T

#### Tom Jones

I have been examining many of the "home user" debt reduction/elimination

software programs and have been incredibly surprised at how simplistic they

are. Very few do *any* type of true data modeling. For instance, many

programs won't even allow you to declare that a credit card's minimum

monthly payment is a percentage of the existing balance for a given period.

I am a software engineer (who *unfortunately* could use a much more robust

debt reduction modeling tool) so my plan is to write one myself. It took me

all of two days to mimic much of the functionality of existing programs.

Yet, I am amazed that no one has applied any type of AI (artificial

intelligence, genetic algorithms, expert-systems, etc.) to this problem.

Attempting to determine a [provably] optimal debt reduction plan can be a

very complex multivariate problem; in most cases it is impossible to

mathematically prove any given solution is *truly* optimal.

I am hoping that the folks that hang around this group can point me to

references for more complex mathematical formulas that are related to credit

based calculations. I am not financial guru but I have taken some pretty

heavy math courses so I'm not afraid of digging in.

I already have references that detail the simple I = PRT stuff... ;-)

The problem that I am currently stuck on is this:

I have a CC that compounds its interest monthly based upon the average daily

balance during that period. The due date for the bill is the 25th of each

month. I can perform the simple stuff like given the principal, APR, and

payment X, determine how long will it take me to pay off the debt (including

the total interest paid).

What if, instead of paying my bill on time, I pay the bill at the

*beginning* of the month, thus the average daily balance for each period

would be less. The end result is that the total interest paid has

decreased. Unfortunately, I haven't been able to find (or derive) any

formula/algorithm that accomplishes this; but the CC companies can obviously

do it. I am quite sure that every new CC company doesn't figure this stuff

out from scratch - there *has* to be existing formulas for these types of

problems.

Any references (the web, text books, etc.) would be greatly appreciated. If

you have any suggestions for my software please let me know.

-TJ

PS: You cannot reply to my email address - if you want talk to me outside of

this newsgroup please post to the group and I will contact you directly.