Financial Mathematics CT-1 Finally Paid Off

 How you may ask, 

I sat for my financial mathematics paper in 2017. For those who do not know what this is, here is a summary. In the pursuit to be an actuary, there are exams that you are supposed to take and pass. Financial Mathematics (CT-1) was the name of one of it in the Institute and Faculty of Actuaries (IFoA) exam system before they changed the syllabus and consequently the exam paper names.

I passed this paper on the first trial with what I would consider an excellent grade. The surprising bit is, as a unit/course, Financial Mathematics 1, was one of my three lowest scores in my entire undergraduate. So, this felt like part vindication that given different circumstances and motivation, I can do pretty well.
I studied for the exam for probably more than 3 months, did almost all the past papers leading to that year and checked them against examiners' reports - thanks to the IFoA repository. I did have a study buddy during this period.

I did 2 more actuarial exams/papers:

•  Life contingencies - absolutely loved the pension calculations. This paper highly influenced my final actuarial group project and 
• Business Finance - CB -1  - also, did great for someone who thought Financial Accounting 1 was tough and intimidating as a unit/course. 

I however have paused on my pursuit to be an actuary and I am now fully immersed in data science. Which I grew into because of actuarial science itself.

Back to FM. There was a chapter on Interest theory and Financial economics. The chapter had a section on loan amortization schedules. Many of the questions were on calculating the outstanding loan amount at a point in the repayment period, the new instalment amount if the terms (interest, repayment period..) of the loan were changed etc.  I never knew there will come a time I would have to use the knowledge in my personal life. Like ever. Cause what am I, a bank?!

Anyway, fast forward to several years later, I start my masters, finish the masters, get an internship that shifts into a job , get some money - I am fairly good at saving- so, save some money. Then, the question arises, what can I use this money for? It is not enough to make significant purchases where I currently live but, it is a good amount if I transfer it back home. I ended up loaning it to a friend for a business back home. 

As usual, in any loan, you have to talk terms and all other loan related details to ensure the loan repayment is done orderly and all parties are satisfied. This is when I got to use all that knowledge from 7 plus years ago. I created a loan amortization schedule on google sheets so my friend can keep track of what is expected to be repaid and the changes to outstanding amount on which interest is based off of. This was also to help the friend decide on the next installment amount. The schedule is actually quite easy to build. The terms for this loan were, pay what you can till your outstanding balance is zero - a flexible loan term and installment amount. Here is a link to the interactive template google sheet. A snippet of what it looks like is as below. Editable cells are colored red and the rest will automatically fill.

If there is something I missed, let me know. 

Maybe we could start a small lending business together- who knows!

Happy reading!

~ NMN