Debt horrors

Louise posted the links to the loan/mortgage calculators she uses. Thanks Louise!

Here is the horrific truth.

In Feb/March we had one credit card with $6,000 debt (at its limit) and 25% interest. We made a monthly minimum payment of $125. At that rate we would have:

  • taken 30 years to pay it off
  • paid over $30,000 (!!!!!!!!) in interest
Instead, with our debt snowball plan, we would pay only $500 in interest and have paid it off in half a year, saving us $29,500! Actually, saving us more than that since our interest is now half of what it was then.

Overall, if I plug in our total loan amount, and the average interest rate (10%), our debt snowball plan is saving us $10,000 in interest and 2 years in debt-time (takes 2 years off us getting to Debt Zero Day).

If we could increase our payments towards our snowball by $200 each month (an extra $1000 each month put towards debt) we would save over $2000 and decrease our debt-time by 3 months. Wow!!!

That extra $10k or so would be much better off in our retirement savings! Time to stop paying the banks!


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