How much would I have saved if I never paid interest on anything? Turns out a lot!!!! Try calculating an estimate of all the interest you ever paid on housing, cars, credit cars, vacations, recreational vehicles, etc.
The One that really bothers me is the interest paid on a home! When a person first buys a home, most of the monthly payment is interest. This is why it is imperative to buy as low cost a house as possible and get the lowest rate possible. That interest is a wealth destroying monster!
The next interest monster is paid on cars. With interest you are paying another couple thousand! Buy used and in cash if possible.
Think things through before you sign that contract. Is it worth it?
Some folks are so debt averse they try to never pay interest, which saves them many thousands of dollars over a 30-40 year period. This tactic has the added benefit of keeping their net worth at all times above zero. Remember, many people have a negative net worth, which to me would be awful!
Some rules of thumb when it comes to debt:
1. It’s the opposite of compounding interest that builds wealth. Debt destroys wealth and enslaves people when not used responsibly.
2. Try to avoid it on depreciating assets or consumer things.
3. Keep your credit score high so that if you do need to use leverage and debt you are gaining a lower interest rate.
4. Shop around for interest rates, make competitions compete!
5. Bad debt limits our options in life.