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How much interest will I have to pay over my lifetime? Do you ever ask yourself that question? Many of us get so caught up in our daily lives that we sometimes fail to consider…how much interest is really costing. With how consumer focused America is we often think, “we deserve it now” or “I’ll be able to pay it off later.” Because of this, most businesses have catered to our wants and opened up many avenues of credit. From in-store financing loans to payday loans, to store specific credit cards. All of these “opportunities for debt” constantly try to pull us into a life of slavery to debt.
With all these “opportunities of debt” have you ever sat down and really considered the real costs? How much interest am I paying per hour? Per day? Per week? Per month? Per year? Here are few categories to start adding up your interest?
- Home Loan
- Student Loans
- Car Loans
- Credit Card Interest
- Credit Card Fees (late fees & penalties)
- Pay day Loans
- Banking Fees (overdrafts & ATM fees)
Once a year (maybe around New Years) it is a good idea to add up your interest payments and calculate how much you are paying. This helps give you a bench mark of how much more (or less) is going to pay other people. Once you have your totals added up then here are some equations to put things into perspective of how much interest is costing you.
- Hourly Income Going Towards Debt
- Hourly Income – (Total Interest/2080hours) = Interest Per Working Hour
- Tithe vs Interest
- Yearly Giving – Yearly Interest Paid = Net Difference
- Will help you see how much interest could be going towards tithing and furthering God’s kingdom. This might even shed some light on whether you are paying more than 10% of your total income towards debt.
- Yearly Interest Change
- 2011 Interest Paid – 2010 Interest Paid = +/- Difference
- Question this will help answer: Am I making a difference in paying off principal or am I adding more debt from year to year?
Like most things in finances, calculating your total interest paid can take some hard work and time, but it may prove affective for you. It just might help you confront head on how much interest is really costing you.
Do not owe anyone anything-except to love one another. For the one who loves another has fulfilled the law. – Romans 13:8