this drastically changes the
payment plan relative to all accounts. I've attempted to do this in excel
with the solver in optimize mode, and for simple cases it shows there is a
benefit to actually modelling it, however with a complicated case the solver
just dies. The debt planner seems to have a good enough optimizer in it that
it should be able to handle this case, if someone can just tell me how to
give it the information.

Thanks for your help,

Darren