Cohousing-L Mailing List: Calculating long-term reserves

[JJSherwood (JJSherwood]

Since I have learned so much from reading the postings on this list, and
since I find CoHousing folks to be so incredibly generous with their time and
information, I want to share something we developed here at Deer Island
Village. We have developed a simple and straight forward method to calculate
long-term reserve requirements, e.g., replacing the roof on the common house
in 30 years.

To estimate MONTHLY RESERVE REQUIREMENTS--

At 3% annual inflation, $100 becomes:

* $134.39 in 10 years 
* $155.79 in 15 year
* $180.61 in 20 years
* $209.38 in 25 years
* $242.72 in 30 years 

Then, at 5% annual interest earned on earlier payments, what is required to
reach:

* $134.39 in 10 years is 120 monthly payments of .8619 each
* $155.79 in 15 years is 180 monthly payments of .58 each
* $180.61 in 20 years is 240 monthly payments of .438 each
* $209.38 in 25 years is 300 monthly payments of .35 each
* $242.72 in 30 years is 360 monthly payments of .2899 each

To accumulate reserves in today's dollars over 30 years requires monthly
payments: 

* $10,000 is $24,272 (in 30-year dollars @ 3% inflation) takes  $1.61 each
month from 18 families
* $20,000 is$48,544 (in 30-year dollars @ 3% inflation) takes   $3.22 each
* $30,000 is $72,816 (in 30-year dollars @ 3% inflation) takes  $4.83 each 
* $40,000 is $97,088 (in 30-year dollars @ 3% inflation) takes  $6.44 each 
* $50,000 is $121,360 (in 30-year dollars @ 3% inflation) takes $8.05 each
month from 18 families.

I am: 
jjsherwood [at] aol.com
Deer Island Village
Novato, CA