Can I make £1,024 in 11 weeks from nothing?

Annie_Fanny

kathfisch wrote:

If she got her loan (£4500 I think she said) in 3 installments of £1500 in September, January and April.

Ignoring interest on previous student loan balance etc and assuming the loan interest rate is 3% (0.25% per month), the loan balance would be:

£1500 in September
£1503.75 in October (£3.75 interest)
£1507.51 in November (£3.76 interest)
£1511.28 in December (£3.77 interest)
£3015.01 in January (£3.78 interest and £1500 loan payment)
£3022.55 in February (£7.54 interest)
£3030.15 in March (£7.60 interest)
£4537.73 in April (£7.58 interest ok, maybe I'm pennies out there and £1500 payment)
£4549.07 in May (£11.34 interest)
£4560.44 in June (£11.37 interest)
£4571.84 in July (£11.40 interest)

If she were to put all of her loan into an ISA paying 5.5% (0.458% monthly) the ISA balance would go like this:

£1500 in September
£1506.87 in October (£6.87 interest)
£1513.77 in November (£6.90 interest)
£1520.70 in December (£6.93 interest)
£3027.67 in January (£6.97 interest and £1500 payment)
£3041.54 in February (£13.87 interest)
£3055.47 in March (£13.93 interest)
£4569.46 in April (£13.99 interest)
£4590.39 in May (£20.93 interest)
£4611.42 in June (£21.03 interest)
£4632.54 in July (£21.12 interest)

That's all assuming payments being made exactly at beginnings of months etc etc, but its pretty close I hope. And assuming that student loan interest is calculated and paid monthly on a compound basis - if not the interest on the loan would be less.

So... she would be £60.70 better off by July. That is a very conservative estimate though as this shows you that the interest rate on student loans is not always as high as 3%, not in recent years anyway. Of course, there's no guarantee that the interest rate on savings will stay as high as 5.5% but, in the unlikely event that the two interest rates were getting so close to each other as to make it hardly worth it (I'm not an economist, I don't know if this would ever happen) then the money is sitting waiting in the ISA and the loan can be paid off straight away.

The beauty of this, of course, is that the money will carry on working for you for years to come. That £60 is just the tip of the iceberg, the gap between interest earned and paid will keep getting bigger.

There is no financially rational reason for paying any more off the student loan than you have to, the only argument that holds water (it seems to me) is that all that money sitting there is a temptation and if you might spend it on something else then the benefit is gone! But... if you will use it for something that you would have otherwise taken out a loan for (something essential of course ) then 3% or thereabouts is cheaper than any personal loan you're going to get!

Hope that helps!

Kath x

Woah there Kath! You obviously have a brain for figures...when I look at numbers it is literally like a fog going across my eyes! Thanks for that breakdown though. I know some people couldn't be bothered to do something like this but £60 is £60 and, in my opinion, is definately worth the effort. Free money YEAY!

Annie
Xx

Annie_Fanny

Annie021063 wrote:

As I am rarely in a position to save money I don't know much about interest etc. If I invested the loan (£1500 in Sept, Jan and then May I think - total about 4.5K what interest would I be looking at?? How much can you put into an isa over a year?
Thanks for mentioning this Annie - can you let me have some more details?
BFN

To learn a little bit more about saving have a look at Martin Lewis' guide which I found really useful. There will also be links to best rates etc:http://www.moneysavingexpert.com/cgi-bin/viewnews.cgi?newsid1103213261,45760,

Hope this helps...
Annie

benedictadams

Felt like death warmed up this morning

so ebaying the last of the MFN ebay stuff for this time looks to be out of the window.

It was all free so can use it for the next one

My total is lower than it was before because i had to buy some new shoes and i got some more stuff from the charity shops forgetting that i wouldn't have time to make money from it before tomorrow

finallydebtfree!!

£639.83 is still great though ben, if you had never started this challenge you would never have had it!

Im feeling awful today too, hope we both get better soon

edit: and looking at your signature thats almost enough to pay off your coop divindend credit card! (nine months earlier than expected)

missysx

just thought i'd say as a new person on this site... what a great thread and interesting read!

BangraMonkey

BangraMonkey wrote:

CONGRATULATIONS ANNIE!! WELL DONE

i've fallen away of late due to a number of problems... from work to family illnesses

i haven't updated in a while but my funds are at approximately £650 (will update signature once i have an exact target). i started a week late so have another week to hit the target but things are getting worse so don't think i'll be able to do it.

i'm up for the 3k challenge but i think i'll have to include all the things i didn't included for the 1024 challenge.

once again... congratulations annie. you've shown that with hard work you CAN make money from nothing.

i'm gonna stop the challenge a week early as i'm not up to continuing it this week... family illnesses and problems got a lot worse.

i don't have an exact final amount but it was over £700.

best of luck to all those who still have some time to get there

jet77

Eagerlearner - it's 3k in 6 months (500 a month) not 3k in 3 months.

finallydebtfree!!

I spied emily on another thread! no money for nothing total on her signature now though

glad your still around on the site somewhere emily and would like to say thanks for starting this thread, without you I would never have made nearly £50 from nothing! and all off us still here with whatever amount they have made feel the same i expect! (especially annie!! )

jpwhittle

i made a fiver today on a monopoly board i bought for a pound. well chuffed. cant wait for the next challenge to start im a bit to eager to get going.

had to use my money though on car tax husbands christmas present a new christmas tree mines locked in the shed and little boy lost the key. and a new hoover. still got all that for fre and still managed to give my husband £200 to match bet with so he will kepp making profits from that for us. so hopefuly will make that we spent back up in a few weeks.

now just to bring on the next challenge (thinkk im now a challenge addict)

we missed you emily hope your better thanks again for starting this challenge

finallydebtfree!!

had to use my money though on car tax husbands christmas present

is that his xmas present?