Getting out of debt is a great idea. Albert Einstein is quoted as saying, about compound interest,
"[She] who understands it, earns it ... [she] who doesn't ... pays it.”
This article is intended for a reader (a specific reader, who knows who she is) who has recently learned enough about compound interest to stop paying it and start earning it. This is only about paying down all compound interest debt to zero. Investing is another issue altogether, and it can actually begin during the process described here.
Paying a debt can take many months, even years. What if there is more than one? Then it can take even longer, but a determined girl can get it done.
This article describes a DataPerfect program to allow her to try different plans, and for each plan, see how long it will take to get to the zero point.
Why DataPerfect? In a phrase, because this writer knows how to use DataPerfect.
We have tried a spreadsheet, but it is quite cumbersome, and the plan has to be carried out mostly by hand. This will be better, for once a plan has been described, the remaining calculations will be automatic.
DataPerfect will be used to create a model of the situation. The model can then be used to try out different strategies.
The output of each plan will be a simple spreadsheet, which can be imported into, say, Google Docs, and then further manipulated and/or printed.
The first panel will have one record per loan. This panel could get as fancy as desired, but the main bits of information are: 1) an identifying number, 2) the principal owing, 3) the interest rate. To this, I will add a field for a computed monthly interest amount, and links to various other pieces of information.
The second panel will have one record per month. Each record will also point back to the previous month.
DataPerfect has a sort of Y2K problem,
in that its dates can only run until
sometime in December 2038.
I will be assuming that that will be
enough time!
If not, the panel can be changed to use
simple strings, as the date
6/1/2015
is simply a label for the month, and
is not used in any calculations.
Each plan has 1) a number (although I will use letters), 2) a name, 3) a link to plan elements, and 4) an amount, starting at zero, which will collect the monthly payment amounts from plan elements. Finally, it will maintain a count of the number of elements in the plan.
Each plan element has 1) a plan number, 2) a sequence number, 3) a loan number, and 4) a projected monthly payment.
The projected monthly payment will total into the associated plan. This will be a sort of sanity check that the total amount being paid monthly for all of the debts is the desired amount.
The plan number links back to the plan record, and the loan number links back to the loan record. Indexes ensure that each sequence number will be unique and that each loan will appear only one time in a plan element.
Each payment has 1) a plan number, 2) a loan number, 3) a month identifier, 4) a computed monthly interest, 5) a new principal balance, and 6) any left-over funds from the very last payment made on that loan.
Note that there will be one payment record per plan-loan-month combination, running until the loan is paid off.
Full details are embedded in DEBTX.STE which is a file which can be imported into DataPerfect to recreate the database structure.
Here is only an outline of the steps of the process. More detailed information will be forth-coming, and/or I will sit down at her machine and help her through them.
DataPerfect is a DOS program, which will not run in a modern (post XP) windows machine, nor on a 64 bit processor.
So, the first step is to install vDOS. This can be found (as of the date of this writing) at source forge. Select the latest version from the list. At this writing, I selected Version 2015.04.10.
The installation process will create a folder,
by default, C:\vDOS and also a
sub-folder, C:\vDOS\DPTEST which
contains the DataPerfect program itself,
DP26YI.EXE and several sample
database definitions.
When you run vDOS, it will bring up
a window with some text explaining that it will
start DataPerfect to verify that it itself is
operating, and that you can press F7 to exit
DataPerfect.
It invites you to press any key to continue, and when you do, you will see this screen.
┌──────────────────────────────────────────────────────────────────────────────┐
│ Use ↑ and ↓ to move to the desired database, then press Enter. │
│ │
├────You can also──────────────────────────────────────────────────────────────┤
│ 1 - Create a New Database [If you have definition rights.] │
│ 2 - Change Directory │
│ 0 - Exit │
└────Selection: 0─────────────────────────────────────────────────────────────┘
Pathname: C:\DPTEST\
BUDGET
CHECKING
CONTACTS
MAILING
MEMBERS
STAR
STE-BASE
TEST
TIMEBILL
At this point, you should use windows to create a folder
C:\vDOS\DPTEST\DEBTX.
Then, instead of pressing Enter to look at one of the sample
databases, press 2 to change the directory,
press the End key and type DEBTX.
┌────Note──────────────────────────────────────────────────────────────────────┐
│ │
│ The subdirectories in the current directory are listed below. │
│ │
├──────────────────────────────────────────────────────────────────────────────┤
│ Enter a pathname to select a new directory. │
│ │
└──────────────────────────────────────────────────────────────────────────────┘
C:\DPTEST\DEBTX
Pathname: C:\DPTEST\
DEBTX
Pressing Enter will move you to the DEBTX
folder, which will be empty until you have done
the following steps.
The next program to install is DataPerfect
itself.
It can be obtained from the
community web site.
Note that vDOS includes the basic executable program,
but we will also need DPIMP.COM for the
next step.
This executable file is in the DataPerfect .zip file.
Place it in the folder C:\vDOS\DPTEST.
Finally, the
database definition
needs to be
downloaded and imported.
To do this, visit the database definition page and save
it into C:\vDOS\DPTEST\DEBTX.
Press F7 a few times until you return to the DOS prompt.
Then use the command cd DPTEST\DEBTX to
move into the database folder.
Then run DPIMP by using the command
..\DPIMP.
Use the command exit to close the vDos
window.
Now when you run vDOS and enter the DEBTX
directory, you will see this screen.
┌──────────────────────────────────────────────────────────────────────────────┐
│ Use ↑ and ↓ to move to the desired database, then press Enter. │
│ │
├────You can also──────────────────────────────────────────────────────────────┤
│ 1 - Create a New Database [If you have definition rights.] │
│ 2 - Change Directory │
│ 0 - Exit │
└────Selection: 0─────────────────────────────────────────────────────────────┘
Pathname: C:\DPTEST\DEBTX\
DEBTX
Press Enter to come into the newly imported DEBTX
database.
You will see a list of its panels.
┌────Note──────────────────────────────────────────────────────────────────────┐
│ A list of panels is displayed. Use ↑ and ↓ to highlight the │
│ desired panel, then press Enter. │
│ If you have definition rights: │
│ To define a new panel, press Insert (Ins). │
│ Press Delete (Del) to delete a panel. │
│ │
└──────────────────────────────────────────────────────────────────────────────┘
--Beginning--
DEBTX.LON
DEBTX.MON
DEBTX.PLN
DEBTX.ELE
DEBTX.PMT
--End--
Then, the supplied datafile of month identifiers must be imported into the newly created database. The first database report must be run in order to add the value of the previous date to each record. The supplied datafile contains values for 282 months (26 and a half years), and some of these can be deleted, leaving as many as she expects to use.
Our debt elimination planner will make these entries into the database.
Once a plan is completely described and checked, she will run a report which will create all of the payment records, up to the point at which all loans have been paid, or until all existing month records have been considered.
Once the payment records have been created, she will run another report to produce a comma separated values text file, suitable for importing into a spreadsheet.
After considering as many plans as desired, she will adopt one, begin making the payments as computed, and get on with the real business of her life, living it.
© Bruce Conrad 2015 debtx@sanbachs.com June 2015
