Jan

31

Compound Interest in a Monthly Payment

Posted In: Personal Finance

Why do you have month left after the money? Perhaps it is because you are dealing with the fallacy that monthly payment is the only way to do business. I have news for you. It isn’t. The monthly payment is nothing more than the outcome developed by advertising and which the IRS has aptly named “Gotta have it now” syndrome.

When on a car lot, have you noticed that after a little small talk the question eventually comes up, “Where are you expecting your monthly payment to be?” The ploy is very simple. That shiny new car you just have to have does not cost $20,000. It only costs $400. Of course “monthly payment” is rarely mentioned above a whisper. I Know. I use to be a retail manager and this is how we trained our employees. “Anything in the store that you want is yours for less than $42.”

Have you ever notice the large bold price of the monthly payment. If it weren’t for the Truth In Lending Law, the total price might not even appear. But the total price usually does appear in some small out of the way place in hopes you will never see it. But that is the point. You must reshape your thinking to think in terms of total cost and not monthly payment if you are to beat the debt trap you find yourself drowning in.

Albert Einstein was once asked what was the most powerful thing he had ever witnessed. His simple genius was quick to answer, “compound interest”. The following examples illustrate compound interest.
Finance a $2000 item at 19.8 %. By making minimum monthly payment it will take 31 years to pay it off and more than $10,000 in compound interest.

On the other hand or twenty years, if you were to invest $300 per month at 10% (i.e. mutual fund) for 20 years the compound interest would accumulate your investment to $227,810.65. That amount would generate $1,936.39 per month for the rest of your life.

Ask yourself the question, “Do you want compound interest working against you or for you?” The choice is yours. But until we shut down the wealth sucking valves that are drowning us in debt, we will never get ahead. We need to live by the creed, “If I can’t afford to pay for it in cash, I can’t afford it.”

Is it essential to do so? To answer that ask yourself how your financial future is looking. Do you like juggling monthly payments and never quite having enough left over? Do you like paying 4-6 times more for an item than its value? If so, continue on the way you have been going.

But if you are tired of it, get out of the monthly payment rut. The average consumer can eliminate all debt including their mortgage with the money they currently earn in an average 7.5 years. I have been teaching people how to do this for 10 years and you can see how it is done reading my Magic Bullet Article You might also want to know that that eliminating all debt is like getting a 40% Tax-free Increase 40% tax-free pay increase. If you don’t believe me read the article about it.
_______________________

Mike has been an Internet Guide/Writer in the field of Credit/Debt Management for over 10 years. His site was awarded Best Of Net by Forbes Publication from 2000 to 2005 with site visitation doubling to over 500,000 average views per month in the last year.

Readers will probably be interested to know Mike, the author of this article, also offers a free debt elimination mini-course via e-mail. You can enroll at Debt Free In 7.5 Years
http://learncreditmanagement.co

Article Source: Compound Interest in a Monthly Payment

Jan

31

Compound Interest in a Monthly Payment

Posted In: Personal Finance

Why do you have month left after the money? Perhaps it is because you are dealing with the fallacy that monthly payment is the only way to do business. I have news for you. It isn’t. The monthly payment is nothing more than the outcome developed by advertising and which the IRS has aptly named “Gotta have it now” syndrome.

When on a car lot, have you noticed that after a little small talk the question eventually comes up, “Where are you expecting your monthly payment to be?” The ploy is very simple. That shiny new car you just have to have does not cost $20,000. It only costs $400. Of course “monthly payment” is rarely mentioned above a whisper. I Know. I use to be a retail manager and this is how we trained our employees. “Anything in the store that you want is yours for less than $42.”

Have you ever notice the large bold price of the monthly payment. If it weren’t for the Truth In Lending Law, the total price might not even appear. But the total price usually does appear in some small out of the way place in hopes you will never see it. But that is the point. You must reshape your thinking to think in terms of total cost and not monthly payment if you are to beat the debt trap you find yourself drowning in.

Albert Einstein was once asked what was the most powerful thing he had ever witnessed. His simple genius was quick to answer, “compound interest”. The following examples illustrate compound interest.
Finance a $2000 item at 19.8 %. By making minimum monthly payment it will take 31 years to pay it off and more than $10,000 in compound interest.

On the other hand or twenty years, if you were to invest $300 per month at 10% (i.e. mutual fund) for 20 years the compound interest would accumulate your investment to $227,810.65. That amount would generate $1,936.39 per month for the rest of your life.

Ask yourself the question, “Do you want compound interest working against you or for you?” The choice is yours. But until we shut down the wealth sucking valves that are drowning us in debt, we will never get ahead. We need to live by the creed, “If I can’t afford to pay for it in cash, I can’t afford it.”

Is it essential to do so? To answer that ask yourself how your financial future is looking. Do you like juggling monthly payments and never quite having enough left over? Do you like paying 4-6 times more for an item than its value? If so, continue on the way you have been going.

But if you are tired of it, get out of the monthly payment rut. The average consumer can eliminate all debt including their mortgage with the money they currently earn in an average 7.5 years. I have been teaching people how to do this for 10 years and you can see how it is done reading my Magic Bullet Article You might also want to know that that eliminating all debt is like getting a 40% Tax-free Increase 40% tax-free pay increase. If you don’t believe me read the article about it.
_______________________

Mike has been an Internet Guide/Writer in the field of Credit/Debt Management for over 10 years. His site was awarded Best Of Net by Forbes Publication from 2000 to 2005 with site visitation doubling to over 500,000 average views per month in the last year.

Readers will probably be interested to know Mike, the author of this article, also offers a free debt elimination mini-course via e-mail. You can enroll at Debt Free In 7.5 Years
http://learncreditmanagement.co

Article Source: Compound Interest in a Monthly Payment