The model behind the score (simple, transparent)

The Large Purchase Planning Tool produces three core outputs: an estimated loan payment (if you finance), a savings timeline (if you pay cash or save a down payment), and an affordability score from 0 to 100. Everything is intentionally straightforward so you can sanity‑check the math and change assumptions.

Most big purchases have a “sticker price” and then extra costs. We combine them into a single total: Total Cost = Purchase Price × (1 + Taxes/Fees%). This simple approach approximates sales tax, registration, delivery, and other one‑time add‑ons. If your fees are fixed (like $1,200), you can mimic that by adjusting the percentage slightly upward or downward.

If you finance, you usually pay a down payment (or upfront cash). We compute: Down Payment = Total Cost × Down Payment% and Loan Amount = Total Cost − Down Payment. For cash plans, the loan amount is treated as zero — but the tool still checks whether paying cash would leave you with a safe emergency fund.

For most loans, the payment is amortized — meaning each payment includes interest and principal, and the balance gradually declines. We use the standard amortization formula:

• r = monthly interest rate = (APR ÷ 100) ÷ 12
• n = number of payments = termYears × 12
• Payment = LoanAmount × [r(1+r)^n] ÷ [(1+r)^n − 1]

If APR is 0% (promotional financing), the formula becomes simply LoanAmount ÷ n. This is a clean estimate for planning — real payments can differ due to fees, insurance, or rounding by the lender.

“Affordability” is not just the payment — it’s what the payment does to your monthly life. We calculate a basic debt-to-income ratio (DTI) after the purchase: DTI = (Other Debt + New Payment) ÷ Monthly Income. We also compute monthly cushion: Cushion = Income − Essentials − Other Debt − New Payment. A higher cushion usually means less financial stress and more flexibility to handle real life.

The tool sets an emergency fund target using your essential monthly expenses: Emergency Target = Essentials × Emergency Months. Then it applies the optional Risk Buffer slider as a conservative “margin of safety.” Practically, we treat the buffer as increasing the required cushion and emergency funds slightly. If your buffer is 10%, the tool expects you to keep roughly 10% more breathing room than the minimum. This is not a “rule,” it’s a personal comfort setting — and it’s great for viral sharing because it lets people compare how conservative they are.

The score is a weighted blend of four components, each converted to a 0–100 sub‑score:

• Payment pressure (30%): lower payment‑to‑income earns more points.
• DTI (30%): lower overall debt load earns more points.
• Cushion (25%): higher leftover cash after fixed costs earns more points.
• Safety buffer (15%): keeping an emergency fund after the purchase earns more points.

The intent: a plan can score well even if the purchase is large, as long as the budget can absorb it comfortably. And a plan can score poorly even for a “small” purchase if your cash‑flow is already tight.

• 80–100 (Comfortable): The plan likely fits your budget with room for surprises.
• 55–79 (Manageable): It can work, but you should watch trade‑offs and protect your cushion.
• 35–54 (Borderline): One “bad month” could cause stress. Consider a bigger down payment, longer timeline, or cheaper option.
• 0–34 (Risky): The plan is likely to strain your cash‑flow or remove safety buffers. Pause and redesign.

Realistic scenarios (so you can sanity‑check)

Numbers are illustrative. Your actual rates, fees, and expenses will vary — but these examples show how the tool thinks and why the score changes when you move sliders.

You want a $30,000 car, expect ~8% fees, put 10% down, finance at 7% APR for 5 years. Income is $5,500/month, essentials $3,200/month, other debt $250/month. The tool estimates total cost near $32,400, down payment ~$3,240, and a loan around $29,160. The payment may land in the mid‑$500s/month depending on APR and term. If that payment reduces your cushion from $2,050 to ~$1,500, the plan can still be healthy. But if you raise APR or shorten the term, the payment rises quickly and the score drops.

You want a $6,000 travel package. You have $10,000 saved, essentials are $2,500/month, and you want a 3‑month emergency fund ($7,500). Paying cash would leave you with $4,000 — which is below your emergency target. The tool will flag this as risky even though you “can afford” it. A better plan might be: pay a deposit now and save the rest over 3–5 months, or pick a cheaper option.

You’re buying $20,000 of equipment. You can save $800/month and already have $5,000. Hybrid means you first build a safer down payment + emergency buffer, then finance the remainder. If you raise your down payment slider from 10% to 25%, your payment drops — but the timeline to reach the down payment increases. This is the classic trade‑off: time vs interest. The “best” answer depends on your risk tolerance and cash‑flow stability.

• If the purchase pushes your cushion near zero, it’s “expensive” even if the price seems reasonable.
• If DTI jumps high, the purchase reduces your future options (rent, mortgage, business investing).
• If you drain emergency savings, a surprise expense becomes a debt problem.

A repeatable planning workflow (the “no regret” version)

Most people plan large purchases emotionally first (“I want it”), then financially second (“I’ll figure it out”). This workflow flips it: you keep the excitement, but you also keep control.

Pick Finance if you expect to borrow most of the cost. Pick Cash if you want to avoid interest. Pick Hybrid if you want a compromise: save a meaningful down payment and keep a buffer, then finance the rest. Hybrid is often the “best realism” option because it reduces interest without draining your safety net.

Your “Monthly essentials” should include rent/mortgage, utilities, groceries, insurance, and any must‑pay bills. Don’t lowball it. The tool’s cushion calculation is only as good as your expenses. If you’re unsure, review the last 60–90 days of bank statements and take an average.

The Risk Buffer slider is your “what if life happens?” dial. Increase it if you have variable income, dependents, health uncertainty, or just prefer peace of mind. Decrease it only if your income is extremely stable and you already have strong savings.

Don’t treat the score as a grade. Treat it as a feedback loop. If your plan is borderline, try these levers:

• Lower price: the fastest fix. Cheaper option usually wins.
• Increase down payment: reduces payment and risk, but may delay purchase.
• Extend term: lowers payment, but increases total interest paid.
• Increase monthly savings: improves timeline and reduces reliance on debt.
• Improve expenses: lowering fixed costs increases cushion permanently.

Once you land on a plan you like, hit Save plan. Then create a second plan that’s slightly more conservative: perhaps 5% more fees, or 1% higher APR, or one month more emergency fund. If the conservative plan still looks okay, you’ve built a purchase that doesn’t require perfect conditions to succeed.

Reminder: This tool does not include insurance, maintenance, or depreciation. For cars and homes especially, include those costs in your “Monthly essentials” or your cushion will look better than reality.

Frequently Asked Questions

• Is this a financial advice tool?

  No. It’s an educational planning calculator. It helps you think clearly, but it cannot know your full situation.

• Why do you use monthly income after tax?

  Most people experience affordability through their take‑home pay. Using after‑tax income makes the cash‑flow cushion more realistic. If you only know gross income, estimate taxes conservatively or use a paystub to approximate take‑home.

• What’s a “good” DTI?

  Many lenders use thresholds (for example, under ~36% for many consumer lending contexts), but your personal comfort can be lower. If your DTI rises and your cushion shrinks, you’re trading freedom for the purchase.

• Why does the score drop when I increase the down payment?

  It usually shouldn’t — a bigger down payment lowers the loan and payment, improving the score. If your current savings can’t cover the down payment plus your emergency target, the safety buffer component may fall. That’s a helpful warning: don’t “win” a lower payment by draining your safety net.

• How accurate is the payment estimate?

  It uses the standard amortized loan formula and is typically close, but real payments can differ due to lender fees, insurance, rounding, and whether interest accrues daily. Treat it as a planning estimate.

• What if my monthly savings is zero?

  The tool can still show affordability for financing, but the cash and hybrid timelines will be “not possible” until you allocate some monthly savings or reduce the target.

• Should I always avoid financing?

  Not necessarily. Financing can be rational if it preserves your emergency fund, supports business cash‑flow, or lets you make a purchase that increases income. The key is: financing should create options, not remove them.

• Can I use this for a home down payment?

  Yes for high‑level planning, but homes involve more costs (insurance, maintenance, property taxes, HOA, closing costs). Add those into essentials, and consider using a dedicated mortgage calculator for detailed scenarios.

• How do I share this with a friend?

  Use the share buttons or “Copy.” A viral way to share: screenshot your score and say “My risk buffer is X% — what’s yours?” Then link the tool.

Use responsibly (and avoid the “optimism trap”)

The biggest purchase mistakes come from optimistic assumptions: underestimating fees, overestimating income stability, and assuming “nothing will go wrong.” A small buffer helps you stay calm even when life changes.

• Try +2% fees and +1% APR. Does the plan still look okay?
• If income dropped 10% for 2 months, would you stay afloat?
• Would you still be saving something monthly afterward?
• Would the purchase block future goals (moving, investing, quitting a job, starting a business)?