Methodology: how we calculate every result

We think a finance tool should show its work. Every calculator on this site uses standard, published financial formulas — no black boxes and no fudge factors. Here is exactly what runs behind each one, so you can trust the output and check it yourself.

Loan Calculator

M = P × r ÷ (1 − (1 + r)^−n)

We use the standard amortization formula, where P is the amount borrowed, r is the monthly rate (APR ÷ 12), and n is the number of monthly payments. The schedule is built month by month: each payment is split into interest (balance × r) and principal (the remainder), and the balance is reduced accordingly. Extra payments are applied straight to principal, which shortens the term and lowers total interest.

Compound Interest Calculator

balance = balance × (1 + r) + contribution, each month

We convert your nominal annual rate at the chosen compounding frequency into an equivalent monthly rate — r = (1 + APR ÷ f)^(f ÷ 12) − 1 — then step the balance forward one month at a time, adding your contribution each month. This handles monthly, quarterly, or annual compounding with a single consistent method. "Interest earned" is the final balance minus everything you contributed.

Savings Goal Planner

r = (1 + APY)^(1 ÷ 12) − 1

We turn your APY into a monthly growth rate, then add your deposit and grow the balance each month until it reaches your goal — that is your timeline. For the deadline mode, we invert the future-value-of-an-annuity formula to solve for the exact monthly deposit needed: PMT = (FV − PV × (1+r)^n) × r ÷ ((1+r)^n − 1).

Debt Payoff Calculator

snowball → smallest balance first | avalanche → highest APR first

We simulate payoff month by month. Interest accrues on every balance (balance × APR ÷ 12), every debt receives its minimum, and all remaining budget is funnelled into one target debt chosen by the strategy. When a debt clears, its payment rolls into the next target — the "snowball" effect. We run both strategies on your real numbers so you can compare payoff dates and total interest side by side.

Rent vs. Buy Calculator

compare net worth, same starting cash, same monthly budget

This is the comparison most tools get wrong. Both parties start with the same cash (the buyer's down payment plus closing costs) and spend the same total on housing each month; whoever spends less on housing invests the difference at your investment-return rate. We then compare each path's net worth — the buyer's home equity (sale value net of selling costs, minus the remaining loan) plus side investments, versus the renter's portfolio. Because the starting cash and monthly outlay are identical, neither side is rigged to win.

What our numbers exclude

Our results are clean models, which means they deliberately leave out things that vary too much to assume for you: income and capital-gains taxes, mortgage insurance (PMI), loan origination fees and points, HOA dues, and the tax deductibility of mortgage interest where it applies. We call these out on the individual tools where they matter most. Treat every result as a well-founded estimate, not a quote.

Editorial standards

Every guide is written and reviewed in-house. All figures are calculated with the same standard formulas our calculators use — the amortization formula for loans, effective-rate compounding for savings — and worked examples are checked against those tools. We update guides when the math or best practice changes. This is educational information, not personalized financial advice.

Content is written and reviewed by The SmartMoney Tools Editorial Team. When we cite a rule of thumb — the 28/36 rule, the 50/30/20 budget, the three-to-six-month emergency fund — we explain where it comes from and when it does and does not apply, rather than presenting it as gospel.

Found something that looks off?

We take accuracy seriously. If a result does not match your own math, tell us and we will look into it.