The secret formula behind modern life...

...the compound interest formula:

A = P * (1 + (r/n))^^nt, where A is the total amount that will be paid, P is the principal of the loan, r is the interest rate per year (as a decimal), n is the number of times the interest is compounded during a year, and t is the number of years of the loan.

 ^^ means exponent; the Advanced or Scientific versions of a computer's Calculator can handle those.

I call it a secret formula, because I don't have it memorized, and I couldn't even find it in our home library. I ended up having to look it up online. Nor was it part of my high school education. I'm not sure I even saw it in a college class.

But it does have a huge impact on modern life. My husband recently sent me a "I got $90,000 into student loan debt and now my life sucks" online article.

The writer mentioned that she had split a $10 per month Netflix bill with her college roommate.

I dug up the compound interest formula, and figured out just how much that Netflix really cost her:

$5 per month = $60 dollars per year; that's P here.

Her highest interest rate loan was 9.25%, so let r = 0.0925.

Student loan interest is compounded monthly, I believe, so n = 12.

For the time period t, I chose 20 years, because it will take her at least that long to pay off all those loans, unless she marries unusually well. She is only now beginning to realize that she'll be paying on those loans for the rest of her life if she only pays the interest due, and never pays down the principal.

The result came out to almost $387 a year; more than five times what she thought it cost her. For Netflix alone. Now run a similar calculation for her new clothing from the mall and similar non-necessities.

There's a reason that the Bible contains many admonitions to avoid debt, if at all possible, and also, for ancient Israel, laws for limiting how far Israelites could get into financial bondage on the one hand, or could enslave their countrymen and capture all the wealth, on the other.