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adding a loan video transcript:
Okay. In this video, we're going to walk you through how to add alone to your forecasting spreadsheet. So if you look at the top here, you can hit add loan. It's going to add it below the income that we had added
and to get started here. I'm just going to use credit card as an example. And you can use this for any uncollateralized loan that you might have, but if you have a loan that has an asset with it, you're going to want to use the button, add asset with loan. So the most typical type of loan, like this is a credit card loan, but you can also go, just get a loan from your bank that's unsecured.
And this is what you would use. So you need to know the terms of your loan. And so for credit cards, you have a credit limit. I'm gonna put that amount in and you have the amount that basically you're trying to pay off. So let's type this in here
and. Put in the number of years, you think you'll take you to pay it off, put in a five and the start year is going to be 2019. And to keep things simple, to show you how this works. The first payment is also 2019 and let's make the interest rate 5% and your remaining balance is going to be 2350. Okay. So what's happening here is if you have a $9,000 loan to five-year term, but at 5% interest rate, the system is calculating what your monthly payment would be based off those terms.
So another way to look at this, if you want to see how this is calculating out, you can go to this loan tab. You could put in 96, 74 at 5%, over five years. And you can see the payment amount for one year is $1,964. So even though you put it in as a five-year term, because you only have 2355 remaining, it's basically paying it off just a little over a year.
So I just wanted to walk through that. So you could see how this is working. If I've put in the full amount of this loan, 96, 74. Now you can see everything's working in sync because you have a 5% interest rate over five years. It calculates what the payment is per month, what that payment would be for an entire year.
And 1, 2, 3, 4 pays it off in five years. So. If the interest rate is changing or variable. So let's say you have an introductory rate of 0% for the first year. Put that zero in that first year. And then, you know, with credit cards, this could go the Hawaii. Let's just say it goes up to 13%. It could even go higher.
A copy of that to the right. And what's happening is a spreadsheet it's based the five-year term. Think of that is basically coming up with your payment amount is what that's doing. So when you start messing with these interest rates, even though your payment amount was based off a five-year term, it was using 0% interest.
If I put 13 in here, 13%, it's going to increase what that payment amount needs to be. And then, because you started out with 0% interest for that first year and. Um, it's painted off more rapidly, uh, because of that 0% there. So there's several variables here that you're able to change. That's going to change how this spreadsheet behaves, and I know it's a little bit confusing, but the reason I did it this way is there's many different loan, uh, options out there.
You can even have things that begin, uh, the payment begins late. So if the first payment isn't until 2020, Say you have 0% for that first year. And then it starts accumulating at 13% that second year. Uh, I need a copy of this over, um, and now you've accumulated interest. So let's look at what what's, uh, being shown here.
Your loan beginning balance was 96, 74. You made no payments, no interest at first year. So your loan Andi balance was 96, 74. Capacity down here is saying, Hey, you have $15,000 credit available unsecured credit. Um, available capacity is 53, 26. We'll get into what this unsecured credit means. Basically, if it's something that you want to make available to cover your expenses, you could put a hundred percent in here and it's going to say, okay, there's a hundred percent of this is available to cover expenses.
Since it's unsecured, most likely you don't want to, ideally you would not want to use any of that to cover expenses. Um, but the options there, and we'll get over, go over that more in future videos of how this all links together. So second year now it's in 13%, this 96, 74, and everything's calculated basically full percentage for the year.
Simple interest, 1339. Um, your loan is now this plus this is at 11,013. Reduces how much of the 15 thousands available? You said your first payment begins in 2021. And so now the payment kicks in. So if you wanted this payment to be higher, you could change the terms here. So you could say, I want it to be paid off in a lower term number of years, and it's going to increase that.
Because of this loan being unique, even if you want it truly to be paid off in four years, because you didn't make any payment those first two years, you basically would say, Hey, I need this thing paid off in two years. And, um, it's still not quite doing it. You might even have to go to 1.8 and they're pretty much got it.
Um, close to what you need. You have control over the format. So you can click on this and you can expand that so you can see exactly what you put in there. 1.7. So now it's getting paid off in two years, even though there's no payments those first two years. So that's how you can control what's going on with the spreadsheet and that the reason that you want to build a control, that is there's a lot of unique loans out there with a lot of different options.
And. Um, you know, you have interest free periods with credit cards, and basically you'd want to start making payments as soon as that interest free periods up so that I put 2020. So first years interest free second year start making payments. And if you can't afford this much per year, then you might need to increase your loan term.
So 2.5, now it's taking it out. Which can see here is your loan balance is decreasing and you can see what credit card payments you had to make. So this all adds up to 11,000 5, 57. You can see the interest you had to pay on that loan. If you ended up borrowing more money, so charged on the $500, uh, now you increase that loan and you, because you increase that.
There is more interest being calculated. Now you can see you paid more interest, paid more to pay it off, but let's say you made an additional payment that year of $650. You can see what impact that has. So the point of all this is, once you get all your information in here, the full picture, your income, your loans, your asset with loans, your investments.
And you see at the top, what your expenses are. You anticipated large expenses coming down the road. You'll be able to see years where you have plenty of coverage and years where you don't have enough coverage. And based on that, you can make appropriate decisions on what you want to do with these alones and how quickly you want to pay them off.
You can see the impact it has on you, how much interest you're paying. If you don't want to pay $2,000 of interest, then you need to pay this off quicker. So, um, there's lots of options here, so you can get, uh, an accurate picture of what's happening with, uh, your finances and make good decisions for the future.
So we're going to try to be responsible. We're going to say, we're going to pay this thing off in one year. We're going to play the credit card game. We have a 0%. For the first year and we're going to say, you know, we, we didn't owe all that money. We had already paid, paid it down and let's just make this the same for simplicity.
So you can see let's get rid of this extra stuff. And. Now you can see what's happening because I, um, took advantage of the 0% for the first year and I don't want to pay any interest. So basically what I'm going to say is I'm going to make sure I paid off before the interest free period is up. So I'm going to put that 0% there.
So I started out with 2355. And didn't have to make any payments. At first year, second year, I made the payments before the interest free was up. And what this is doing is you'll be able to see up top what you had to pay in terms of payments and what you owed in terms of, of liabilities. So as of 2019, your liability balance was 2355 and you didn't make any loan payments.
In 2020, you'll build a. A loan payment of 23, 55, 0 liabilities. So that's what these fields over here are doing the way I'm setting this up. Um, again, I let it up to you how you want to do it. Um, I'm not going to have interest expense is one of the options because it's contained within the loan payments.
So it's down here more, it's informational and I'm actually going to hit delete on my keyboard because I don't want this line adding up into anything. And I know it's a little confusing, but when you think about it, your loan payments contain, you're paying off that interest expense over time. So when you take a look at this, you, you build a C on this loan, how much interest you're paying, but overall, um, you don't want to double count, uh, the money going out.
So hopefully that makes. And I think it will become more clear as we add more elements to the spreadsheet quickly. I want to add another loan. You have two credit cards and we're going to put in Wells Fargo credit card
again, playing the credit card game one year interest. But Lawrence credit limit
start this.
So all we're doing is putting all the different elements in here. Again, don't want to pay any credit card interest, putting those in at zero. We're going to pay them off before the interest free period. We're going to take advantage of that first year of interest free.
All right. So you can see there's no interest being calculated full. Mount's going to be paid off. And that takes care of that one. Okay. In the next video, we'll go into adding an asset with alone. Thank you.
Click here to watch more videos : https://www.xlyourfinances.com/videos.html
and to get started here. I'm just going to use credit card as an example. And you can use this for any uncollateralized loan that you might have, but if you have a loan that has an asset with it, you're going to want to use the button, add asset with loan. So the most typical type of loan, like this is a credit card loan, but you can also go, just get a loan from your bank that's unsecured.
And this is what you would use. So you need to know the terms of your loan. And so for credit cards, you have a credit limit. I'm gonna put that amount in and you have the amount that basically you're trying to pay off. So let's type this in here
and. Put in the number of years, you think you'll take you to pay it off, put in a five and the start year is going to be 2019. And to keep things simple, to show you how this works. The first payment is also 2019 and let's make the interest rate 5% and your remaining balance is going to be 2350. Okay. So what's happening here is if you have a $9,000 loan to five-year term, but at 5% interest rate, the system is calculating what your monthly payment would be based off those terms.
So another way to look at this, if you want to see how this is calculating out, you can go to this loan tab. You could put in 96, 74 at 5%, over five years. And you can see the payment amount for one year is $1,964. So even though you put it in as a five-year term, because you only have 2355 remaining, it's basically paying it off just a little over a year.
So I just wanted to walk through that. So you could see how this is working. If I've put in the full amount of this loan, 96, 74. Now you can see everything's working in sync because you have a 5% interest rate over five years. It calculates what the payment is per month, what that payment would be for an entire year.
And 1, 2, 3, 4 pays it off in five years. So. If the interest rate is changing or variable. So let's say you have an introductory rate of 0% for the first year. Put that zero in that first year. And then, you know, with credit cards, this could go the Hawaii. Let's just say it goes up to 13%. It could even go higher.
A copy of that to the right. And what's happening is a spreadsheet it's based the five-year term. Think of that is basically coming up with your payment amount is what that's doing. So when you start messing with these interest rates, even though your payment amount was based off a five-year term, it was using 0% interest.
If I put 13 in here, 13%, it's going to increase what that payment amount needs to be. And then, because you started out with 0% interest for that first year and. Um, it's painted off more rapidly, uh, because of that 0% there. So there's several variables here that you're able to change. That's going to change how this spreadsheet behaves, and I know it's a little bit confusing, but the reason I did it this way is there's many different loan, uh, options out there.
You can even have things that begin, uh, the payment begins late. So if the first payment isn't until 2020, Say you have 0% for that first year. And then it starts accumulating at 13% that second year. Uh, I need a copy of this over, um, and now you've accumulated interest. So let's look at what what's, uh, being shown here.
Your loan beginning balance was 96, 74. You made no payments, no interest at first year. So your loan Andi balance was 96, 74. Capacity down here is saying, Hey, you have $15,000 credit available unsecured credit. Um, available capacity is 53, 26. We'll get into what this unsecured credit means. Basically, if it's something that you want to make available to cover your expenses, you could put a hundred percent in here and it's going to say, okay, there's a hundred percent of this is available to cover expenses.
Since it's unsecured, most likely you don't want to, ideally you would not want to use any of that to cover expenses. Um, but the options there, and we'll get over, go over that more in future videos of how this all links together. So second year now it's in 13%, this 96, 74, and everything's calculated basically full percentage for the year.
Simple interest, 1339. Um, your loan is now this plus this is at 11,013. Reduces how much of the 15 thousands available? You said your first payment begins in 2021. And so now the payment kicks in. So if you wanted this payment to be higher, you could change the terms here. So you could say, I want it to be paid off in a lower term number of years, and it's going to increase that.
Because of this loan being unique, even if you want it truly to be paid off in four years, because you didn't make any payment those first two years, you basically would say, Hey, I need this thing paid off in two years. And, um, it's still not quite doing it. You might even have to go to 1.8 and they're pretty much got it.
Um, close to what you need. You have control over the format. So you can click on this and you can expand that so you can see exactly what you put in there. 1.7. So now it's getting paid off in two years, even though there's no payments those first two years. So that's how you can control what's going on with the spreadsheet and that the reason that you want to build a control, that is there's a lot of unique loans out there with a lot of different options.
And. Um, you know, you have interest free periods with credit cards, and basically you'd want to start making payments as soon as that interest free periods up so that I put 2020. So first years interest free second year start making payments. And if you can't afford this much per year, then you might need to increase your loan term.
So 2.5, now it's taking it out. Which can see here is your loan balance is decreasing and you can see what credit card payments you had to make. So this all adds up to 11,000 5, 57. You can see the interest you had to pay on that loan. If you ended up borrowing more money, so charged on the $500, uh, now you increase that loan and you, because you increase that.
There is more interest being calculated. Now you can see you paid more interest, paid more to pay it off, but let's say you made an additional payment that year of $650. You can see what impact that has. So the point of all this is, once you get all your information in here, the full picture, your income, your loans, your asset with loans, your investments.
And you see at the top, what your expenses are. You anticipated large expenses coming down the road. You'll be able to see years where you have plenty of coverage and years where you don't have enough coverage. And based on that, you can make appropriate decisions on what you want to do with these alones and how quickly you want to pay them off.
You can see the impact it has on you, how much interest you're paying. If you don't want to pay $2,000 of interest, then you need to pay this off quicker. So, um, there's lots of options here, so you can get, uh, an accurate picture of what's happening with, uh, your finances and make good decisions for the future.
So we're going to try to be responsible. We're going to say, we're going to pay this thing off in one year. We're going to play the credit card game. We have a 0%. For the first year and we're going to say, you know, we, we didn't owe all that money. We had already paid, paid it down and let's just make this the same for simplicity.
So you can see let's get rid of this extra stuff. And. Now you can see what's happening because I, um, took advantage of the 0% for the first year and I don't want to pay any interest. So basically what I'm going to say is I'm going to make sure I paid off before the interest free period is up. So I'm going to put that 0% there.
So I started out with 2355. And didn't have to make any payments. At first year, second year, I made the payments before the interest free was up. And what this is doing is you'll be able to see up top what you had to pay in terms of payments and what you owed in terms of, of liabilities. So as of 2019, your liability balance was 2355 and you didn't make any loan payments.
In 2020, you'll build a. A loan payment of 23, 55, 0 liabilities. So that's what these fields over here are doing the way I'm setting this up. Um, again, I let it up to you how you want to do it. Um, I'm not going to have interest expense is one of the options because it's contained within the loan payments.
So it's down here more, it's informational and I'm actually going to hit delete on my keyboard because I don't want this line adding up into anything. And I know it's a little confusing, but when you think about it, your loan payments contain, you're paying off that interest expense over time. So when you take a look at this, you, you build a C on this loan, how much interest you're paying, but overall, um, you don't want to double count, uh, the money going out.
So hopefully that makes. And I think it will become more clear as we add more elements to the spreadsheet quickly. I want to add another loan. You have two credit cards and we're going to put in Wells Fargo credit card
again, playing the credit card game one year interest. But Lawrence credit limit
start this.
So all we're doing is putting all the different elements in here. Again, don't want to pay any credit card interest, putting those in at zero. We're going to pay them off before the interest free period. We're going to take advantage of that first year of interest free.
All right. So you can see there's no interest being calculated full. Mount's going to be paid off. And that takes care of that one. Okay. In the next video, we'll go into adding an asset with alone. Thank you.
Click here to watch more videos : https://www.xlyourfinances.com/videos.html
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All of XLYourFinances' spreadsheets are protected by copyright laws. Breaking into the spreadsheet’s macros or breaching its password protection not only makes guarantees of the spreadsheet’s usability and support for the spreadsheet null, but is also considered a copyright infringement, as the methodologies and techniques utilized are proprietary and owned by XLYourFinances, LLC. Please refer to the terms agreement for more details on the terms of use.
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All XLYourFinances.com spreadsheets are copyright protected, © 2010-2022.
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