The solution to yesterday’s mortgage puzzle:
Commenters pointed to several reasons why biweekly payments of (say) $500 will pay your mortgage off so much faster than monthly payments of $1000, but of these by far the most important is that biweekly payments of $500 add up to 500 x 26 = 13,000 dollars, whereas monthly payments of $1000 add up to 1000 x 12 = 12,000 dollars. With the biweekly payments, you make the equivalent of 13 monthly payments every year.
In other words, the key observation is that two weeks is not half a month.
My colleague Michael Wolkoff posed this puzzle to me many years ago, and I’m embarrassed to admit I failed to solve it before Michael gave me the solution. I was reminded of it yesterday when I got a biweekly-plan offer in the mail.