Author Topic: Excel - comparing $1 apples to apples  (Read 1431 times)

Ashcons

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Excel - comparing $1 apples to apples
« on: September 13, 2013, 09:56:15 AM »
There's a pretty common theme in this subforum with people asking whether option A, B, or C is the best way to put their money to work. There would be a lot of qualitative and quantitative factors that would go into formulating the best answer for each poster's question, but Excel seems like it would be pretty helpful on the quantitative side.

Is anyone using custom workbooks to answer this question for their own situations? I'm thinking about trying to put together one for mine, though the number of variables seems like it would make accurate estimates quite difficult to arrive by based on things like when PMI drops off mortgage notes, variable interest rates, etc.

An example might be looking at the value of $1 on a timeline at intervals using a set of inputs like a mortgage note, credit card balances, investments with an estimated rate, etc. The goal would be putting in variables for each option on where you could spend $1 PV and seeing what the FV would be out at 1, 5, 10, and 30 years, I guess.
« Last Edit: September 13, 2013, 10:26:50 AM by DebtStubble »

Tyler

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Re: Excel - comparing $1 apples to apples
« Reply #1 on: September 13, 2013, 11:11:02 AM »
Excel is a fantastic tool -- I use it a lot to help map out financial tradeoffs with mortgages, withdrawal rates, etc.

That said, don't confuse Excel's precision with accuracy when it comes to forecasting future money trends.  Focus on the big stuff and don't let the little variables get in the way of making "good enough" decisions in the here and now.  Analysis paralysis is the enemy of action, and you don't have to have a perfectly mapped out plan to start moving in the right direction today.