[this is a ymoyl update.]
i couldn’t help reworking the table to be more accurate:
| year | savings | + interest | = year’s contribution |
total capital |
yearly investment income |
monthly investment income |
| 1 | $12,000.00 | $585.00 | $12,585.00 | $12,585.00 | $602.19 | $50.18 |
| 2 | $12,000.00 | $1,198.52 | $13,198.52 | $25,783.52 | $1,233.74 | $102.81 |
| 3 | $16,000.00 | $2,036.95 | $18,036.95 | $43,820.47 | $2,096.81 | $174.73 |
| 4 | $16,000.00 | $2,916.25 | $18,916.25 | $62,736.71 | $3,001.95 | $250.16 |
| 5 | $16,000.00 | $3,838.41 | $19,838.41 | $82,575.13 | $3,951.22 | $329.27 |
| 6 | $16,000.00 | $4,805.54 | $20,805.54 | $103,380.67 | $4,946.76 | $412.23 |
| 7 | $16,000.00 | $5,819.81 | $21,819.81 | $125,200.47 | $5,990.84 | $499.24 |
| 8 | $16,000.00 | $6,883.52 | $22,883.52 | $148,084.00 | $7,085.82 | $590.48 |
| 9 | $16,000.00 | $7,999.09 | $23,999.09 | $172,083.09 | $8,234.18 | $686.18 |
| 10 | $16,000.00 | $9,169.05 | $25,169.05 | $197,252.14 | $9,438.51 | $786.54 |
| 11 | $16,000.00 | $10,396.04 | $26,396.04 | $223,648.18 | $10,701.57 | $891.80 |
| 12 | $16,000.00 | $11,682.85 | $27,682.85 | $251,331.03 | $12,026.19 | $1,002.18 |
i changed two things: i’m calculating at 4-7/8% interest instead of 5%, and i’m taking account of the fact that my car loan will be paid in 03/2004, so i’ll have another $4,000/year free to invest. i added two new columns; “monthly investment income” is the real bottom line, and what i want to watch.
i keep getting a sneaking suspicion that my real monthly needs are around $500. i was looking at $1,000/month on the basis of the average expenditures of the last 6 months (minus the mortgage and car payment), but didn’t take into account the fact that i made a $2,000 downpayment on the car during that time. you can see the anomalous bump on the graph. in any event, i’m curious to see how i’ll be doing in 7 years.
the difference in interest rates continues to bother me. it’s a losing battle to earn 4-7/8% interest while paying 8.19% on the auto loan and 7% on the mortgage. at the end of this year, i should look into what i can do about cutting down the length of the auto loan. in a few years, when i’ve approached what could be an ultimate living income, i should put serious thought to the idea of pulling out of investing for a while and redirecting my savings toward paying off the mortgage asap. say i put 7 years into reaching my $500/month, then was able to pay off the mortgage in two more years… so many possibilities. back to normal after tax month.
jeffcovey.net 