# Interest and debt

Contents

## Compound interest basics

Interest is the basis of modern capital markets. Depending on whether you are lending or borrowing, it can be viewed as a return on an asset (lending) or the cost of capital (borrowing).
This tutorial gives an introduction to this fundamental concept, including what it means to compound. It also gives a rule of thumb that might make it easy to do some rough interest calculations in your head.

6:56

Introduction to compound interest

Introduction to compound interest

9:28

The rule of 72 for compound interest

Using the Rule of 72 to approximate how long it will take for an investment to double at a given interest rate

## Interest basics

This is a good introduction to the basic concept of interest. We will warn you that it is an older video so Sal's sound and handwriting weren't quite up to snuff then.

9:56

Introduction to interest

What interest is. Simple versus compound interest.

8:01

Interest (part 2)

More on simple and compound interest

## Credit cards and loans

Most of us have borrowed to buy something. Credit cards, in particular, can be quite convenient (but dangerous if not used in moderation).
This tutorial explains credit card interest, how credit card companies make money and a far more silly way of borrowing money called "payday" loans.

7:30

Annual percentage rate (APR) and effective APR

The difference between APR and effective APR

11:59

Institutional roles in issuing and processing credit cards

The institutions involved in processing your credit credit and how they relate to each other

10:26

Payday loans

How Payday lending works

## Continuous compound interest and e

This is an older tutorial (notice the low-res, bad handwriting) about one of the coolest numbers in reality and how it falls out of our innate desire to compound interest continuously.

11:38

e and compound interest

Sal introduces a very special number in the world of math (and beyond!), the constant e.

5:39

e as a limit

Sal continues the discussion on e, this time digging deeper into the mathematical definition of e.

8:59

Formula for continuously compounding interest

## Present value

If you gladly pay for a hamburger on Tuesday for a hamburger today, is it equivalent to paying for it today?
A reasonable argument can be made that most everything in finance really boils down to "present value". So pay attention to this tutorial.

8:34

Time value of money

Why when you get your money matters as much as how much money. Present and future value also discussed.

10:19

Introduction to present value

A choice between money now and money later.

10:11

Present value 2

More choices as to when you get your money.

7:42

Present value 3

What happens when we change the discount rate?

10:02

Present value 4 (and discounted cash flow)

Lets change the discount rates depending on how far out the payments are.

## Personal bankruptcy

Back in the day (like medieval Europe), you would actually be thrown in jail if you couldn't pay your debts (debtor's prison). That seemed like a pretty awful thing to do (not to mention that lenders are much less likely to be paid by someone rotting in prison), so governments created an "out" called bankruptcy (which, as you'll see, is a pseudo-painful "reset" button on your finances).

13:22

Personal bankruptcy: Chapters 7 and 13

Chapter 7 and Chapter 13 personal bankruptcy.