Terotechnology

Categories: Tech

If therey's anyone out there looking for some impressive-sounding words to throw around at the next neighborhood block party, we've got your back. Please allow us to introduce “terotechnology,” a word that sounds fancy, but really has a pretty simple meaning: it’s the way in which we figure out how to maximize the lifespan and usefulness of a machine or other piece of physical equipment.

Specifically, terotechnology measures the cost of owning a physical asset over its entire lifespan, and looks for ways to decrease that cost while increasing the lifespan.

For example, let’s think about a car. If we own a car, we probably know how much we paid for it and how much it costs to insure it and fill it with gas. But cars are expensive, which is why we also know that, if we take care of the car (change its oil like we’re supposed to, take it in for tune-ups, keep it gunk-free, avoid driving it like we stole it, and don’t wreck or submerge it), then it will probably last a lot longer than it would otherwise.

In other words, a combination of care, preventive maintenance, repairs, foresight, and good car management will all help to extend the life and lower the ownership costs of our vehicle. In other other words, we just described terotechnology: we took a holistic, multidisciplinary look at physical asset ownership and figured out how to make it cost less, last longer, and provide more benefit to the owner.

Related or Semi-related Video

Finance: What is APR?0 Views

00:00

and finance Allah shmoop What is a P R old

00:07

Even pirates know nothing worth anything in life is free

00:10

But unlike in G olden days of pirate lore where

00:13

you'd have to steal to get more money in the

00:15

bank well you can actually rent money today For instance

00:18

a mortgage a car loan a credit card They're all

00:20

forms of renting money taking on debt in exchange for

00:24

some interest in you know paying for that debt or

00:26

renting it But setting up alone includes other costs Like

00:29

you know when you buy a house you have to

00:31

pay a closing costs You have to pay to be

00:33

sure there's no mold on the wall and you have

00:35

to pay to be sure there's a proper title to

00:37

the house so no one claims ownership to it in

00:39

a whole bunch of other expenses and fees that come

00:41

in there Well somebody's got to pay those inspectors the

00:43

title Dudes you know the home underwriters That's why we

00:46

like a PR I annual percentage rate which takes into

00:49

account the interests you'll be paying until the loan is

00:52

repaid and all those other costs and fees right so

00:55

a PR basically tries to roll in everything so that

00:58

you get the gross cost out of your pocket not

01:01

just one sliver of some of the costs It's going

01:03

to take you to buy whatever it is you want

01:05

to buy Well a PR combines all the cost the

01:07

borrower of alone will be facing An average is them

01:10

over The term of the loan is a percentage right

01:12

so it grosses up the percentage to match reality But

01:15

when you look at buying a new car house or

01:17

a researching credit cards you'll probably notice two rates the

01:20

A p R And the interest rate to different things

01:23

where the interest rate is the interest you'll be paying

01:25

on the loan on Lee will each month You make

01:27

payments to pay the loan back with well in the

01:29

beginning most of it being interest that you're paying And

01:32

gradually you worked down the principal until it you know

01:35

goes away and there's nothing really a PR shown will

01:38

be higher because it wraps the interest rate in with

01:41

all the other fees So you get a better idea

01:43

of exactly how much this is really going to cost

01:46

you Well the A p R is your best friend

01:48

When you want to know Are these guys ripping me

01:50

off For what When your comparison price shopping like between

01:53

two different credit cards or mortgages while a PR will

01:56

tell you which one will actually cost you less Overall

01:59

if one company has lower interest rate about hire a

02:02

PR than a number well it means there's hidden fees

02:04

and charges all the time They're going to hit you

02:06

for that money And yes those charges will hurt If

02:09

a company keeps pointing to its low interest rates asked

02:12

them for the a p r to get the real

02:15

measure of that cost comparison right Well with mortgages in

02:18

particular you have the option of hey those extra costs

02:20

upfront or you can wrap some of them into the

02:23

loan itself which means you'd be paying those fees off

02:26

just like you're paying off the principal balance Well some

02:28

types of loans come with lots of fees like mortgages

02:31

like points up front all kinds of their taxi things

02:33

and some with fewer like credit cards Like more competitive

02:36

They're kind of simpler but whichever type alone you're signing

02:38

up for Remember a PR is usually calculated with simple

02:41

interest rather than compound interest Simple interest grows linearly over

02:46

time little by little Compound interest includes interest on top

02:49

of interest It grows a whole lot faster over time

02:51

Well this is important to think about since some loans

02:53

Yu's compound interest like credit cards and some use simple

02:56

interest like mortgages Let's say you get a credit card

03:01

with an 18% interest rate and you go hog wild

03:04

buying rum and gold and then a tropical island the

03:07

size of your bathroom racking up 500 grand in credit

03:10

card debt Well that debt will grow in a calm

03:12

pounding rate Not only do you owe interest on the

03:15

principal amount the amount borrowed but you'll also end up

03:17

owing Maur the interest on the interest you just haven't

03:20

paid yet Every month your credit card company calculates how

03:23

much you owe them in total not based on that

03:12

500 grand you initially borrowed But on that 500 grand

03:29

principle pull us any unpaid interest to date So let's

03:32

just see how big compound interest is compared to simple

03:35

interest and we're getting to the whole notion of a

03:37

PR here Your 500 grand of credit card debt with

03:39

18% interest It would take you over 15 years to

03:42

pay off if you paid in aisle 7 800 bucks

03:45

and change for months with calm pounding interest you'd end

03:47

up paying a 6,688,000 and change Yeah you borrowed half

03:52

a mil and ended up going over 6.5 mill If

03:56

credit cards were simple interest like mortgages well then in

03:59

the same situation you'd only end up paying 1,000,000 9

04:02

That just under 2,000,000 for borrowing that half of interest

04:05

very expensive There's a reason the bank executives have really

04:07

nice jets So you ended up paying six point $5,000,000

04:10

total in interest and principal with calm pounding interest and

04:13

only one point 9,000,000 with simple interest Well when you're

04:15

using a PR is you got to remember that number

04:18

is using the simple interest calculation If you get a

04:21

credit card and rack up calm pounding debt which you

04:23

will if you don't pay it off in full every

04:25

month well then you're gonna go a whole lot more

04:27

money to your credit card company than the A P

04:30

R would have had you believe when you signed up

04:32

for it And you know about that island there Give

04:35

backs island buying maybe and

Find other enlightening terms in Shmoop Finance Genius Bar(f)