Math 1050

In Math 1050 we did a project where we figured out the cost of both a 15 and 30-year mortgage.  Further, we used an Amortization Schedule to decipher the impact of increasing monthly payments and decreasing the number of years we took out a mortgage.

How did this project affect the way you think about how math can be applied to the real world? (Note that the question is not about YOUR individual life or career. While you may include that if relevant, the question is about the broader world.) Write at least one paragraph discussing specifically how the project impacted your view, whether it changed your existing thinking or just provided further evidence supporting your point of view. Be specific.

It’s clear that math is an important and useful tool for making intelligent decisions in our everyday lives. Whether we use math or math in our everyday life is irrelevant, the truth of the matter is important decisions rely on math and we’re both directly and indirectly impacted by those decisions. This project was used to show on a micro level how we as consumers can make smarter long-term financial decisions. Spending $100 more on our loan payments could save us thousands of dollars in the future. However, this is simply the tip of the iceberg when making wise economic decisions. We could apply math to other life decisions. As college students, we should be concerned about what our degrees really cost us (and in return, give us). Like homebuyers, we shouldn’t have a 30-year mortgage set-it-and-forget-it attitude as that can cost us an immense amount of money. Is a more expensive school worth the return? Is it worth getting a Master’s degree in your field? How much does that Master’s degree cost and how long will it take you to pay it off? What are your alternatives?

Ultimately this project did not change my perspective on managing finances as these were ideas I was already aware of. However, this doesn’t mean this is isn’t an interesting or unimportant reminder lesson. We need to remember the costs of the decisions we make. As I mentioned before, as students, do we know the costs of our education? Do we know what we gain? I think some students are completely unaware of these questions—let alone their answers—and find themselves with dead-end degrees and thousands of dollars in debt. At least with a mortgage you have a house to show for it. If you make a bad financial decision with your degree, you could owe as much as you would for a house and still be stuck with a ramen noodle life.

The project backed up my beliefs with the results of the math. It’s absolutely clear that you save many by paying more sooner. With a $178,000 mortgage, you save over $18,000 over 15 years if you opt for a 15 year mortgage instead of a 30 year. Spending an extra $100 a month saves you even more money. The results certainly make the answer obvious.

To conclude, math is definitely a valuable tool both to society and us as individuals. Any responsible adult should seek to understand the long-term implications of the decisions they make whether it’s the decision to buy a house, a car or a college education. We as individuals should seek to use math as part of a strategy to save money and make decisions that save us money..