the richest man in atherstone

For those that don't already know, I created an online mortgage payments calculator a few years ago and it remains one of the most popular pages on my website.

If you are planning on getting a mortgage or re-mortgaging, this tool can help you find out how much your monthly repayments will be. It will also break down your payment schedule into months and tell you how much of the monthly payment is interest and how much is repayment of the capital.

Finally, you can alter the interest rate, length of the loan and monthly payment to compare different mortgage deals and see how many years you can take off your mortgage by making overpayments.

Try out my monthly mortgage calculator.

Mathematics is an essential element of running our personal finances effectively. Working out how much our mortgage costs us, how much interest our savings earn and how long until we have enough cash to retire can all be time-consuming tasks.

Over the years, I've used my website development skills to create a number of calculators that make performing calculations such as those described above much much quicker.

Earlier this year, I thought it would be a good idea to put them all in one place and share them with others who may also find them useful, so I bought the domain name Financial-Info.co.uk and planned to neaten them up and put them online. Unfortunately, I became busy with other projects but today I had a few hours spare so decided to get back to it.

I knocked up a quick website and added my Compound Interest Calculator to it. I have also provided the functionality for other websites to display the calculator in an inline frame so it's just a matter of copying and pasting some code to get a free Compound Interest Calculator on your website as I have done below:

I have a compendium of other calculators on my computer that require a bit of sprucing up but I expect to add them Financial-Info over the coming weeks. In the meantime, I'd be grateful if any website owners out there in Internet Land would give the calculator a go on their own websites and give me some feedback on their experiences using the comments field below or emailing me (arkad@therichestmaninatherstone.co.uk)

Cheers,

Arkad

Today, my mortgage dropped below the £60,000 mark (to £57,942.92 to be exact) thanks to an overpayment of £3000.

One of my goals for the year was to do this and I can now happily strike it off the list.

When I moved house 13 months ago, we (my wife an I) took out a £65,000 loan for the property, so to reduce the capital owed by £7000 in little over a year marks a major achievement. From the moment we moved in we decided that we would consistently overpay the mortgage each month with 30% of any extra income we earned. We'd forecast that we should be able to achieve our target by the end of the year. A recent inheritance helped us to do it six months early.

So what does reducing our loan do for us?

Well, had we simply paid the minimum payments each month the capital we'd owe at this moment in time would be around £63,800. This equates to a minimum monthly payment of around £417 (interest and repayment combined) for the remainder of the term. Due to the overpayments, the minimum monthly payment is now around £379 - that's about £38 less, which may prove very useful if we run into cashflow problems when I quit employment in the near future. Over a year that is a saving of £456.

To put it into context, if I were to put the money I have overpaid my mortgage with into a savings account instead, I would need to earn around 7.9% after tax in interest to equal the savings I made by "investing" in my mortgage.

Of course, reducing monthly payments is one just option when making mortgage overpayments. The other is reducing the term of the mortgage. If I continue paying the £413 that I was paying before, the debt would be cleared in 20 years - knocking four years off the mortgage term!

So, there's a lot to be said for overpaying your mortgage. Some people like to use their spare cash to save, whilst others prefer to pay off their debts. I am somewhere in the middle - I can see that both holding onto cash and reducing liabilities have their own merits.

I think it is important to realise that when opportunities to make worthwhile investments are scarce, reducing liabilities such as your mortgage should not be overlooked as an addition to your portfolio (even though the numbers work the other way).

Calculate the savings you could make by making overpayments to your mortgage using my handy Mortgage Calculator.

This series of articles was inspired by a wealth-building strategy created by Stuart Goldsmith. It is called 'Double Your way to a Million Plan' and you can sign up for your free copy on this webpage. For a brief outline of the strategy, take a look at this post.

Since becoming self-employed a few weeks ago, I've been thinking an awful lot about whether I should keep my business income and Doubling income separate. This is the way I've done it over the past year, the main reason being that the rules for Doubling state that Doubling money should be kept separate from personal cash.

This poses a number of problems. Firstly, I will have two sets of accounts to keep and working out the split for National Insurance and taxes will be quite difficult. Secondly, each time I come up with a new money-making idea, I will have to decide whether it contributes to my personal or Doubling income. I would have to design some sort of criteria to help me make the decision - and what sort of criteria would I use?

Over the weeks, I've come up with a number of strategies for keeping the funds separate, however none of them 'felt right' and they were all unnecessarily over-complicated. I feel I could continue to ponder upon this until the cows come home but, even then I don't think I would come up with a satisfactory solution.

So, I made a decision.

I will combine my Doubling quest with my other business ventures and split all the income between myself and the Doubling Pot. Although this is technically breaking one of the rules of Doubling, I believe it is the only satisfactory solution to the dilemma. My business will become my 'Doubling Account' and one of the expenses from said account will be my salary. I think at some point everyone that attempts to 'Double to a Million' will have to pay wages or labour costs, and that is the way I think about drawing a salary from it.

As well as gaining personally from my Doubling exploits, my Doubling Project will gain from my personal business income (including income from this website). A joining of forces, as it were.

The way I intend to split the profits is by totting up the income earned every quarter and splitting it three ways. The first third will be held back to pay the end of year tax bill. The second third will be retained as the Doubling Fund and the third third(?) will be transferred to my personal bank account.

My salary will be further divided as highlighted in my personal financial plan for 2008.

This also has the advantage of amalgamating the Doubling updates I make here into a single quarterly post.

So, with this plan in hand and a little math, I find that I need to earn a little over £15000 during 2008 to achieve two of the goals I set myself at the beginning of the year (goals 4 and 5).

I'd better get cracking...