Our Methodology

General Principles

All calculators on FinanceCalc Hub are built using standard financial formulas widely accepted in the banking and accounting industries. We prioritize conservative estimates to help you plan safely, rather than optimistic scenarios that might leave you short.

Debt Payoff Calculations

Our debt payoff tools use the standard amortization formula: A = P * (r(1+r)^n) / ((1+r)^n - 1).

• Interest Calculation: Interest is calculated daily based on the annual percentage rate (APR) divided by 365, or monthly divided by 12, depending on standard practice for the debt type.
• Payment Application: We assume minimum payments are made first, with any extra funds applied directly to the principal balance of the target debt (Snowball or Avalanche method).

Investment Projections

Investment returns are calculated using the compound interest formula: A = P(1 + r/n)^(nt).

• Compounding Frequency: Unless otherwise stated, we assume monthly compounding for investment accounts, which is standard for most brokerage and retirement accounts.
• Inflation: Where "inflation-adjusted" results are shown, we apply a standard 2-3% annual inflation rate to discount future values back to today's dollars.

Mortgage Affordability

We use the industry-standard 28/36 Rule to determine affordability:

• Front-End Ratio (28%): Housing costs (P&I, tax, insurance) should not exceed 28% of gross monthly income.
• Back-End Ratio (36%): Total debt obligations (housing + other debts) should not exceed 36% of gross monthly income.

Our calculator takes the lower of these two figures to provide a safe maximum home price.

Data Privacy

Crucially, all calculations happen in your browser. We do not transmit your financial inputs (income, debts, loan amounts) to any server. Your data remains private and is cleared as soon as you refresh the page.