Final answer:
To determine savings for the Empower Plus Loan, use an online calculator tool to compare mortgage terms and understand the impact of interest rates. Calculate your savings based on the marginal propensity to save from your after-tax income. Evaluate loan terms and associated costs intelligently to make informed financial decisions.
Step-by-step explanation:
To determine the savings for the Empower Plus Loan, it is imperative to analyze various factors relating to loan terms and personal financial health. Using an online calculator tool can help compare the long-term financial implications of different mortgage lengths, such as 15 or 30 years. Additionally, understanding the concept of interest rates and how they affect the total cost of a loan is crucial for making an informed decision.
It is also important to understand your after-tax income and how much you can afford to save and spend, using the marginal propensity to consume (MPC) and marginal propensity to save (MPS). For instance, if your after-tax income is $240 and MPS is 0.1, then the savings would be $24 (which is 10% of $240), and the consumption would be $216 (which is the remaining 90% or 0.9 multiplied by the after-tax income).
When considering a loan, one should evaluate factors such as ability to repay, interest rates in the economy, and other associated costs, such as those in purchasing and maintaining a car or acquiring insurance. Educating yourself on these topics will lead to savvier financial choices and potentially more substantial savings over time.