Methodology

Each calculator page has its own Methodology aside describing the assumptions specific to that decision. This page covers the cross-cutting choices that apply to every calculator on the site.

Opportunity cost is always counted

Most popular calculators compare nominal cash flows ("mortgage payment vs. rent," "loan interest vs. account interest") and stop there. We don't. Every page that compares two paths counts the opportunity cost of the capital you'd otherwise have invested at a market return you specify.

This is why our rent-vs-buy answer often disagrees with the realtor's rent-vs-buy answer.

Real dollars, not nominal

Where horizons span more than a year or two, we treat inflation as neutral — rent grows with it, home prices grow with it, wages grow with it. Comparing two paths that all inflate at the same rate simplifies to comparing them in today's dollars. We do not project a specific inflation rate.

Pre-tax, except where noted

Most calculators work in pre-tax dollars. The exceptions — Roth conversion, paying off student loans, taking Social Security — explicitly model marginal tax brackets, because the whole point of those decisions is the tax treatment. Each of those pages spells out the bracket assumptions in its Methodology aside.

Conservative defaults

Default values lean conservative: 7% real market return, 3% home appreciation, 1% annual home maintenance, 6% transaction cost on a home sale. You can override any of these. The defaults are where most reasonable analysts cluster, not where you'll get the most exciting answer.

What we don't model

Where the math came from

Standard finance: time value of money, amortization schedules, future-value of an annuity. The code is open to inspection in src/lib/finance.ts on the site repo. If you find a bug or think an assumption is wrong, tell me through the contact form or at [email protected].