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To Save Or To Borrow? app in the Windows Store

Purposes Of The Application

Sometimes, we are anticipating a big-ticket purchase and we ask ourselves whether it would be better to save the money we need for that purchase or to just go ahead and borrow for it. Sometimes, we wonder whether we wouldn't be better off to skip the entire purchase and save our money. How long would it take to save that much anyway? And what if you just took a cheaper deal and saved the difference as part of your retirement nestegg? Put another way, what will the effect of making this large purchase be on your life, your retirement income, your future? Sometimes, you'd just like to know some of these things, even if you decide to take the plunge anyway--at least you'll know what you're doing.

This is the purpose of this application--to quickly and easily answer some of those questions for you.

  1. Use this app while you're searching for and considering that big-ticket item. See how much your monthly payment will be for a loan given the prevailing interest rates in your area. Compare it to your savings options as well as learn what it could mean toward your retirement finances.
  2. When you find the item you're serious about, the one you like, you can snap pictures of it and email them to your spouse and friends--just to show off what you've found. And while you're at it, you can see how much the monthly (interest and principal) payment will be, and compare it to the savings option. You can email that information as well.

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Understanding It

Just to help you understand what you're going to see, we've run an example as shown below. Note first that this sample has no real meaning--the numbers were picked out of the air to demonstrate the app's use and that's all. In the sample, we're going to get together $45,000. We can borrow it over a time frame of 60 months and pay 12.5% annual interest. Our best deal for savings is a mere 1.2% return. Our sample uses a person who still has twenty years (240 months) before she/he wants or needs to retire. When we run this, we see the results as shown below.

ITSBITS To Save Or TO Borrow? Burn The Mortgage! Save On Your Wheels! Catapult Garage Software Save On Your Wheels! Fixed-Rate Amortization Schedule Tool

The first result is pretty straight forward. If we borrow the money, here's our monthly payment amount ($1,012.41) and the amount we'll invest to make the loan, which is $60,744.60 in our example. (A quick subtraction will tell you you're paying $15,774.60 in interest for this transaction.)

The next result tells you that you can save the same amount of money over the same amount of time by putting $727.70 into your savings account AND by doing this you'll save $17,112.78 in interest. Of course, you don't have whatever it is you want to buy for 48 months, but you do save $17K to make up for its absence. Hmmmmmm.....

Now you look at the next result and you find that if you made the same monthly payment as your lender demands, i.e., $1,012.41, you could save your $45,000 in 44 months instead of 48 and you'd still save $16,198.56 in the process.

But wait. No matter your age, you should always remember that you're going to want to retire someday and if you have even a tiny brain you're not going to want to depend upon the government to take care of you. So, now you see that if you use either of the methods above and save your $45K, but keep it at a measely 1.2% interest rate (and you should be able to do far better than that as time goes by), even if you made no further additions to it you'd have an extra $54K to use in retirement. Not impressed yet? OK, the next result shows what happens if you continue to add that monthly payment you're saying you can afford to your $45K until retirement. Now you see that you'd have an extra $254K to live on in retirement. That should impress you just a bit.

"But, you say, I need to spend at least some of that money to get past my current needs." Fine, the next two sets of results show what you'll have if you saved a quarter or a half of the $45,000. Notice the 50%-saved option where you continue to save the monthly payment of $1,012.41 until retirement. You'd still have $227K to live on when you retire. Think of this in terms of driving a three-year old car instead of the brand new one that's going to depreciate by 40%-50% over the first three years of its life anyway. Think of it in terms of buying a slightly-used, slightly-smaller boat instead of that money-pit you're looking at. (A boat is a hole in the water where you pour money, anyway. Ask any boat owner who's not trying to sell their rig.) The examples are endless, but you get the idea. And that's how it all works.

The trick is that now you know the positives and the negatives and you're armed to make an intelligent decision. (Many bankers hate that!)

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Using The Application

To use this application:

  1. Enter the amount you need for your major purchase--the amount you'll need to borrow rounded to the nearest whole dollar. Only enter numbers 0-9, no decimal, commas, or other symbols.
  2. Enter the number of months you'll have to pay off the loan if you borrow the money.
  3. Enter the interest rate percentage you'll be paying for the use of the money you're borrowing. This should be entered as 99.9 or 9.9 e.g., 3.9% would be entered as simply 3.9 with no percent mark.
  4. Enter the interest rate percentage you'll receive on your savings. This should be entered as 99.9 or 9.9 e.g., 3.9% would be entered as simply 3.9 with no percent mark.
  5. Lastly, you must either select the number of years remaining until you hope to retire OR you can simply enter the number of months this represents.
  6. When you have entered the number of months, the saving vs. borrowing analysis will be shown on a page to the right of your entries.
  7. As a last note, double-click in the colored background area (not in the analysis page) and notice the bottom-right button. Click on it to see a flyout where you'll find a number of websites that may be of interest to you. These cover such things as a number of governmental and independent organizations where you'll find information about borrowing and/or saving; magazines dealing with investing, etc.; student loans, and more. The screen will look something like the one shown just below.

ITSBITS To Save Or TO Borrow? Burn The Mortgage! Save On Your Wheels! Catapult Garage Software Save On Your Wheels! Fixed-Rate Amortization Schedule Tool

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By now, you've probably noticed camera and photo buttons at the upper-left (on the App bars you saw after right-clicking the screen). If you have a built-in camera, give To Save Or To Buy? permission (see Permissions) to use your web-cam. Then you can use it to take photos of whatever you like, or you can select an existing photo. You can then email your photos or share them with some of your other programs. The screen will change to show your image so it looks something like this:

ITSBITS To Save Or TO Borrow? Burn The Mortgage! Save On Your Wheels! Catapult Garage Software Save On Your Wheels! Fixed-Rate Amortization Schedule Tool

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Finally, notice the photo-reset button. It resets To Save Or To Borrow? to take other photos. In a similar manner, the Discard button will reset the loan amortization chart and the photo section at the same time.

The Discard button on the lower-left navigation bar will clear your current entries so you can start over with new information.

An example of what the screen will look like when first used is shown below:

ITSBITS To Save Or To Borrow?Catapult Garage Software, Save On Your Wheels! Burn the Mortgage Fixed-Rate Amortization Schedule Tool

You can choose one of several color schemes to suit your taste or mood. Just use the standard Windows 8® Settings and then select the "Colorize" setting. Choose a color scheme you think you would like, then hit the go-back button at the top of the Colorize flyout. Here's the same screen image with the white/blue color scheme applied.

ITSBITS To Save Or TO Borrow? Burn The Mortgage! Save On Your Wheels! Catapult Garage Software Save On Your Wheels! Fixed-Rate Amortization Schedule Tool

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Each of the application's buttons is discussed above, so here's a screen image showing the application buttons available with the application:

ITSBITS Catapult Garage Software Save On Your Wheels! Fixed-Rate Amortization Schedule Tool

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ITSBITS Catapult Garage Software, To Save Or To Borrow? Burn The Mortgage! Save On Your Wheels! Fixed-Rate Amortization Schedule Tool

Once you've entered your data, the large "page" will appear explaining your options. The first three lines of text will explain how much the normal loan will cost you/month and in total. Next, two basic savings options will be explained so you'll know how long and how much you'd save on interest costs if you put the money aside and waited rather than borrowing it.

But wait. There's much more to think about. What if you didn't buy this whatever-it-is, but instead saved the money toward retirement? What if you made the monthly payment into your own savings account until retirement? Here are the answers to those questions. But what if you really need to spend at least a major fraction of the amount and then you saved the rest toward retirement? The answers to these questions may surprise you once you see them. Also, remember that the short-term interest you can earn on savings will almost always be less that what you could earn when saving over a longer period of time, and there are long-term tax benefits to be gained in certain IRA options that will make the retirement amounts better yet.

So now you know the true cost of the deal you're thinking of getting yourself into. You can also see what a cheaper or a used "whatever" would do to your financial world. Even if you decide to go ahead and borrow the money for one reason or another, at least you'll know what it's really costing you, both long-term and short-term.

Just remember, retiring on dog food...bad, bad, bad! Depending upon the government to take care of you 15 to 30 years from now...that's just plain crazy!

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Finally, let us take just a second to tell you how much we appreciate your use of our software. Use it to save lots of money! Retire well.

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Known Issues

There are no known problems at the time of this writing (1/31/2013).

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