Example #2 is a more detailed financial model.
The person in this example started the system in December of 2007 with an existing mortgage, an existing HELOC with a balance of $4500, and with $10,000 in savings. This person decided to put all the savings into the system. (The first item listed for income is "Dump from Savings".)
This person is maintaining an up-to-date estimate to monitor and track progress in eliminating debt by updating the HELOC interest rate as it changes quarterly and by adding a one time income event upon receiving a tax return.
The estimate file is up-to-date as of June 2008 (7 months after starting the program.) A new car was purchased which was financed with a 5 year loan @ 7.25%.
P&I Loan Details
Two loans: the mortgage and the car loan. Since the car loan has a higher interest rate, it becomes the primary loan while being paid off. If you look closely at the Transaction Details, you will see that injections are made to the mortgage when it is the primary loan (before the car loan was started and after the car loan was paid off.)
HELOC Details
HELOC Limit: $25,000
Beginning Balance: $4,500
This person has entered the HELOC interest rates as they changed. Since the person does not know what the future interest rates will be, a value of 10% was entered starting at 7/1/08 which will be used for future HELOC interest calculations. This person will replace the value for 7/1/08 when the new interest rate is known and will create a new forward value (with a date of 10/1/08) at that time. Strictly speaking, entering all your different HELOC interest rates is not necessary for you to do. This estimate demonstrates what a person who is trying to get as accurate of an estimate as possible can do with My Debt Elimination Calculator if they choose.
Income
Sources: 2 regular and 2 one-time events
This person has two regular sources of income and two one time income events. The one time events are a transfer from savings and a 2007 tax return. The regular sources of income are a job which pays every two weeks on Friday and a renter that pays on the 1st of each month.
Expenses
The house insurance and property taxes are entered here. This is the way to model the payment of these two expenses whether you pay them yourself directly or have them paid via an escrow account with the mortgage.
Based on the information entered, the loans will be paid off in 8 years and 11 months saving a total of $141,132 using the HELOC Based System of Debt Elimination.
Note:You can load Example #2 by clicking on "Example #2" under the Help menu. (You may need to save the work in your current estimate before you load the example.)
