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----------------- TMONEY Version 3.1 ---------------------- TMONEY (Time Values of Money) Copyright 1986, 1987, 1991, 1992 Gale R. Horst 5361 Browntown Rd. Sawyer, MI 49125 (616) 426 - 3734 ----------------------------------------------------------------- This product is distributed on an "as is basis" with no express or implied warranties. NOTICE TO ALL USERS: You must read the license agreement. Your use of TMONEY indicates that you have read and accepted the agreement. --- PREFACE --- by Gale R. Horst, Author of TMONEY TMONEY originated out of a personal need for loan calculations and comparisons. I felt that adequate information was too difficult for most of us to obtain. Any time a purchase was financed we were at the mercy of the lending institutions and had to be told what financing terms were best for us. In addition, I need to be able to check over my statements from a lending institution to verify their accuracy. In 1986 during the process of refinancing my home (with the help of TMONEY), I discovered errors in the records of my mortgage company. The errors had accrued to over $200 already and would have compounded into the thousands in several more years. I promptly sent a printed copy of the loan amortization table to the mortgage company and requested a loan history and investigation into the apparent errors. Due to the accuracy and professional-looking report produced by TMONEY, the mortgage company quickly recognized and corrected the problem. At this point I realized how important it is that consumers have the tools available to track their own financial plans. I added various additional financial planning tools to the original TMONEY and produced version 2 as a shareware product. Since that time TMONEY has spread from coast to coast and become a tool used by both consumers and professional financial planners. TMONEY version 3 contains numerous new features and enhancements that make it easier to use and understand. Other features were also added to provide information requested by registered users of TMONEY 2.01. Many hours of work were required to bring TMONEY version 3 to completion. If TMONEY was a profit seeking venture undertaken by the commercial software industry, the retail cost would be much higher. Considering the fact that TMONEY can show you how to save thousands of dollars, the license fee of $24.00 is quite minimal. If you find this utility to be useful, please comply with the license agreement and become a licensed user. As always, your comments and suggestion on TMONEY are welcome. I sincerely hope that TMONEY 3 will assist you in making sound financial decisions in planning and tracking your financial future. - Gale R. Horst --- Table of Contents --- Installation and Setup . . . . . . . . . . . . . . . . . . 1 General Instructions . . . . . . . . . . . . . . . . . . . 2 TMONEY Setup Menu screen (F2) . . . . . . . . . . . . . . . 4 LOANS: Compute loan payments and interest tables . . . . . 8 Compute loan amount and interest tables . . . . . . 16 Compare loans, various rates, amounts, durations . . 17 SAVINGS: Plan deposits to reach a future goal . . . . . 20 Find future value of regular savings deposits . 21 Present value of future amount . . . . . . . . 23 Future value of a present amount . . . . . . . 24 WITHDRAWALS: Present value of withdrawals . . . . . . . . . 25 Withdrawal planner . . . . . . . . . . . . . . 27 INFLATION-BASED PLANS: Graded savings . . . . . . . . . . . 28 Graded withdrawals . . . . . . . . . 30 RETIREMENT: Complete retirement planning . . . . . . . . . 32 TMONEY formulas and assumptions . . . . . . . . . . . . . . 42 Advanced use of the TMONEY functions . . . . . . . . . . . 44 Life Insurance Planning . . . . . . . . . . . . . . . . . . 44 License agreement . . . . . . . . . . . . . . . . . . . . . 48 Ordering information, site licenses and quantity discounts. 50 TMONEY Version 3.1 PAGE 1 --- Installation and Setup --- Note that the "Enter" key is marked "Return" on some keyboards. We will just call it <Enter> in the rest of this user's guide. Hard drive installation: For easy setup, an installation program has been provided on the distribution diskette (or downloadable file set). To use the easy installation program follow the directions below. Place the distribution diskette into drive A: Log onto drive A: by typing "A: <Enter>" Type "INSTALL <Enter>" You will be prompted for a directory to install to. The default is "C:\TMONEY". Press <Enter> to accept this recommended setting. If you want the file to be contained in a different directory, then type in the complete path name (drive and directory) and press Enter. If the specified directory does not exist, you will be given the option to have it created for you. You will be prompted for the drive your system is booted from. If you have a hard drive, this will almost always be C:. To accept C: just press <Enter>. Otherwize, you will need to provide the correct boot drive letter. Next you may be given the option of adding your TMONEY directory to the path. Selecting YES for this option is recommended. This will allow you to access TMONEY at any DOS prompt by simply typing "TMONEY <Enter>". Note that this will not take affect until next time you turn on your computer or reboot your system. If you don't see this option, it is because the subdirectory you selected is already contained in the "PATH=" statement in your AUTOEXEC.BAT file. (See your DOS user's guide for information on the PATH command and the AUTOEXEC.BAT file.) Floppy drive installation: If you do not have a hard drive, you may want to format a floppy diskette as a bootable system disk, then install TMONEY.EXE to that diskette. Follow the above procedure and substitute "A:\" or "B:" when prompted for the path to install to. You will probably not need to change the PATH statement. Therefore answer No to the question regarding modification of the PATH statement in the AUTOEXEC.BAT file. TMONEY Version 3.1 PAGE 2 --- General Instructions --- To start TMONEY type: TMONEY <Enter> There are several optional command line switches. These switches are not normally needed and are provided for special purposes. To use them just add a space after TMONEY and type the switch before you press <Enter>. These switches will remain in effect next time you use TMONEY without needing to use the switch again. /B - Suppresses the use of color on all monitors. This switch will have no effect if you are using a true monochrome monitor. However, there are many varieties of composite monitors that only display one color in many shades. On these monitors you may want to try the /B and /C switch to see which you like better. /C - Cancels the /B switch and tells TMONEY to use color in the display. This switch will have no effect if you are using a monochrome monitor. /V - This switch is only needed on very rare occasions. It tells TMONEY to use the system BIOS to write to the screen and not assume that it can access video memory. Do NOT use this switch unless necessary since it will cause all of the screen writes to be slow. If TMONEY works on your monitor and you can read everything on the screen then you do NOT need to use this switch. /M - Cancels the /V switch. /P - Disables printer-ready checking. Some printers do not respond as expected when an inquiry is issued to determine if the printer is ready and has paper loaded. /R - Cancels the /P switch and enables printer-ready check. The /C, /M, and /P switches are set by default unless you change them. The most common example of needing one of these switches is with the /B switch. If you are using TMONEY on a computer with an LCD type display, as is commonly used on laptop and portable systems, you may want to either give the "/b" switch on the command line like: TMONEY /b or press F2 and select monochrome display attributes to make TMONEY Version 3.1 PAGE 3 the display more readable. When you start TMONEY a "sign-on" screen will appear. Press any key (such as the space bar) and the copyright notice will appear. Press a key once more and the main menu will pop up. The menus in TMONEY are easy to follow. Help is available at any time. Press the F1 key and either a help menu or a text window of information will pop-up. When you are done reading the help information, press the ESC key. Navigating through the TMONEY screens and functions: The MENUs of TMONEY are accessed by moving the highlighted select bar up or down to select the desired function. Moving the bar up or down is done by pressing the keys marked with up or down arrows. For most keyboards, the arrow keys are on the right-hand side of the keyboard. Usually the up arrow also has an "8" and the down arrow also has a "2" marked. If you press these keys and the select bar does NOT move, press your "Num Lock" key that is usually located near the upper right hand side of the keyboard and try again. Also note that the "Home" key will return the select bar to the top position and the "End" key will will move it to the last position in the menu. An optional method of making a selection from a TMONEY menu is to press the key corresponding to the highlighted character in the menu item of your choice. Simply pressing the key will select the item without pressing the <Enter> key. Once you have selected a financial function from the main menu, you will see prompts on the screen requesting the necessary information. If you are not sure about the information or the reason for the function, press F1 to see a help screen. The help screens will explain and show an example of the usage of the function. The ESC key generally moves you back to the previous menu or cancels the current input box. If you accidentally select a feature or input that you did not want to access, chances are that pressing the ESC key will cancel your selection and return to where you came from. Use of the Function keys and other common options are shown at the bottom of the screen at the appropriate time. If you are uncertain of what you are to do next, look to the bottom of the screen first. TMONEY Version 3.1 PAGE 4 --- TMONEY Setup Menu screen (F2) --- Once you have started TMONEY you may access the setup options menu at any time by pressing the F2 key. The setup menu screen allows customization of various aspects of TMONEY's operation. Your configuration may (optionally) be saved which causes your options to remain in effect every time you use TMONEY. Screen Colors: You may customize the colors to fit your preferences by using the "Select Screen Colors" function. All the available colors for your screen are displayed in the top portion of your screen. Use the cursor keys to move the select bar to the color you want to change. To select a new color simply type in the new color number selected from the chart and press <Enter>. When you are finished with your color selections, press ESC to return to the Setup Menu. Note: The colors you select will not be displayed until the screen is redrawn. For example, if you were in the TMONEY main menu when you pressed F2, you will return to the same main menu screen just as it was before. To make your new colors take effect, select a function then press ESC to go back to the main menu. This will cause your new colors to be displayed. The usage of each screen color that may be selected is described below: Main Background Color Color for the screen background and frame that is displayed while the TMONEY main menu is active. Main Menu Frame Color Color for the frame around the main menu and the menu title. Main Menu Text Color Color for the text contained within the main menu selection box. Main Menu Bar Color The color for the select bar in the main menu. Submenu Frame Color Frame and title color for all select menus OTHER THAN the main menu or the pop-up help menu. Submenu Text Color Color of the text within submenu selection menus. Submenu Bar Color Color for the submenu select bar. TMONEY Version 3.1 PAGE 5 Value Input Color This color is displayed while your data input is in progress. It should be a different color from Item Select Color. The Item Select Color indicates the input item you have selected by using the cursor (arrow) keys. Once you start to input the data, the color is changed to the Value Input Color. Output Background Color General screen color used in all TMONEY function screens. Output Text Color Color of general text printed within function output screens. Output Values Color Color of the values (numbers) displayed on output screens. Output Title Color Color for output screen title, column titles, and input titles. Help Frame Color Color for the frame (boxes) used in the F1 pop-up help system accessed from the main menu. Help Menu Color Color for the text appearing in the F1 pop-up help menus. Help Bar Color Color for the select bar used in the F1 pop-up help menus. Help Message Frame Color Color of the frame around the help window that is displayed once you have selected a help item. Help Message Text Color Color of the help text displayed within the help window frame. Screen Bottom Prompt Color of the prompt messages that appear at the bottom of the screen. Item Select Color This color is used to identify the current selected input location or item. This is the color of the box that you can move around some of the input screens (using the cursor keys) to select an input item. To select the default colors or monochrome screen color choices select "Reset to Color Default Choices" or "Reset to Monochrome Default Choices" from the Setup Menu. TMONEY Version 3.1 PAGE 6 Output Format There are two ways to display (and identify) each payment or the values displayed in each function. You may identify them by the payment number or by using actual calendar dates. Payment Number - Each value (such as each payment in a Loan screen) is marked under a column labeled Year/Month/Payment#. For example the values 2/5/17 would represent the 2nd year of the loan, the 5th month. The 17 indicates that this is the 17th payment from the start of the loan. Payment Date - Each value (such as each payment) is identified by the day when it is scheduled to be made. For example, "1992 Oct 25" indicates October 25th of 1992. If payment date is selected, the amount of interest paid will be included in the output. Printer Setup Options Printer Port: You may select what port your printer is connected to. (See your computer's manuals for more information.) You may select ports LPT1, LPT2, or LPT3. The selection TMONEY.PRN will send output that would normally be sent to a printer to a file named TMONEY.PRN. If you do not have a printer available, you can send printer output to this file. Later you could print this file using the MS-DOS command "PRINT TMONEY.PRN" to send the file to a printer. You could also use the MS-DOS command "TYPE TMONEY.PRN >LPT1" to send the file to the printer on LPT1. The selection "No Printer" indicates that no printed output should be used. Set Top/Bottom Margin: Sets how many blank lines you want at the top and bottom of each page or printed output. Set Lines Per Page: Set this according to how many lines of printed output can appear on a single page. (See your printer manual.) The page length for most printers is 66. Printer Output Setup String: Many printers, especially the dot-matrix type, may be configured using special setup codes. These codes tell the printer to use a certain font, near-letter-quality mode, or other setup functions. If you would like to have TMONEY send special setup codes to your TMONEY Version 3.1 PAGE 7 printer before any output is printed, select this item. Up to 16 8-bit values may be sent. You must input these values in hexadecimal notation. See your printer manual to select any codes you may want to use. Since zero is a valid printer code, after you input the values you will be prompted for the number of valid characters in your setup string. Enter the proper value between 0 and 16. Set Printer Header File Name: This is a very nice feature of TMONEY 3 that allows you to print a header at the top of each function that you send to the printer. For example, if you are doing financial planning for a client as part of your business, you may want to have your name and address at the top of the financial plan (like a letter head). To use this feature you must first use a text editor (or word processing program) to create the header file. You may have your text editor or word processor name the file anything you want. Use Set Print Header File Name to tell TMONEY the name of the file you want to use. Note: If you are using a word processor, you must have it actually do a printed output to a file. This file will contain the exact data that would have been sent to the printer. If your word processor has the capability to write the file as an ASCII file, you should use that option. Set Print Footer File Name: This is exactly like the Header except that it is printed at the bottom of each output function. Save: Save Setup to Configuration File This saves everything you customized in the setup menu. Next time you use TMONEY these selections will be the way your set them.- Note: if you do NOT use this feature to save your setup, your changes will no longer be in effect next time you use TMONEY. Load: Load Setup from Configuration File The main purpose for this feature is the following. Assume you have decided to change some of the setup items then realize you made a mistake. This feature would reset to them to the way they were last time they were saved. TMONEY Version 3.1 PAGE 8 --- Compute loan payments and interest tables --- This is a standard loan amortization tool to investigate how much a loan will cost both in monthly payments and total interest. A schedule of payments and interest is also provided for tracking the loan throughout the repayment period. You will be prompted to input the term of the loan (number of years), the interest rate, the amount of the loan, and the frequency of the payments. If your setup options (see F2 Setup Menu) are set to show the payment dates, you will also be prompted to input the calendar date of the first payment. From this information TMONEY will compute your payments. The output menu will let you select display options to see each scheduled payment or yearly payment/balance samples. Each of the input items you must provide are described below. Years: Enter the number of years it will take to repay the loan. + Months: Normally you will enter 0. If you are computing a loan for 18 months you could input "Years: 1 + Months: 6" or optionally "Years: 0 + Months: 18". Interest Rate: Enter the annual percentage rate (APR) that will be charged on the outstanding balance. Lenders are required to provide you with the APR and the total cost of the loan. Loan Amount: Input the amount of the loan (how much do you plan to borrow). Note: Do NOT use any commas "," or dollar signs "$" in your input. These will be added by TMONEY when dollar values are displayed. Payments: You will be shown a select menu to select the payment frequency. The frequency menus have the following choices: Annual - One payment per year Semi-Annual - 2 payments per year (every 6 months) Quarterly - 4 payments per year (every 3 months) Monthly - 12 payments per year (every month) TMONEY Version 3.1 PAGE 9 Semi-Monthly - 24 payments per year (twice a month) Bi-Weekly - 26 payments per year (every 2 weeks). Weekly - 52 payments per year (every week) A number of companies pay their employees more than once a month (for example on the 1st and 15th of every month). More and more financial institutions (such as company endorsed Credit Unions) have implemented loan payments that can be automatically taken out of every pay check. Originally, they only applied the payments to the loans once a month. This has begun to change as these financial institutions are learning to compute these loans based on payment frequencies other than monthly. Using TMONEY to change the payment frequency from Monthly to Semi-Monthly you can see that there is a savings by properly computing (and applying) each payment to the loan. Take the following example: Duration of Loan Rate Amount Payments Years: 4 +Months: 0 11.5 12000 Monthly The monthly payment is $313.07 and the total cost of the loan is $3,027.34 Now compare this with the following: Duration of Loan Rate Amount Payments Years: 4 +Months: 0 11.5 12000 Semi-Monthly The semi-monthly payment is $156.24 ($312.48 a month) and the total cost of the loan is $2,999.24. If you were making payments twice a month but the payments were held and then applied to the loan only once a month, you were over-paying by $28.10. That is not a very large amount, but never the less, you were being over-charged and this savings of $28.10 should really be yours. 1st Payment Date: If you have the output format selection (see F2 Setup Menu) set to Payment Date option, you will also be prompted to input the date of the first payment. Your date input must be of the format month - day - year. Remember to separate month, day and year by dashes "-". (Note that the separator character is country dependent.) Note: This is the date of the first payment, not the date of the loan origination. For example, if you are making monthly payments and you input TMONEY Version 3.1 PAGE 10 January 15 of 1991 for the first payment, then the loan is assumed to have originated on December 15th of 1990. After you have input all the data, the monthly payment is computed and displayed. You will also see the Loan Output Menu. From this menu you may select to have a table of values displayed, printed, or you may go back and change any or all of the input values. In addition you may select the Loan Accelerator function (described on page #14). If you opt to show every payment, every payment will be displayed. If you are considering a long payment period such as a home mortgage then it may be more useful to only look at the yearly samples (Show Yearly Payment Samples selection in the Loan Output Menu). By examining the payment table you can see how much of each regular payment is actually applied toward the loan (principal) and how much is paying the interest for that month. Note that the total of all interest paid is also kept in the last column. By examining the payment schedule you can easily determine your payoff balance in the Amount Owed column. This is how much you still owe on the loan after the payment made on the date (or payment number) indicated in column one. Note: If you have set the F2 setup option to display the calendar date of each payment, then TMONEY will also compute the the total interest and principal paid for each calendar year. This information is needed for tax purposes. --- Examples of using Loan Function --- EXAMPLE 1: "I am considering buying a new car. After trading in my current automobile, I will need to get a loan for the balance remaining which will be about $8,500. If I can get 48 month financing at 9.9% what will my payments be and how much will the total finance charge be for the life of the loan?" SOLUTION 1: Duration of Loan Rate Amount Payments Years: 4 +Months: 0 9.9 8500 Monthly Payments: $215.17 Monthly Select one of the Screen output options. The last value in the right column (Total Interest) is the total cost of the loan ($1,828.44). The value $1,828.44 is the total cost of the loan. Always check the monthly payment as well as the total cost of the loan against what the loan officer shows you (In most states TMONEY Version 3.1 PAGE 11 the lender is required to give you, in writing, the total cost of the loan.). You can forgive them (or this software author) for being off by a maximum of a penny on the monthly payment. This is due to a very slight difference in the method of computation or rounding. However, if you are off by more than a few cents, they have probably tried to tack on some life or disability insurance on the loan without your approval or misrepresented the actual APR for the loan. (Not very likely, but this does happen! Usually because of a new or poorly trained finance person at the car dealership who is handling the loan for a customer.) Another interesting example on the subject of auto financing. We all remember the car commercial advertising 2.9% financing. Let's look at their example. With 20% down you could finance up to 36 months at 2.9% (on selected models). However, the commercial stated "get 2.9 percent financing or $1,000 cash back". In other words let's assume you could borrow $10,000 at 2.9% or take the $1,000 rebate and go to your credit union and borrow $9,000 at 10%. You will find that the monthly payments on $10,000 at 2.9% come to 290.37 while the payments on $9,000 at 10% are $290.40. The payments are almost exactly the same. This confirms our suspicion that, the difference in the finance charges were tacked on to the price of the car! For one more example of loan calculations let's look at a home mortgage. EXAMPLE 2: "I financed my home for $55,000 at 9.5% on a 30 year mortgage. Is there an easy way to pay ahead on this loan in an easy systematic way and pay it off early? How much would this save in interest?" SOLUTION 2: Duration of Loan Rate Amount Payments Years: 30 +Months: 0 9.5 55000 Monthly Payments: $462.47 Monthly Note: Your actual monthly payment may be more if it also includes escrow for insurance and/or taxes. Somewhere on your annual statements and original loan forms this amount will appear as the monthly payment. Years ago, lending institutions balked at people paying any other monthly amount than what was scheduled at the time the mortgage originated. In fact it was specifically not allowed, a charge was accessed, or you were given limited and specific number of "extra" payment opportunities. TMONEY Version 3.1 PAGE 12 Before the advent of the computer, extra principal payment did add some extra work for the loan processor. For most lending institutions of today, it is little or no extra effort to process additional amounts to be applied directly to the principal. Therefore here is a simple plan to pay ahead on your mortgage. Use the F2 Setup Menu (if necessary) and select the output format to display year/month/payment number. Print a schedule of every payment by selecting "Printer: Show Every Payment" from the Loan Output Menu. (Although not required, a printed schedule is highly recommended for your record keeping.) Now pay attention to the Principle column. This column indicates exactly how much of each payment actually goes to reduce the amount of money you owe. Just for an example, setup the above the $55,000 loan. You can see that only $27.05 of the first payment actually is applied to the amount owed (the principal). The other $435.02 pays the interest for that first month of the loan. Your loan balance is now $54,972.95. Now let's assume that you feel that this month you could afford to pay a little extra on the loan. Look at the next row (payment #2) and see that the principle portion of that payment is $27.27. Now you can see that if you add exactly $27.27 to your first payment you will have shortened the term of your loan by exactly one month. In addition, you can see that by paying that extra $27.27 you have eliminated one months interest which would have been $435.20. Therefore, by paying only an extra $27.27 you have actually saved yourself $435.20. That's quite a savings already! I recommend the follow procedure each month: - Look at your payment schedule and decide how many months extra principle payments you can afford. - Add an exact amount to cover the next 1 or more months of principle payments to your payment. Make sure it is marked as extra principle on your payment form. In other words, make sure the mortgage company knows what to do with the extra money. - Circle the number of payments you made on your printed schedule and mark the payment date beside it. Following this plan gives you the following: - You can shorten your loan by as much as you can afford on a month-to-month basis. TMONEY Version 3.1 PAGE 13 - You don't have to consider refinancing in order to get a shorter term loan. - You are not tied down to the larger payments. If you have a "bad month" with extra unforeseen bills you are not required to make the higher payments. - You have a written record (keep it in a safe place) of every payment and what your payoff balance is at any time. This is important! If you ever refinance or sell your house the mortgage company's payoff balance better be the same as yours (within a few pennies). You can double-check your balance with the annual statement from your mortgage company. Over all, I feel this is a good plan and have used it personally for several years. However, I must offer the following cautions. Paying the principal for a few months ahead does NOT mean that you can skip a future payment! Chances are your mortgage company will NOT look at it that way. You will have to check your balance with the mortgage company's balance periodically to make sure they have been applying your extra principal against the amount owed and not putting it into your escrow account (or somewhere else!). TMONEY Version 3.1 PAGE 14 --- Loan Accelerator --- The loan accelerator is a special option in the Loan Output Menu. The loan output menu is a part of the main menu selection "Comput Loan Payments & interest tables" as well as "Compute Loan Amount & interest tables". The loan accelerator function demonstrates the effect of accelerating the rate at which a loan is repaid by making slightly larger payments. Many people, if asked, would agree that they could aford to make larger payments. Even if the additional amount is small, TMONEY's loan accelerator will demonstrate that the effect can be quite a large savings during the life of most loans. Let's illustrate this by looking at an example. Assume I have just financed my home. My mortgage is a 30-year mortgage in the amount $65,000 at a rate of 9.5%. We can input this into TMONEY's standard loan function as follows: Duration of Loan Interest Rate Loan Amount Payments Years: 30 Months: 0 9.5 65000 Monthly Payments: $546.56 After looking over my monthly budget, I determine that I could easily add an additional $35 each month to my house payments. My next step is to select: "Accelerator: Accelerate Loan Payments" from the Loan Output Menu. I respond to the prompt: "Enter an amount that you could afford to add to every payment." $ 35 The savings I could realize by following this plan is computed, displayed, and compared with my original plan. Yr / Mo Rate Loan Amount Payment Total Interest ------- ---- ----------- ------- -------------- Current Loan: 30 / 0 9.50 % $65,000.00 $546.56 $131,759.88 Accelerated Loan: 22 / 10 9.50 % $65,000.00 $581.62 $94,362.89 Total savings in accelerated payment plan: $37,397.00 TMONEY Version 3.1 PAGE 15 Please observe that TMONEY's loan accelerator rounds the plan to the nearest even number of payments. This makes it easier to track in that the loan will be repaid in an even number of payments. In otherwords, the increase in each payment amount may be slightly more than the amount input. In our example, I can see that by simply adding $35.06 to each payment I could shorten the loan from 30 years to 22 years and 10 months. This would also save $37,397.00 in interest! The next submenu displays three options: Adjust the current loan computation: This will change the loan to the new adjusted loan with slightly higher payments and a shorter repayment period and return to the standard loan function. At this point you can output the new accelerated payment schedule. Note: If you selected a payment mode of weekly bi-weekly or semi-monthly, your new computed payments may not necessarily result in an even number of months (although an even number of payments will have been computed). Therefore, if you change any of the input values after adjusting the current loan computation using the loan accelerator, the payment amount will again change to an even number of months. This will have some affect on the payment amount displayed. Input a different extra principal amount: This allows you to start the accelerator over again and try a different amount on the same original loan. For example we can select this option and enter 5 (instead of 35) and see that even this small amount added to each payment would still save $8,049.88 and shorten the loan by a year and a half. Return to loan menu: This returns to the loan function without changing any of the original input amounts. TMONEY Version 3.1 PAGE 16 --- Compute loan amount and interest tables --- This function is like the "Compute loan payments ..." above with the exception that a different value is computed by TMONEY. In this case, you are assumed to know the years, interest rate, and payments but not the amount borrowed. This feature can also be used to compute the payoff balance if you know how many years/months remain in the loan, the rate and the payment amount. EXAMPLE: "I am considering the purchase of a home. I feel that I can afford a monthly payment of about $650.00 a month (plus tax escrow). The current rate is about 10.25% and I would like to finance for 20 years. How much can I afford to borrow?" SOLUTION: Duration of Loan Rate Amount Payments Years: 20 +Months: 0 10.25 Monthly ! Payments: $650.00 Monthly +-----------------+ ! The loan amount will be computed and displayed ^. In this case the amount you may afford to borrow is $66,215.49. Select one of the Screen output options as described above to examine the payment schedule. To study the impact of a different interest rate or duration of the loan, select "Change Input Values" from the output menu. This allows you to reselect an input value and change it. Each time a change is made the loan amount is updated to reflect the change. TMONEY Version 3.1 PAGE 17 --- Compare loans, various rates, amounts, durations --- When "shopping" for a loan or considering the type and amount of financing, many users want to see the effect of various interest rates and loan durations. With previous versions of TMONEY, users had to enter their values over and over again. The loan comparison function of TMONEY version 3 makes it easy for you you examine and compare the effect of various loan years, rates, or amounts. The basic input items are the same as in Compute Loan Payments (duration, rate, loan amount). After these basic input items have been input you are asked to select which of these three items you are comparing. You are then asked for the "Increment" for the item to be compared. Your original loan amount will be computed, then 11 more computations will appear on the screen. For each computation, the "Increment" value will be added to the item you are comparing. Let's look at an example. In recent years many persons have had to face a decision regarding whether they want a slightly higher fixed home mortgage rate or a lower but variable rate. In making this decision it may be helpful to see a chart of various interest rates. Let's assume a $60,000.00 mortgage for 30 years. Select the "Compare Loans" function and enter the following values: Years of Loan Interest Rate Loan Amount Payments 30 8 60000 Monthly The following menu will appear: ----------< Select the item to be compared >---------- Duration of Loan: increment the duration of the loan --> Interest Rate : increment the interest rate Loan Amount : increment the amount of the loan Select "Interest Rate" and the upper part of the screen will prompt for one more entry: Enter Increment for the interest rate : .5 If we enter ".5" then the following chart will appear showing rates between 8% and 13.5% in 1/2% increments. Years Rate Loan Amount Payment Total Interest ----- ---- ----------- ------- -------------- 30 8.00 $60,000.00 $440.26 $98,493.15 30 8.50 $60,000.00 $461.35 $106,085.31 30 9.00 $60,000.00 $482.77 $113,798.49 30 9.50 $60,000.00 $504.51 $121,624.51 TMONEY Version 3.1 PAGE 18 30 10.00 $60,000.00 $526.54 $129,555.46 30 10.50 $60,000.00 $548.84 $137,583.69 30 11.00 $60,000.00 $571.39 $145,701.85 30 11.50 $60,000.00 $594.17 $153,902.95 30 12.00 $60,000.00 $617.17 $162,180.32 30 12.50 $60,000.00 $640.35 $170,527.68 30 13.00 $60,000.00 $663.72 $178,939.10 30 13.50 $60,000.00 $687.25 $187,409.03 You can now see that if your interest rate climbed up to 13.5% your monthly payment could go as high as $687.25 and if it dropped to 8% your payment would go down to $440.26. Another excellent use for this feature is to determine the term (duration) of your loan. This time we will assume a fixed rate of 11% but look at the effect the term has on both the payments and the total interest. Input the following setup: Years of Loan Interest Rate Loan Amount Payments 5 11 60000 Monthly Enter Increment for the loan duration : 5 The following table will be displayed: Years Rate Loan Amount Payment Total Interest ----- ---- ----------- ------- -------------- 5 11.00 $60,000.00 $1,304.55 $18,272.72 10 11.00 $60,000.00 $826.50 $39,180.01 15 11.00 $60,000.00 $681.96 $62,752.47 --> 20 11.00 $60,000.00 $619.31 $88,635.13 25 11.00 $60,000.00 $588.07 $116,420.35 --> 30 11.00 $60,000.00 $571.39 $145,701.85 35 11.00 $60,000.00 $562.17 $176,113.33 .... If we examine the data for a 20 year loan compared with a 30 year loan we can see that the monthly payments are $571.39 for a 30 year loan and $619.31 for 20 years. Now look at the difference in the total interest cost of the loans (Total Interest column). The 30 year mortgage cost $145,701.85 while the 20 year mortgage cost $88,635.13. The bottom line of our comparison is: If I can afford the monthly payment of $619.31 instead of $571.39 (a difference of $47.92) I can save a total of $57,066.72 on the cost of the loan. Considering the savings, many persons would be willing to scrape up the additional $47.92. Note that some financial analysts would argue that "You could deposit that $47.92 per month into savings and get 7.5% on that amount so you're not offering a fair comparison." Ok TMONEY Version 3.1 PAGE 19 fine, let's look at that angle too. You may use the TMONEY function "Future Value of Regular Deposits" to determine that investing this $47.92 every month at 7.5% for 20 years will yield a total of $26,700.62. If we subtract that from my original figure of $57,066.72 you will still show a savings of $30,366.10 by paying your mortgage in 20 years instead of 30. If you really want to know the exact savings, you will have to include all the tax implications into our formula. However, that is beyond the intended scope of our discussion. For most persons who do not have a complex tax situation, the above analysis is quite clear and adequate. Consult your tax accountant if a further discussion of tax issues is necessary. TMONEY Version 3.1 PAGE 20 --- SAVINGS Plan deposits to reach a future goal --- The savings planner will help you add a purpose and organized plan to your savings. Many people simply throw some money into a savings account and hope it will amount to something some day. I must say that there is nothing wrong with this plan. In fact that's more of a plan than many people have. For some, the thinking is "I am putting $x into savings every month because that's all I can afford to put aside, so why plan." If that is the case, you can still use the TMONEY selection "Future value of regular deposits" and see what the future value of your regular deposits of $x dollars will amount to. You may be pleasantly surprised. On the other hand it may be nice to stop and take a look ahead and see where you want to be with your savings at some point in the future. One of the reasons I originally added this feature to TMONEY was to plan some savings for a future college education for my son. I'll use this example to demonstrate the use of this feature. I wanted a plan to accumulate $20,000.00 in savings by the time my son (age 0) is in college (age 18). I used my company Credit Union (for payroll deduction convenience) and assumed that I will keep most of the money invested in CDs at about 8% compounding monthly. I then input the following values: Accumulation Rate Savings Goal Compounding Years : 18 8 20000 Monthly +Months: 0 The results from TMONEY told me that if I deposit only $41.38 each month for 18 years I will have $20,000.00. If you try this example, you will see that TMONEY also informs me that I will have only deposited a total of $8,938.08. The rest of my $20,000.00 (the other $11,061.92) is the amount of interest I will have received on my savings over the 18 years. This certainly makes the plan look like an effective way to plan for my son's education. After the initial computation, the Savings Menu (as in all TMONEY functions) allows you to print the plan or modify the input values to compute another goal. Note: To really finalize this plan I selected "Present value of future amount" from the TMONEY main menu. There I determined that the present value of my future $20,000.00 is $4,761.25. Why do I want to know this? In reviewing my life insurance needs (as is suggested periodically and every time your family grows) this amount is important. If something happened to me today, my plans call for $4,761.25 of my life insurance to be TMONEY Version 3.1 PAGE 21 "ear-marked" for a college education for my son. Since this money can earn interest for 18 years before it is needed I only have to set aside this amount in my life insurance plan and not the entire $20,000.00. (See the Present Value description later in this manual for details.) --- Future value of regular deposits --- This function will determine the future amount generated by systematic regular savings. Now that electronic funds transfers (EFTs) are widely available, many people are choosing to have their paychecks electronically deposited into the financial institution of their choice. This makes regular saving deposits very convenient since you can select to have your money automatically split between checking, loans, and savings. Other convenient savings plans are also available to many corporate employees. These include 401-K plans and other company sponsored savings plans. Regardless of what type of plan you are enrolled in, it's nice to be able to look ahead and see what these funds will amount to over a certain period of time. For example, my company savings plan allows me to select a certain percentage of my salary to be invested into a the plan. Lets assume the savings percentage rate I selected results in a monthly savings investment of $67.32 and the current rate the savings/investment plan is earning is 7.42%. At this rate how much will this be worth in 20 years? Enter the following: Accumulation Rate Deposit Amount Frequency Years : 20 7.42 67.32 Monthly +Months: 0 Future Value Total of Deposits Interest Earned $37,141.15 $16,156.80 $20,984.35 I can see that on top of my savings deposits of $16,156.80 I could earn an additional $20,984.35 of interest for a total of $37,141.15 in my account 20 years from now. Note: In this plan, TMONEY assumes that the Frequency (monthly in our example) of the deposits equals the frequency of the compounding. (How often is the interest added to the account so that the interest itself can also earn interest is commonly referred to as compounding). In recent years it seems that most banks compound savings on a monthly basis. In some corporate savings plans the compounding is every 6 months. In that case, to get an accurate computation you would have to multiply the monthly deposit amount by six ($67.32 x 6 = $403.92) and select Semi-Annual from the Frequency/Compounding TMONEY Version 3.1 PAGE 22 menu as follows: Accumulation Rate Deposit Amount Frequency Years : 20 7.42 403.92 Semi-Annual +Months: 0 The results: Future Value Total of Deposits Interest Earned $37,189.29 $16,156.80 $21,032.49 Those of you who have worked with compounding will be quick (and correct) to say "Wait a minute! You cannot make more interest compounding semi-annually than by compounding monthly!". Let me explain why the examples above are correct. It reflects my decision as to how the computation should be done to make it easy to understand. TMONEY makes the assumption that you always make the first deposit on the day you start your plan. That's the way most people seem to do it. Make the plan, then walk into their bank and make the first deposit. This means that if you selected semi-annual, you will have the semi-annual amount deposited into the account and earning interest for the entire first six months. On the other hand the monthly plan would only have the first months deposit earning interest for six months, the second for five, the third for 4 months and so on. TMONEY could have been written to accommodate a deposit frequency that was different than the compounding frequency. In fact I did just that in an early beta version of TMONEY 3.00. However that seemed to add an unnecessary amount of confusion for the users. For example, users of that test version could not comprehend in their minds the concept of depositing money every two weeks (26 times a year) and having the interest paid monthly (12 times a year). Add to that confusion the different ways financial institutions compound the interest on savings accounts. Some use average balance, some use low balance, and there used to be some that just took the balance on the day the interest was computed. I once belonged to a Credit Union that computed the interest daily, but added the interest to the account once a month. I guess you call that computed daily and compounded monthly. The main point of this discussion is the fact that no matter how I compute the interest on savings, TMONEY will not be exactly in accordance with every (or even most) methods currently in use by financial institutions. While there are strict government regulations on how interest is computed and reported on borrowing money, the same is not true of savings. I feel that the way TMONEY 3 computes the future value of savings is the best general-purpose method possible. TMONEY Version 3.1 PAGE 23 --- Present value of future amount --- Present value determines what a future sum of money is worth now. In the business and finance world there are a number of situations where the present value function is needed. On a more personal level, the present value computation has some valuable applications as well. EXAMPLE: "I have a 11.5% bond that matures 5 years from now. In 5 years it will be worth $10,000.00. What is it worth today?" SOLUTION: Accumulation Rate Future Value Compounding Years : 5 11.5 10000 Annual +Months: 0 Present Value $5,802.64 The present value of the bond is $5,802.64. TMONEY Version 3.1 PAGE 24 --- Future value of a present amount --- The future value function will determine the effect of depositing a sum of money into an interest bearing account and leaving it to compound (earn interest with the interest periodically being added to the account) for a period of time. EXAMPLE 1: "My IRA account balance, $23,489.12, is currently compounding quarterly at an annual rate of 8.25%. Assuming I do NOT make any more deposits into this account, how much will it be worth when I retire 23 years from now?" SOLUTION 1: Accumulation Rate Present Value Compounding Years : 23 8.25 23489.12 Quarterly +Months: 0 Future Value Total Interest $155,639.81 $132,150.69 Another example of using future value is to determine the effects of inflation on our future income needs. EXAMPLE 2: "My current income is about $2,100.00 a month. Assuming an inflation rate of 4.5% each year, how much should my income be 10 years from now just to keep up with inflation?" SOLUTION 2: Accumulation Rate Present Value Compounding Years : 10 4.5 2100 Annual +Months: 0 Future Value $3,261.24 My income will need to be $3,261.23 in ten years to keep up with a 4.5% annual rate of inflation. TMONEY Version 3.1 PAGE 25 --- Present value of withdrawals --- This function could also referred to as "Present value of installments" as we will de from the second example given below. This function allows you to determine the amount of cash that you would need to plan for regular withdrawals of a specific amount. EXAMPLE: "When I retire, I would like to be able to withdraw $1,000.00 each month from my savings account for the next 25 years. If I can get 8% interest on the savings account, how much money do I need to have in the savings account before I retire?" SOLUTION: Duration of Plan Interest Rate Withdrawals Frequency Years : 25 8 1000 Monthly +Months: 0 Present Value is : $129,564.52 Total withdrawals: $300,000.00 This plan has informed me that if I start with $129,564.52 in a savings account that pay 8% interest, I can withdraw exactly $1,000.00 each month for 25 years. Note that the total amount I will have withdrawn over the 25 years is $300,000.00. Note: The plan is computed so that your first withdrawal begins one month after the start of the plan. TMONEY also makes the assumption that the interest for the month has already been added to the account before you make each withdrawal. If your withdrawal plan does not account for this, your account will be depleted several months early. Transactions of the following type also can benefit from this function. Assume I have bought out a business partner. She agreed to sell her half of the business if I pay her monthly installments of $650.00 each month for the next five years. Note that there was no talk of a cash price since that was out of the question for me. My first year of sole ownership goes extremely well and at the end of the year I decide that I should finish the buy-out with a cash amount rather than continue the monthly installments for four more years. How much should this final cash payment be? She may hope that I would just pay her $31,200.00 ($650 times 48 monthly installments). I call my bank and determine that the lending rate would be 14% for a business loan. Now I bring up present value of withdrawals in TMONEY and enter: TMONEY Version 3.1 PAGE 26 Duration of Plan Interest Rate Withdrawals Frequency Years : 4 14 650 Monthly +Months: 0 Present Value is : $23,786.46 Total withdrawals: $31,200.00 Now I can present a cash buy-out offer of $23,786.46 since that amount represents the present value of the remaining monthly installments. TMONEY Version 3.1 PAGE 27 --- Withdrawal planner --- The withdrawal planner takes a given amount of money, the rate and a duration of time (number of withdrawals) and computes the amount of each withdrawal. EXAMPLE: "I am ready to retire. I have $150,000.00 in an interest bearing account at 7.5%. I would like to make regular monthly withdrawals from this account for the next 20 years. How much can I withdraw each month?" SOLUTION: Withdrawal Duration Rate Starting Amount Frequency Years:20 + Months:0 7.5 150000 Monthly Withdrawal Amount: $1,208.39 Total Withdrawals: $290,013.60 Now I know that can withdraw $1,208.39 each month for 20 years. Over that 23 year period I will have withdrawn $290,013.60. Note: The plan is computed so that your first withdrawal begins one month after the start of the plan. TMONEY also makes the assumption that the interest for the month has already been added to the account before you make each withdrawal. If your withdrawal plan does not account for this, your account will be depleted several months early. TMONEY Version 3.1 PAGE 28 --- Graded savings --- The graded savings planner allows you to plan your savings accumulation with the assumption that your income will increase annually. The input values are the same for the graded savings planner as for the standard savings planner (term, rate, goal, compounding/deposit frequency) with the addition of the inflation rate. The the deposit amount computed by TMONEY is the amount of each regular deposit for the first year. Each year thereafter, starting with the first deposit of the second year, you must increase your deposit amount by the inflation factor. EXAMPLE: "I want to accumulate $20,000.00 12 years from now for a college fund for my son. The investment where I plan to build the fund is paying 8.5% interest. I plan to be able to increase my deposit amount by 6% once a year. What amount should I deposit each month during each year of my plan?" SOLUTION: Term Rates Savings Goal Compounding Years : 12 Interest : 8.5 20000 Monthly +Months: 0 Inflation: 6 Monthly Deposits $60.16 If I select "Show Yearly Totals" from the output menu, I can see a summary of deposits and the account balance for the entire 12-year plan that looks something like: Year Mo Pmt# Deposits Interest Balance ------------ -------- -------- ------- 1 12 12 $60.16 $34.12 $756.04 2 12 24 $63.77 $102.99 $1,624.27 3 12 36 $67.60 $181.91 $2,617.38 4 12 48 $71.66 $271.99 $3,749.29 5 12 60 $75.96 $374.48 $5,035.29 6 12 72 $80.52 $490.74 $6,492.26 7 12 84 $85.35 $622.26 $8,138.72 8 12 96 $90.47 $770.70 $9,995.06 9 12 108 $95.90 $937.86 $12,083.72 10 12 120 $101.65 $1,125.74 $14,429.25 11 12 132 $107.75 $1,336.52 $17,058.77 12 12 144 $114.22 $1,572.62 $20,002.03 This chart tells me what the graded monthly payments will be for each year of the plan. Note that the dates under the heading "Year Mo Pmt#" are the date for the END of each year. Each monthly deposit for the first year was $60.16. Interest TMONEY Version 3.1 PAGE 29 in the amount of $34.12 was received over the first year. The balance at the end of the first year was $756.04. If you select "Show Every Deposit" from the output menu, each deposit will be displayed (or printed). Note once again that due to the necessity of rounding each payment and interest transaction to the nearest penny, the final total will not be exactly the goal. However, it is as close as possible without allowing deposits and interest payments to include fractions of pennies. TMONEY rounds the amounts when computing and showing the deposit schedule since that is the method most (or all) financial institutions must use. TMONEY Version 3.1 PAGE 30 --- Graded withdrawals --- The graded withdrawal plan computation allows for regular withdrawals with annual increases based on an inflation rate. If you are planning on regular withdrawals as a means of paying expenses that will fluctuate based on inflation or the cost of living, it only makes sense to plan to give yourself a raise each year. EXAMPLE: "When I retire, I want to begin to withdraw $500.00 each month from my savings. I also want to increase my monthly withdrawals each year by 4 percent. Assume I will be able to get 9% interest on the account balance and I want my funds to last for 25 years. How much money must I have in my account when I start my monthly withdrawals?" SOLUTION: Select graded withdrawals from the TMONEY main menu and input the following values: Duration of Plan Interest Rates Withdrawals Frequency Years : 25 Balance Rate : 9 500 Monthly +Months: 0 Inflation Rate: 4 Present Value is: $83,294.27 I must begin with $83,294.27 in my savings account. If I select "Show Yearly Totals" from the output menu, I can see a summary of deposits and the account balance for the entire 25-year plan that looks something like: Year Mon Day Withdrawals Interest Act Balance Total Interest ------------ ----------- -------- ----------- -------------- 1992 JUN 1 $500.00 $635.39 $84,854.07 $7,559.80 1993 JUN 1 $520.00 $646.38 $86,310.05 $15,255.78 1994 JUN 1 $540.80 $656.45 $87,642.45 $23,077.78 1995 JUN 1 $562.43 $665.45 $88,829.28 $31,013.77 1996 JUN 1 $584.93 $673.18 $89,846.04 $39,049.69 1997 JUN 1 $608.33 $679.46 $90,665.48 $47,169.09 1998 JUN 1 $632.66 $684.05 $91,257.48 $55,353.01 1999 JUN 1 $657.97 $686.70 $91,588.44 $63,579.61 2000 JUN 1 $684.29 $687.14 $91,621.24 $71,823.89 2001 JUN 1 $711.66 $685.06 $91,314.81 $80,057.38 2002 JUN 1 $740.13 $680.13 $90,623.55 $88,247.68 2003 JUN 1 $769.74 $671.96 $89,497.09 $96,358.10 2004 JUN 1 $800.53 $660.15 $87,879.85 $104,347.22 2005 JUN 1 $832.55 $644.24 $85,710.42 $112,168.39 2006 JUN 1 $865.85 $623.72 $82,920.96 $119,769.13 2007 JUN 1 $900.48 $598.04 $79,436.70 $127,090.63 2008 JUN 1 $936.50 $566.59 $75,175.08 $134,067.01 TMONEY Version 3.1 PAGE 31 2009 JUN 1 $973.96 $528.68 $70,045.14 $140,624.59 2010 JUN 1 $1,012.92 $483.57 $63,946.69 $146,681.18 2011 JUN 1 $1,053.44 $430.44 $56,769.34 $152,145.11 2012 JUN 1 $1,095.58 $368.39 $48,391.65 $156,914.38 2013 JUN 1 $1,139.40 $296.42 $38,680.00 $160,875.53 2014 JUN 1 $1,184.98 $213.44 $27,487.22 $163,902.51 2015 JUN 1 $1,232.38 $118.24 $14,651.62 $165,855.47 2016 JUN 1 $1,281.68 $9.51 -$4.65 $166,579.36 This chart tells me what the graded monthly withdrawals will be for each year of the plan. Note that the dates under the heading "Year Mon Day" are the date for the END of each year. The sample listed above started on February 7, 1991. The first entry, 1992 JUN 7, is the end of the first year of the plan. Each monthly withdrawal for the first year was $500.00. Each amount under the Interest column contains the interest for a single month. If you select "Show Every Withdrawal" from the output menu, every individual withdrawal will be displayed Note once again that due to the necessity of rounding each payment and interest transaction to the nearest penny the final total will not be exactly zero. However, it is as close as possible without allowing withdrawals and interest payments to include fractions of pennies. TMONEY rounds the amounts when computing and showing the deposit schedule. You may also notice that the account balance will also grow during the early years of the graded withdrawal plan. The monthly interest during these first number of years is greater than your monthly withdrawals. Since your withdrawals are increasing every year, that is necessary to allow this complex financial plan to succeed. The withdrawal formula: The withdrawal plan assumes that the interest will be received each month BEFORE the withdrawal is made. The first withdrawal starts one month after the start of the withdrawal plan. If withdrawals are made before the interest is added to the account each month, your account balance will be depleted earlier than planned. Although this will not make a drastic difference, you could find yourself depleting the account a few months early. TMONEY Version 3.1 PAGE 32 --- RETIREMENT: Complete retirement planning --- Retirement planning is a necessary part of everyone's financial plan. Regardless of whether you are nearing retirement, already retired, or have no plans to retire for 40 years, TMONEY retirement planner offers you an excellent planning tool. TMONEY helps you formulate plans on accumulating the funds necessary to meet your retirement goals. During retirement, you can plan your retirement income and feel comfortable about the rate at which you will be utilizing your retirement fund. In speaking with persons who are already enjoying their retirement years as well as professional retirement planners, the following comment seemed to surface quite often: "Most retirement plans make no accommodations for inflation. They expect you to live on the same amount of monthly income for the rest of your life." TMONEY lets you select the inflation factor to be applied to your retirement plan. This inflation factor (input as an annual percentage rate) is applied to all retirement computations. TMONEY has a rather exclusive "Retirement Inflation Formula" that enables you to give yourself a raise each year of your retirement. TMONEY takes into account your current funds as well as your current accumulation plans. Many people "hedge" on their retirement funds by investing parts of them in various accounts and investments. The projected return on these investments varies which is why I felt TMONEY must account for them separately. If your retirement funds are in more than one account, you will appreciate the fact that TMONEY considers each account and it's respective rate of return separately. There is no restrictive limit on the number of these accounts allowed. (The only limit is 65,000 accounts or the available memory in your computer system ... whichever is used up first.) Using the TMONEY retirement plan (page 1): The retirement planner begins by prompting for some preliminary information: Current Age: Enter your age or the age you want this plan to begin from. Date: Today's date will be filled in for you. If this is not TMONEY Version 3.1 PAGE 33 the date to assume for the start of your plan enter a new date in mm-dd-yy format (such as 5-15-92 for May 15, 1992). If today's date is ok, then just press Enter (marked Return on some keyboards) or the right arrow key to move to the next input location. Retirement Age: The age when retirement will begin. This will be set to 65 by default. Any time you change the retirement age, the retirement date will be recomputed to correspond. Retirement Date: There will already be a date here. This date assumes that you will retire on todays date in the year you plan to retire. If you plan to retire on another date, enter that date here. If you change the date by a year or more, the retirement age will also change to correspond. Monthly Retirement Income: This is one of the more important selections you will be asked to make. TMONEY is asking for a figure based on what you would need today. In other words, based on the purchasing power of your money today, how much monthly income will you need that is to be provided by this plan. You may want to take the following items into consideration: Assume your home is paid for (if that will be the case by the time you plan to retire) and subtract your mortgage payment from your current living expenses. Now you can work with that amount as a basis. Subtract any company pension you would be entitled to. Unless you are self employed, you may have to contact the Human Resources Department of your employer to obtain these figures. Subtract any government retirement benefits you will be eligible to receive (for example, Social Security benefits for most American citizens). Contact your local government office to obtain these figures. Subtract any other expenses that will no longer apply. This could include items such as dependent child support, and payments into your IRA. Now you should have a figure to input into this entry as a basis for your retirement income needs. Inflation Rate: This is another important selection. Input what you estimate to be the average Cost Of Living Adjustment TMONEY Version 3.1 PAGE 34 (COLA) each year. If your living expenses will likely increase by 3.5% each year then enter 3.5 for this input item. The inflation rate will be used in a number of the retirement needs analysis computations: - Your future monthly income needed at retirement. For example, assume you plan to retire 12 years from now and input 500 for the monthly retirement income and 3.5 for the inflation rate. TMONEY will compute your retirement income as $755.53 by applying the inflation rate to your monthly income over 12 years. - The annual raises in your retirement income will also be at this rate. TMONEY will compute the amount of money you will need to meet your retirement income goal with annual raises based on this rate (assuming you select the "inflation formula" option). Use the above figures for example again. You will withdraw $755.53 per month for the first year of retirement. The second year you will give yourself a 3.5% raise and begin monthly withdrawals of $781.97 and so forth. - If your current fund accumulation plans do NOT support your retirement goals, you will be shown 3 plans that TMONEY will compute to help you reach your goals. The third plan involves regular monthly deposits into your retirement funds. These regular deposits will be computed so that you are expected to increase your deposits by the rate of inflation each year between now and your retirement. Let me point out that the rate you select should be an average rate of inflation. Within the last 20 years, the inflation rate has fluctuated widely and hit as high as 12 percent. However, as an average, 3 to 4 percent may be more realistic. Also note that during those years when the inflation rate skyrocketed, the rate paid on IRA's and certificates of deposits also jumped. I tend to feel (this is my personal opinion only) that the important thing in retirement planning is the ratio between your inflation rate and the rate you plan to receive on your retirement funds. To a certain extent, I think you can assume that if the cost of living and inflation jumps, so will the rate paid on investments. (Although this has not been the case in a number of underdeveloped countries, I feel that my assumption is generally accurate.) TMONEY Version 3.1 PAGE 35 Current Funds: The current funds screen region is where you record the current value of your retirement funds. If you have more than one retirement fund, input each fund on a separate line. Although only three lines of data are displayed at one time, you may use the up and down cursor keys to scroll the current funds window. For each account/fund enter the following: Amount - current dollar value of the account. Rate - interest rate received on this investment. Source - up to 12 characters of text to identify this fund. These are used for your identification purposes only. Compounding - How often is the interest added to the account. This is a selection menu. For each account the projected future value is computed and displayed under the heading "Retirement Value". This indicates what the funds in this account will be worth at your projected retirement date. This assumes the same rate of interest will be received on this account from now until your retire. If the rate fluctuates, try to input an estimate of the average rate based on the account's past history. If you are currently making regular deposits into an account, you must still input it's current value here. Then note your regular deposits in the "Current Regular Deposits" window. Future Lump Sums: This window allows you to include amount(s) that will be payable at retirement. These are amounts of a known value. In other words, you know exactly how much will be received and this amount will not change. For example, if you plan on cashing in a life insurance policy at retirement, put it's cash value (at age 65 or whatever time you plan to retire) here. Future Lump Funds - The amount of the lump sum that you will receive at retirement. Source - Up to 12 characters of text used for you to identify this amount. If you have more than one future lump sum, input each TMONEY Version 3.1 PAGE 36 fund on a separate line. Although only three lines of data are displayed at one time, you may use the up and down cursor keys to scroll the window. Current Regular Deposits: If you are currently making regular deposits into your retirement funds, this window is where you can account for them. For example, you may be making regular deposits in an individual retirement account (IRA). In addition, you may be depositing regular amounts into a 401-K plan through your business or employer. In any case, enter the following information about each account: Deposit Amount - The amount of each regular deposit. Rate - The interest rate received on this account. Source - Up to 12 characters of text used for you to identify this amount. Frequency - Note that when this selection menu pops up, the menu title is "COMPOUNDING". For ease of understanding, TMONEY assumes that the compounding frequency is the same as the deposit frequency. Therefore, if the account is compounded every 6 months and you are making monthly deposits, then you may want to multiply your monthly deposits by six and enter this as the deposit amount and select Semi-Annual from this menu. The retirement value for each of these regular deposits is computed and displayed under the "Retirement Value" heading. If you have more than one retirement fund, input each fund on a separate line. Although only three lines of data are displayed at one time, you may use the up and down cursor keys to scroll the window. If you have input all the items up to this point, you are now ready to switch to the retirement report page. You may switch back and forth between the to pages of the retirement plan at any time by pressing the F9 key. Using the TMONEY retirement analysis (page 2): If this is the first time you have accessed page two since starting this session of TMONEY, you will be prompted for four additional input items. If you have already switched back and forth between page one and page two at least once, these TMONEY Version 3.1 PAGE 37 prompts will be skipped. If you want to reselect any or all of these input items again, press F10 while viewing page 2. The four input items on page 2 are a key to how TMONEY will analyze your retirement plan. Computation Method menu: This menu lets you select one of the following: Fixed retirement income - preserve capital This method does NOT allow annual raises during retirement. During retirement you are assumed to withdraw the same amount every month. The withdrawals will be supported by the interest earned on your retirement fund. In this way, the balance of your retirement account will remain steady and will never be depleted. Fixed retirement income - deplete capital This method does NOT allow annual raises during retirement. During retirement you are assumed to withdraw the same amount every month. The withdrawals will be planned in relation to the duration of the retirement income and the interest rate on the unused balance during retirement. (These are the other two selections described below.) Since the retirement funds will be depleted (used up) at the end of the retirement duration, the amount of retirement funds required to support this option are less than the "preserve capitol" option described above. Retirement inflation formula - recommended method This method DOES allow annual raises during retirement and therefore is the option I highly recommend. This plan is recommended since you cannot assume that inflation will stop and your living expenses will remain constant once you retire. During retirement you are allowed to give yourself an annual raise based on the inflation rate you selected on page one. Obviously, this plan requires the most capital to fund it as compared with the other two options. Duration menu: If you selected the "Preserve Capital" option above, this selection will be skipped as it would not apply. This menu allows you to select how it will take to deplete your funds after retirement. Interest rate on unused balance of funds during retirement: Once you retire and begin your regular monthly withdrawals, what rate of interest do you expect to receive on the TMONEY Version 3.1 PAGE 38 balance of your funds. This is given as a separate rate since you may select a more secure investment after retirement for security reasons. A more secure investment generally pays a lesser rate. Interest rate used to compute additional funds needed: If TMONEY determines that your current plans will NOT accumulate enough money to meet your retirement goals, this rate will be used to propose an additional plan. In that case, three plans will be proposed (all based on this rate). These plans are described later in this user's guide. If you have input any current funds balances on page one of the retirement planner, an average rate will appear here. Just press Enter (or Return) to accept the average rate. Otherwise, enter the rate to be used. The information displayed on page two is a report on the analysis of your retirement plan. For an illustration, assume the information appears as follows: --------------[ Retirement Analysis (page 2 of 2) ]----------- Monthly Computation Method: Retirement Inflation Formula Duration of Retirement Income: 25 Years Interest rate on unused balance during retirement: 6.00 % Interest rate to compute additional funds needed: 7.50 % -------------------------------------------------------------- Considering your inflation factor, by the time your retire you will need a monthly retirement income of: $755.53 To realize your retirement plan, you will need: $164,444.85 at retirement to support your income for 25 years with a 3.50% annual increase in the monthly income. Your current plans will provide: $135,316.07 You need a plan to accumulate an additional: $29,128.78 You could provide the additional funds in ONE of the following ways: 1) Deposit a single lump sum of: $11,876.09 2) Make level monthly deposits of: $124.54 3) Make monthly deposits of: $105.23 and increase the monthly amount by: 3.50% each year. -------------------------------------------------------------- Following is a description of each item in the order that the dollar amounts appear on the above sample analysis screen. $755.53 - This is the amount of monthly income that is scheduled for the first year of retirement. (Observe that the retirement inflation formula was TMONEY Version 3.1 PAGE 39 selected. Therefore the monthly income will increase each year of retirement.) The monthly retirement income input for this particular plan (see page 1) was $500. However, considering the inflation (COLA) factor of 3.5% (also selected on page 1) the actual retirement income will need to be $755.53 per month by time the recipient retires. $164,444.85 - This is the amount of cash the that must be available at retirement. The determination of this amount is based on the page one input values as well as the 4 analysis options at the top of this page. In this case, the recipient could deposit $164,444.85 into an account that pays 6% interest. One month later (s)he could begin withdrawals of $755.53 each month. Each year (after every 12th monthly withdrawal) the amount of the monthly withdrawal could be increased by 3.5%. In other words, the second year withdrawals will be $781.97, the third year $809.34 and so on. The monthly income for the 25th year will be $1,725.12 per month. The duration of the retirement income given in this case was 25 years. Therefore, the plan was computed to deplete the retirement funds at the end of the 25th year. You can see in this example the value of the retirement inflation formula. The monthly income grew from $755 a month to over $1,700 a month. This inflation formula was provided because I can NOT see why anyone would plan to live on the same monthly income for 25 years with no consideration for the effects of inflation on our cost of living. $135,316.07 - The current funds and accumulation plans, input on page one, will generate $135,316.07 by the retirement date selected. If this is less than the above amount (which it is in this case) then the goals are too high and unrealistic or else some additional funds need to be planned for. $29,128.78 - This is the difference between the above two amounts. If your current plans were adequate to meet your goals, then this value would be zero. The next three amount only appear if the above amount is greater than zero. In other words, if you need to plan to accumulate additional retirement funds, then the next three values are suggestions on how to accomplish that. Any ONE of the following methods will accomplish the stated retirement goals. TMONEY Version 3.1 PAGE 40 $11,876.09 - If $11,876.09 were deposited into an interest bearing account paying 7.5% interest (the rate given as one of the 4 analysis options at the top of the page 2 screen), this would compound to $29,128.78 by the retirement date. $124.54 - If this amount were deposited into an interest bearing account paying 7.5% interest each month from now until the retirement date, the account would contain $29,128.78 by the retirement date. $105.23 - This is the graded accumulation method. With this method you would begin by depositing $105.23 per month into an interest bearing account paying 7.5% interest. Each year (after each 12th monthly deposit) you would increase the monthly deposit amount by the inflation factor (3.5% in this example). In other words your second year's monthly deposits would be $108.91. The third year's deposits would be $112.72 and so on. The account balance would total $29,128.78 by the retirement date. Saving your plan to disk: Since you may spend a considerable amount of time setting up your retirement plan, TMONEY provides a way to save the plan to your disk. This gives you the ability to read the plan from the disk next time you use TMONEY. You can also create several plans and save each one to disk and recall any plan again later. To write your retirement plan to disk, press the F7 key. You will be shown the names of any retirement plans that have already been stored on your disk. To replace a plan that is already on the disk, move the select bar over the plan name and press the <Enter> key. To select a new name for your plan, press the insert key (marked "Ins" on your keyboard). You will be prompted to enter the file name. You may input a file name of up to 8 characters and press <Enter> to write the file. To read a retirement plan from disk, press the F8 key. You will be shown the list of retirement plans that are currently on the disk. You may select which plan to load by moving the select bar and pressing the <Enter> key. The data for your saved retirement plan is written to the directory that contains your TMONEY program file. The files for the retirement plan will have the file name extension of ".TRT". For example if you saved your retirement plan under TMONEY Version 3.1 PAGE 41 the name "MYPLAN", your retirement plan will be written to a file named "MYPLAN.TRT". If you decide to delete a retirement plan from your disk, use the MS-DOS "DEL" command to delete the unwanted plans. For example you would use the MS-DOS "CD" command to change to the directory where you copied the file TMONEY.EXE when you installed TMONEY. You would type DIR *.TRT <Enter> to see a list of all the retirement plan files. The following command DEL MYPLAN.TRT <Enter> would delete the retirement plan that you had named "MYPLAN". General tips on the retirement planner: 1 - Avoid the temptation to overstate the monthly retirement income needed. TMONEY will apply your inflation factor for you. Therefore you can safely assume todays cost of living when you decide on this amount. 2 - Don't forget to subtract other monthly retirement income sources such as federal retirement programs and your company pension if these apply to you. 3 - You will have to settle for an average inflation rate. Don't just pick a high rate of inflation "just in case" it reaches that rate. TMONEY Version 3.1 PAGE 42 --- TMONEY Formulas and assumptions --- Regular Deposits - In general where regular deposits are mentioned, it is assumed that the first deposit is made immediately. For compound interest calculations TMONEY assumes all deposits are made on time. If deposits are missed, then the missed interest must be added to the late deposits to keep on schedule. Regular Withdrawals - Where regular withdrawals are planned by TMONEY, it is assumed that the first withdrawal occurs at the end of the first withdrawal period. For example if you use TMONEY to plan monthly withdrawals over a period of time, the first withdrawal is assumed to be made one month from today. Further more, it is assumed that the monthly interest received on the remaining balance is paid on the account balance BEFORE that first withdrawal and before each subsequent monthly withdrawal. Propagation of errors - Where compounding is involved, any deviation from the given values can propagate throughout the interest earning/paying time period involved. For example: Assume I used TMONEY to devise a plan to accumulate $100,000.00 in 20 years at 9% interest. TMONEY informed me that I need to deposit $148.61 each month. Nevertheless, I deposit only $145.00 a month instead. This difference of $3.61 per month reduces the amount deposited over the 20 years by a total of $866.40 but the proposed $100,000.00 will be short by $2,430.08 due to the missed interest on that $3.61 a month for the 20 years. If I procrastinated for a month and skipped the first month's deposit of $148.61, then I will have missed the benefit of one month's interest at the end of the plan. This is the same as making the deposits for 239 months instead of 240. The final balance would be $99,106.06. Missing that one payment cost $745.33 in lost interest over the life of the plan (a difference of $893.94 minus the missed payment of $148.61). Rounding error - Obviously in actual practice, the amount of interest earned or charged must be rounded off to the nearest penny. The same is true when TMONEY computes the TMONEY Version 3.1 PAGE 43 payments/deposits for the plans. When an accurate financial calculation is performed, such as in TMONEY, rounding cannot be accurately accounted for. In addition, some financial institutions round differently than others, This is especially true of the way interest is computed on savings accounts. To illustrate this, take the $100,000.00 savings plan described above and use TMONEY's future value of regular deposits function to show a schedule of the accumulation. You will notice that the final value of the account is $99,999.08 which is 92 cents short of the goal. This is due to the aforementioned fact that each monthly deposit and interest payment has to be rounded to the nearest penny. Depending on the rate and the amounts that are computed each month, sometimes the rounding comes out in your favor and other times this is not the case. Take the above $100,000.00 savings plan again as an example. Use the TMONEY Savings Planner and plan for annual deposits instead of monthly. Now display the schedule and note that the final total amounts to $100,000.30. If it were possible to make payments, deposits, and interest include fractions of a penny, then the results would be accurate down to the penny as planned. TMONEY Version 3.1 PAGE 44 --- Advanced use of the TMONEY functions --- There are be a number of situations where it will be necessary to combine the various functions of TMONEY to solve a financial planning problem. One example is the retirement planner already provided with TMONEY. The retirement planner automatically accesses a number of other TMONEY functions to solve the retirement problem. Other situations arise that require more than a single TMONEY function to resolve. The example of personal life insurance planning is given below. With just a little creative thinking I'm sure you could come up with more situations that also require several functions to resolve. LIFE INSURANCE PLANNING: In personal life insurance planning, TMONEY functions come into play in various ways. In accessing ones personal life insurance needs, various areas of needs must be analyzed. After accounting for immediate final expenses, the rest of the process requires an examination of the period of time remaining in your family's life expectancy. The income necessary to allow your dependents to assume a "normal" lifestyle must be separated into a number of time periods. These periods could include: 1) The time between now and when each of your children reaches college age. 2) The time between now and when your youngest child leaves home. 3) The time between #2 (above) and when your spouse reaches retirement age. 4) Your spouse's retirement years. In order to demonstrate the use of TMONEY to solve these life insurance needs, we will perform a needs analysis for the following family: Father age 32 income $30,000.00 Mother age 30 income $8,000.00 Son age 6 college-bound Daughter age 4 college-bound Side note: For our example we are looking at at a family where the mother has chosen to spend the majority of her time at home with their young children to give them TMONEY Version 3.1 PAGE 45 the guidance they need in their early development years. Her income of $8,000.00 assumes that in addition to her full-time family responsibilities she also works part-time outside of the home. Now we can examine each of the time periods. For period 1, assume that this family has set a goal to have $20,000 set aside for each child by the time they are 18 and ready for college. They planned their college savings at the time each of their children were born by using TMONEY savings planner. These accounts already amount to $3,833.00 in their son's fund and $2,347.00 their daughters account. Therefore, if something would happen to the father today, they need a method of accumulating the rest of the $20,000.00. We can easily compute the remaining amount as: Son Daughter $20,000.00 $20,000.00 - 3,833.00 - 2,347.00 ---------- ---------- $16,167.00 $17,653.00 It will be 12 years before the son starts college (age 18) and 14 years before the daughter reaches college age. This allows us to assume that since the money won't be needed for this length of time, any life insurance funds would be left in an interest bearing account until it is needed. To compute the actual amount needed for the life insurance plan we can use TMONEY to compute the present value. We will assume that the funds could earn 7% interest. Son: Present value of $16,167 at 7% for 12 years = $6,996.52 Daughter: Present value of $17,653 at 7% for 14 years = $6,644.26 This resolves the first time period for our sample family. The second period is concerned with the actual day-to-day living expenses of a widow and two children. Our sample family has decided that during this period of time the mother could work some additional hours. They assume she could earn a take-home pay of $12,000. In addition, they checked with their local social security office and determined that the social security survivor's benefits for a surviving spouse and 2 children would also provide a major amount of assistance. They both agreed that she would need an additional $200.00 per month to help with living expenses until the youngest child gets out of college and leaves home at age 22. TMONEY Version 3.1 PAGE 46 We must find out how much cash she would need to have to be able to withdraw $200.00 a month for 18 years. We will also assume that she would need a cost of living increase on this amount of 4% each year. Therefore, we will use the TMONEY graded withdrawals planner. Duration of Plan Interest Rates Withdrawals Frequency Years : 18 Balance Rate : 7 200 Monthly +Months: 0 Inflation Rate: 4 Present Value is: $32,488.65 This is the amount of the life insurance plan that must be specified to support an income of $200.00 per month for 18 years (with 4% annual raises). The third period is the period between the time the youngest child leaves home and when the mother is of retirement age (we'll use age 62 in this example). Our subject in this case agrees that she could plan to work some additional hours or even full time during this period. However, they agreed that the life insurance plans should provide some financial assistance during this time. It was agreed that $400.00 per month with annual cost of living increases of 4 percent would be adequate. The computation for this period will involve two TMONEY calculations. First we must calculate the present value of the graded withdrawals of $400.00 per month. The mother would be age 48 at the start of this period so the computation would be as follows: Duration of Plan Interest Rates Withdrawals Frequency Years : 14 Balance Rate : 7 400 Monthly +Months: 0 Inflation Rate: 4 Present value is: $53,458.69 However, this is the present value at the beginning of her withdrawals for period three. There would be a lapse of 18 years before these funds would be needed. Therefore we must take the present value of $53,458.69 before 18 years. The TMONEY present value function will tell us that the present value for 14 years at 7% is $15,219.39. This is the amount of our life insurance plan that would be needed to take care of period number three. The final period of our example is the mother's retirement. They decided that by the time she retires she would be able to draw enough social security and other retirement benefits to make up the major portion of her expenses. $500.00 per month seemed to be an adequate amount to be funded by life insurance proceeds. This amount of $500.00 was computed based TMONEY Version 3.1 PAGE 47 on todays social security benefits and todays cost of living. Therefore, we had to compute the future value of $500.00 over 32 years (the amount of time between now and her retirement age of 62) at an inflation rate of 4 percent. Using TMONEY's future value computation we determine that the monthly retirement assistance will need to be $1,794.50. Once again we use the graded withdrawals and compute the amount of capital needed to support withdrawals of $1,794.50 until age 100 (38 years) with 4% annual increases in the monthly assistance. (Age 100 may seem like a much longer period that necessary. However, many persons assume that if they don't live to age 100 then the unused funds will accommodate final expenses and estate settlement etc.) Duration of Plan Interest Rates Withdrawals Frequency Years : 32 Balance Rate : 7 $1,794.50 Monthly +Months: 0 Inflation Rate: 4 Present value is: $473,215.28 Since these funds would not be needed until 32 years from now we can compute their present value to determine how much our present life insurance plan must provide. TMONEY helps us determine that the present value of $473,215.28 for 32 years at 7% is $50,706.72. Now that we have computed the funds for each of these time periods we can sum them all up to determine the total amount of life insurance presently needed on the father of this family. Period #1 $ 6,996.52 6,644.26 Period #2 32,488.65 Period #3 15,219.35 Period #4 50,706.72 ------------- Total $112,055.50 Remember that our example life insurance computation was only intended to show you how to compute the more complex portions of a needs analysis. Our discussion did not specifically include estate settlement costs and cost of paying off outstanding balances of any personal loans and a home mortgage. See your personal life insurance agent for more details on life insurance planning. TMONEY Version 3.1 PAGE 48 TMONEY Copyright (C) Gale R. Horst SOFTWARE END-USER LICENSE AGREEMENT You must read the following terms and conditions before using this SOFTWARE. If you are NOT willing to accept all of the following terms and conditions, you must remove the SOFTWARE from your computer system and destroy any copies of the SOFTWARE. This SOFTWARE is a proprietary product and is protected by copyright laws. It is licensed (not sold) for use on a single machine, and is licensed only on the condition that you agree to the terms of this END-USER LICENSE AGREEMENT. Gale R. Horst (hereinafter termed THE AUTHOR) does NOT warrant that the functions contained in the SOFTWARE will meet your requirements or that the operation of the SOFTWARE will be uninterrupted or error free. LICENSE 1. USE. You and only you may use the SOFTWARE on a single machine (a single CPU) at any given time. 2. COPY. You may copy this SOFTWARE in it's entire and unmodified form for the purpose of distribution to other parties providing the recipient reads, understands, and agrees to this license agreement. You may charge a maximum distribution fee of 6.00 (six) U.S. Dollars for each disk or package containing TMONEY payable by the SOFTWARE recipient. 3. TRANSFER. Except as expressly provided in this agreement, you may NOT transfer this license to another party. 4. OTHER RESTRICTIONS. You may not reverse engineer, decompile or disassemble the SOFTWARE. Any modification of the SOFTWARE is prohibited. TERM Non-registered users are granted a limited license for a period of thirty (30) days (hereinafter termed EVALUATION PERIOD). The license term may be extended without limitation upon agreement and payment of a license fee to THE AUTHOR. Use of non-registered copies of TMONEY beyond your EVALUATION PERIOD is strictly prohibited. Distribution of any printed output generated by the SOFTWARE to any third party during the EVALUATION PERIOD is strictly prohibited. LIMITED WARRANTY TMONEY Version 3.1 PAGE 49 The software is provided "AS IS" without warranty of any kind, either expressed or implied, including, but not limited to the implied warranties of merchantability and fitness for a particular purpose. The entire risk as to the quality and performance of the software is with you. Should the software prove defective, you (and not THE AUTHOR) assume the entire cost of all necessary correction and legal damages. In no event will THE AUTHOR be liable for any damages, including any lost profits, lost savings or other incidental or consequential damages arising out of the use or inability to use the SOFTWARE or for any claim by any other party. Nothing in this LICENSE AGREEMENT constitutes a waiver of THE AUTHOR's rights under the U. S. copyright laws or any other law. You acknowledge that you have read this agreement, understand it, and agree to be bound by its terms and conditions. Your acceptance of this agreement is implied by using the SOFTWARE. TMONEY Version 3.1 PAGE 50 --- Ordering, site licenses, and quantity discounts --- Licensing fees (all fees are in U.S. dollars): Single user / single CPU license. . . . . . . . . . . . $24.00 This is a single user LICENSE. The user is licensed to use TMONEY on a single machine at any given time. The user must make certain that there is no chance of their copy of TMONEY being used by anyone else. If more than one person has access to the machine on which TMONEY has been installed, the multiple users license must be requested. In the case of a user who will ONLY be using TMONEY at home for personal (non-business or professional) reasons, the single user license definition will be extended to include members of the immediate family or household. Under the single user license, printed output (other than the TMONEY order form) generated by TMONEY may NOT be given to a third party. Multi-user/single-machine . . . . . . . . . . . . . . . $49.00 If more than one person will be using or have access to the single machine (CPU) where TMONEY is installed, you must obtain the multiple user / single machine license. The multi-user license grants the use of TMONEY on a single non-network machine (CPU) by any number of users. If TMONEY is to be used in an office or professional environment where printed output generated by TMONEY will be distributed to clients, the multi-user/single-machine license is required. This is the case even if a single machine will be used by a single user. Any distributed output generated by TMONEY must include the TMONEY copyright information at the bottom of the last page of printed output. Network license: . . . . . . . . . . . . . . . . . . . $99.00 The network version of TMONEY must be ordered directly from the author to be enabled in a network environment. This basic network license authorizes use on a network of up to 20 terminals or workstations. For larger configurations see the chart below: TMONEY Version 3.1 PAGE 51 # Terminals / License Workstations Fee ------------ -------- 2 - 20 $99.00 21 - 50 $175.00 51 - 100 $300.00 101 - 200 $500.00 201 - ??? write for information Quantity discount / site license. . . . . . . percentage based Purchases of multiple TMONEY licenses are based on the following discounts: # copies discount -------- -------- 2 - 10 10% 11 - 25 15% 26 - 100 25% 101 - 500 35% 501 - ? 45% Custom versions of TMONEY . . . . . . . . . . . . . negotiable Custom versions of TMONEY will be produced for a negotiable fee for clients with special requirement. Custom modifications can include the TMONEY functions and/or output forms generation. For large quantity licensing, some custom modifications will be done by the author at no additional charge. Contact the author for information. TMONEY Version 3.1 PAGE 52 ----------------------------------------------------------------- Application for software license: TMONEY Version 3.1 ----------------------------------------------------------------- Name:__________________________________________________________ Address:_______________________________________________________ City,ST,Zip:___________________________________________________ Phone:______________________________ Date:____________________ If this is a company, give the name of the contact person: Name:______________________________ Dept:_____________________ Make checks payable to: Gale R. Horst 5361 Browntown Rd Sawyer, Michigan 49125 License type applied for: Single-User/Single CPU ______ ($24 each) Multi-User/Single CPU ______ ($49 each) Network ______ (see chart) #terminals ____ Number of copies: _______ Price each: $_____________ Total list price: $________________ Quantity discount: _____% (see quantity discount chart) Final Purchase Price: $______________ What disk format do you use? 3 1/2" _____ 5 1/4" _____ Where or how did you learn about TMONEY? :______________________ _________________________________________________________________ _________________________________________________________________ Comments & Suggestions: ___________________________________________ ____________________________________________________________________ ____________________________________________________________________ ____________________________________________________________________ TMONEY Version 3.1 PAGE 53 MS-DOS is a registered trademark of Microsoft Corporation. PC-DOS is a registered trademark of International Business Machines Corporation.