Understanding the Mathematics of Personal Finance (PDF)

A user-friendly presentation of the essential concepts and tools
for calculating real costs and profits in personal finance

Understanding the Mathematics of Personal Finance
explains how mathematics, a simple calculator, and basic computer
spreadsheets can be used to break down and understand even the most
complex loan structures. In an easy-to-follow style, the book
clearly explains the workings of basic financial calculations,
captures the concepts behind loans and interest in a step-by-step
manner, and details how these steps can be implemented for
practical purposes. Rather than simply providing investment and
borrowing strategies, the author successfully equips readers with
the skills needed to make accurate and effective decisions in all
aspects of personal finance ventures, including mortgages,
annuities, life insurance, and credit card debt.

The book begins with a primer on mathematics, covering the
basics of arithmetic operations and notations, and proceeds to
explore the concepts of interest, simple interest, and compound
interest. Subsequent chapters illustrate the application of these
concepts to common types of personal finance exchanges,
including:

* Loan amortization and savings

* Mortgages, reverse mortgages, and viatical settlements

* Prepayment penalties

* Credit cards

The book provides readers with the tools needed to calculate
real costs and profits using various financial instruments.
Mathematically inclined readers will enjoy the inclusion of
mathematical derivations, but these sections are visually distinct
from the text and can be skipped without the loss of content or
complete understanding of the material. In addition, references to
online calculators and instructions for building the calculations
involved in a spreadsheet are provided. Furthermore, a related Web
site features additional problem sets, the spreadsheet calculators
that are referenced and used throughout the book, and links to
various other financial calculators.

Understanding the Mathematics of Personal Finance is an
excellent book for finance courses at the undergraduate level. It
is also an essential reference for individuals who are interested
in learning how to make effective financial decisions in their
everyday lives.