#21




Another place more practical classes could be useful in a high school environment; basic maintenance on things like cars, homes, etc could save you a bundle. I've had a handful of bad clogs appear in my home over the years, usually it just entails taking apart the drain and clearing it manually but once it involved cutting out a section of PVC pipe and replacing it.
This cost me under ten bucks plus my time (and I got all wet and slimy I guess) but a plumper would likely have charged hundreds. I feel most people would benefit from a class that taught things like that, and or how to make a budget, how to use credit cards, how to get a loan and what kind of predatory loans to watch out for, etc than they'll ever get from intro to trig or humanities (just to pick two very opposite classes). 
#22




Quote:

#23




I can do a ballpark payment calculation in my head. Compound interest isn't involved in standard payment calculations though.

#24




I don't so much mean the mathematics behind how loans work, more what you need to look for and some basics on loan language. For example, what do 'points' mean, what is the difference between fixed and variable interest, how to spot 'scams', or at least predatory loans?
Things like that. Yes, the actual math of it can be done on any computer (I had an excel sheet myself in college that would give you all the particulars of a hypothetical loan) or smartphone/tablet but knowing what to look for can be more important and is easier to teach without devoting a whole class to it. 
#25




Quote:
Time would be better spent in going over how to do a basic income tax return. FWIW, some of these things change with time, so what's valid now is different from what was valid even a few short years ago. For example, we still have "closed mortgages" in Canada with penalties for premature payoff  today, in the US they are considered predatory lending, but that's a new thing because of the current financial crisis. Being anything more than "basic" would be a moving target for the curriculum, and anything that makes it more difficult just makes it less likely to happen. 
#26




Huh? I don't understand what you mean, because compound interest is pervasive in modern finance  specifically  almost all loans are done as a compound interest loan. If I buy a car and owe $20,000 on it, at 2.9% interest, calculating the monthly payment isn't simple interest. Having a trick for a certain set of circumstances doesn't adapt easily when the parameters change. For example, what's the monthly on that car loan for 4 years? What about 5 years? What if the amount owed is now $21,000? Those are not "in your head" calculations. What kind of "standard payment calculations" are you talking about?

#27




Interest doesn't compound unless the periodic interest charged exceeds the payment. Using a simple example. If I have a $5000 loan for five years at 12%, the first month of the loan my accrued interest would be $50. They payment for that loan is $111.22. The payment pays the interest plus $61.22 of principle. The next month the interest is based solely on the remaining principle. There is no compounding. There isn't compounding unless the payments aren't equal, there is a balloon or the period interest is calculated on is shorter than the payment period. If the bank is say calculating interest daily for a monthly loan.
Incidentally, the payment I worked out in my head for that loan was $108 which is close enough for the purpose at hand. A $20,000 four year loan at 2.9% interest $465 which is about $20 off. the five year loan I calculate at $348 which is off by about $10. $21,000 works out to $486 (off by $20ish) and $365 (off by $10ish). That's close enough for talking points. And I'm not saying I'm spitting the numbers out like Rainman, but fast enough to for my purposes. 
#28




Quote:
Second, your method of calculating in your head may be "close" but not "close enough" when talking about your own money. Think about it  say the bank quotes you that $465 for that loan, and not $441.80 like it really is. Then the interest rate is actually 5.49%, or almost double. But it doesn't appear to be a big deal because it's "only" $20 a month, and only off by about 4%. However, at $465 and not $441.80, the amount paid over the course of that loan would be in excess of $1100. It's inexact  and because this imprecision adds up over time, it matters. In a big way. Even $5 a month over the life of a 30 year mortgage is $1800. Nobody is just going to *take* that from me just because I won't take the time to do the math. Your method really is only valid in the most basic of discussions, because that few dollars here and there adds up to thousands. Without being able to duplicate the exact numbers, people are going to risk giving away money, with a false sense of security that they know what they are doing. Teaching them this method and implying that it is "good enough" is, well, misinformation. An order of magnitude may be good precision for some scientific calculations  for financial calculations, it is not. 
#29




I wouldn't buy a $20,000 car or go with a four or five year loan so my margin for error is much smaller.
It is also a matter of understanding approximately what it will cost me, not a number I'm going to be signing loan papers on. But finding a loan calculator to check my work was a ten second deal on my phone so I could always go there when I was interested in getting a precise number. 
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