Truth Tip, “Lost or Found” Payments in Borrowing Strategy

Important Note  – The “Extra Payment Lost or Found” does not add to (or subtract from) any of the calculations. It is just a way to see the difference in net payment at a rate between whatever is in the “Market Loan Rate” input and either:

  1. the net earnings rate when “Acct-Cash” is selected  -or-
  2. the “Market Loan Rate” when any of the other 3 options are selected.

If you have (-100%) in the “Market Loan Rate,” the numbers for the “Extra Payment Lost Or Found” will look skewed because based upon that input, if you took a loan from another source, the lender would pay you interest. 

To correct this, change the “Market Loan Rate” to the rate your client would have to pay if he/she had to get the loan from another source (the bank, etc.). 

The drop-down selector for “Loan / Withdrawal Source” will determine whether it uses the “Market Loan Rate, “Acct-Cash” or “Acct-Loan.”

If you select “Acct-Cash” or “Acct-Loan,” the calculator will only use the “Market Loan Rate” to analyze the benefit or harm in using an alternate funding source. The number shown in “Lost/Found” illustrates the difference between that source and what they would have had to do (Market Rate) if that alternate source (Cash, Life Insurance Loan, etc.) was not available (by showing the payment difference).

To simplify your process, and get the result you seek in the “Lost/Found” column, make sure that your Market Loan Rate represents what the bank would charge for the loan, vs. the cost of the loan from your account, or the cost of cash. Then the “Lost/Found” column will illustrate the difference between the two methods.