Personal Finance Post, #8

Loan Payments and Net Worth

Many of your loans have fixed monthly payments. They include your auto loan, student loans, mortgage loan. (Your credit card does not have a fixed monthly payment, and will be discussed in the next post.)

If you make all the required payments on your fixed monthly payments on a timely basis, you will owe zero after you make your last payment. In fact, the amount of the monthly payment is mathematically calculated by the borrower to make sure that your loan will be fully paid off after your last payment. This calculation is called “amortization.”

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Started life with no money

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