Comments on: Start Late, Finish Rich http://www.getrichslowly.org/blog/2006/05/10/start-late-finish-rich/ personal finance that makes cents Fri, 10 Oct 2008 22:12:11 +0000 http://wordpress.org/?v=2.5.1 By: J W http://www.getrichslowly.org/blog/2006/05/10/start-late-finish-rich/#comment-148326 J W Wed, 17 Sep 2008 00:48:05 +0000 http://www.getrichslowly.org/blog/2006/05/10/start-late-finish-rich/#comment-148326 VinTek, yu need to stop what you are doing and go back and read the book (if you ever read it in the first place!). You are trying to argue apples and oranges when the conversation is about grapes! Something that might help: either highlight the important stuff (which Mr. Bach does for you at the end of each section), or write it down on a legal pad to make your own set of Cliff's notes. You obviously need them! VinTek, yu need to stop what you are doing and go back and read the book (if you ever read it in the first place!). You are trying to argue apples and oranges when the conversation is about grapes! Something that might help: either highlight the important stuff (which Mr. Bach does for you at the end of each section), or write it down on a legal pad to make your own set of Cliff’s notes. You obviously need them!

]]> By: shhhush http://www.getrichslowly.org/blog/2006/05/10/start-late-finish-rich/#comment-90855 shhhush Tue, 26 Jun 2007 01:49:43 +0000 http://www.getrichslowly.org/blog/2006/05/10/start-late-finish-rich/#comment-90855 Those no-interest introductory offers don't usually last a year, do they? I've heard that the interest rates on those cards end of being a big surprise. Nah, I think I'll just double my payments and beg my bank to lower the interest rate for my good behavior. Those no-interest introductory offers don’t usually last a year, do they? I’ve heard that the interest rates on those cards end of being a big surprise. Nah, I think I’ll just double my payments and beg my bank to lower the interest rate for my good behavior.

]]> By: VinTek http://www.getrichslowly.org/blog/2006/05/10/start-late-finish-rich/#comment-36 VinTek Thu, 11 May 2006 18:15:28 +0000 http://www.getrichslowly.org/blog/2006/05/10/start-late-finish-rich/#comment-36 The example from the book makes no mathematical sense at all. Let's say you borrowed $15,000 at a typical credit card rate of 21%. You'd be paying $299.90 per month. By the time you finished paying off the loan, you'd have paid a total of $20,987.70 in interest. But suppose you stretched this payment plan out to 30 years. Then you'd be paying $263.01 per month and end up paying a total of $79,693.60 in interest. I have no idea how you'd get an extra $150 per month for investments. Under this scenario, you'd only get $37 per month. Your investment is cut by more than three quarters! Alright, let's say then that you've negotiated a lower rate of 17% interest instead. To come close to paying $300 per month at that rate for 10 years, you will have to have borrowed $17,000. Then you pay $295.46 per month and end up paying a total of $18,454.72 in interest. But if you stretch the payments out over a 30-year period, your payments drop to $242.36 per month, and you pay a total interest cost of $70,251.33. You get $73 extra per month for investment, not $150. So your investment cut by more than half! Okay, maybe the author assumes that your credit card interest rate is equivalent to your investment gains. So we'll change the interest rate to 10%. In order to come up to the hypothetical $300 per month payment plan at this rate, you will have to borrow $22,500. With that, you pay $297.34 per month and a total of $13,180.70 in interest. Change the payment plan to stretch over a 30-year period and your payments drop to $197.45, with a total interest paid of $48,583.30. You get an extra $100 per month to invest. This is insane! At the end of 30 years, you've paid $26K more in interest and you've *still* knocked down your savings by a third! Not to mention that as long as you've got a balance on that card, you'll be paying interest on any additional purchases. I don't care if your math-fu is weak or not. You have to run the numbers. What you don't know *can* hurt you. The example from the book makes no mathematical sense at all.

Let’s say you borrowed $15,000 at a typical credit card rate of 21%. You’d be paying $299.90 per month. By the time you finished paying off the loan, you’d have paid a total of $20,987.70 in interest. But suppose you stretched this payment plan out to 30 years. Then you’d be paying $263.01 per month and end up paying a total of $79,693.60 in interest. I have no idea how you’d get an extra $150 per month for investments. Under this scenario, you’d only get $37 per month. Your investment is cut by more than three quarters!

Alright, let’s say then that you’ve negotiated a lower rate of 17% interest instead. To come close to paying $300 per month at that rate for 10 years, you will have to have borrowed $17,000. Then you pay $295.46 per month and end up paying a total of $18,454.72 in interest. But if you stretch the payments out over a 30-year period, your payments drop to $242.36 per month, and you pay a total interest cost of $70,251.33. You get $73 extra per month for investment, not $150. So your investment cut by more than half!

Okay, maybe the author assumes that your credit card interest rate is equivalent to your investment gains. So we’ll change the interest rate to 10%. In order to come up to the hypothetical $300 per month payment plan at this rate, you will have to borrow $22,500. With that, you pay $297.34 per month and a total of $13,180.70 in interest. Change the payment plan to stretch over a 30-year period and your payments drop to $197.45, with a total interest paid of $48,583.30. You get an extra $100 per month to invest. This is insane! At the end of 30 years, you’ve paid $26K more in interest and you’ve *still* knocked down your savings by a third!

Not to mention that as long as you’ve got a balance on that card, you’ll be paying interest on any additional purchases. I don’t care if your math-fu is weak or not. You have to run the numbers. What you don’t know *can* hurt you.

]]> By: Cat Connor http://www.getrichslowly.org/blog/2006/05/10/start-late-finish-rich/#comment-35 Cat Connor Thu, 11 May 2006 18:01:39 +0000 http://www.getrichslowly.org/blog/2006/05/10/start-late-finish-rich/#comment-35 It absolutely is, and that's one of my peeves with the author. He pretty much assumes 10% returns on everything, because he also assumes everyone is using optimal investment vehicles. If you are, then 10% is not unreasonable, so I left that number in the post; however, while I still think saving at the same time as paying down debt is a great idea, that 10% doesn't apply to someone who prefers more conservative investments. It absolutely is, and that’s one of my peeves with the author. He pretty much assumes 10% returns on everything, because he also assumes everyone is using optimal investment vehicles. If you are, then 10% is not unreasonable, so I left that number in the post; however, while I still think saving at the same time as paying down debt is a great idea, that 10% doesn’t apply to someone who prefers more conservative investments.

]]> By: luneray http://www.getrichslowly.org/blog/2006/05/10/start-late-finish-rich/#comment-34 luneray Thu, 11 May 2006 17:43:50 +0000 http://www.getrichslowly.org/blog/2006/05/10/start-late-finish-rich/#comment-34 When the author discusses saving, does he mean putting it in an IRA or CD account where you can't touch it, or actually having a stash of cash available for emergencies. <i>Assuming a 10% annual return on your money</i> That's a pretty big assumption, innit? When the author discusses saving, does he mean putting it in an IRA or CD account where you can’t touch it, or actually having a stash of cash available for emergencies.

Assuming a 10% annual return on your money

That’s a pretty big assumption, innit?

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