Interactive budget and borrowing model: budget bars that can tip into deficit, a loan repayment stream split into principal, interest and fees, and a mortgage compared with rent
The smallest monthly repayment can be the most expensive loan
A budget sorts your pay into fixed costs you cannot dodge, discretionary spending you can, and whatever is left. Borrowing then adds a second price to anything you buy: interest and fees on top of the amount you took. Raise the variable spending until the household tips into deficit, then switch to the loan, stretch the term and watch what happens to the total repayable.
Money in, money outVariable $800
Income $3000 a month after tax, fixed costs $1400. Raise the variable spending past the income line and watch the total bar.
What the picture shows
$800 left · 73% spent
Money left$800
% of income spent73%
Borrowing in real life
Know This
A budget splits income into fixed and discretionary costs, and every loan adds interest and fees on top, so compare the total repayable before you borrow.