Paying off Debt — Even Mortgages

Managing debt is the one thing everyone knows about but probably don’t realize what a big deal it is.

Everyone has to pay their monthly rent or mortgage, credit cards and loans right? I mean anyone that is not homeless. This is a given — on the same level as death and taxes, Right?

But do you truly understand the cost? Do you understand the impact to your personal wealth? What is the opportunity cost of paying your bills and other obligations (what the heck is an opportunity cost anyway)?

The Interest is Killing You

Anyone that has a credit card, line of credit, or any revolving credit line understands what interest is.

Interest is the amount you pay for being poorer than you want to be.

Interest is the cost of buying someone else’s money. The credit card company lets you use their money with the promise of you paying back — or some part of it — to them in the future. Yeah. I can get those new kicks that Lebron just endorsed. I get to wear them NOW — and I will pay later even more that they actually cost. Are we crazy? Do we really need these new shoes?

In the case of buying a home, it makes more sense as few people have the $100,000 and more lying around to pay. By the time a person can save up this amount, they might just be ready for a different kind of home.

Buying on credit or taking a loan out for somethings is a good decision, others not.