Have you ever taken a long, hard look at your monthly mortgage bill and wondered why you’re paying so much more in interest rather than paying toward the loan principal?

Confusing, isn’t it?

How about calculating the percentage of your monthly bring home income that you can’t spend (and creditors always check when you apply for a loan) because it’s specifically reserved for repaying your existing debts?

Even more disheartening, have you ever calculated the exact number of days that you’re forced to work — your stuff eventually ends up owning you after all — to pay for your mortgage, your car, your student loans, and let’s not forget, all of the extra expenses it takes just to keep them legal, operational, and in the good graces of the tax man?

Not exactly at the top of your priorities list… is it?

Chances are, these are all questions that have popped into your head more than once over the years, but you’ve chosen to distract yourself with something less depressing more appealing. Or perhaps, you might not know how to calculate them yourself, but didn’t want to ask for help because you’re afraid the answers would be embarrass you if someone found out.

That’s understandable… I’ve been there on both accounts in my younger years.

So over the next two weeks, I’ll be posting a series of articles on personal finance equations that everyone should know how to calculate for themselves that requires minimal data and and minimal time investment. The goal is to help you identify any (potential) financial problems you might have, track your financial progress month by month to improve your personal finance metrics, and perhaps, gain some insight into why you pay what you’re paying to live the way you’re living.

Photo by RogueSun Media

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