A Straight Talk on Debt

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Interest: the Untold Story

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Every year, a group called the Tax Foundation calculates the day when Americans have earned enough to pay their taxes for the year.


The day is called Tax Freedom Day, and for 2013 the day calculated is April 18th

So the amount of money you earn after April 18th should be all yours to do what you please, right?  Not exactly. 

There's something else that almost all of us pay for the privilege of purchasing something before we've saved up enough cash.

It's called interest.

I recently read an article entitled, "Have Americans Become Too Comfortable With Debt?"  The article really resonated with me as I believe that even while paying off $109,000 of credit card debt, I am still very desensitized to the concept of debt and find it just a part of every day life.  I rarely think about how much my debt is really costing me through the interest charged on those lines of credit each month.

I wanted to get a rough estimate as to how long I have to work to pay for the interest on my credit cards for the year.  Adding up the interest I've paid on my credit cards so far in 2013, plus a projected amount for the rest of the year I calculated that I have work 7 days as a software engineer to pay for the interest on my credit cards.

I went a step further, and using my mortgage interest statements from last year I calculated that I have to work 22 days to pay for that interest.

Add those together, and I have to work an additional 29 days, or almost 6 work weeks, just to pay for the interest on my credit cards and mortgage!  If you have car payments or any other personal loans that time could be even longer.

I may grumble occasionally about it, but I pay my tax bill knowing that it is my duty to help keep this great nation of ours running.  But working hard for six weeks just to hand over that money and never see it again has really opened my eyes to how much of an impact debt has on my finances.

I think of the amount of money I earn in six weeks and how I could use it to invest in my own future, or to live the life I've always dreamed about. 

I'm five payments away from completing my debt consolidation plan when I'll get back seven days of wages per year of money I've just been flushing down the toilet for the last 17 years.  With this new found perspective not only will I be heavily against any new interest charging line of credit, but I'm taking aim at that mortgage.

I challenge each of YOU to calculate how long you have to work to pay for the interest on your lines of credit this year. 

What did you come up with?

Related Links:

Preparing for Life AFTER a Debt Management Plan (DMP)

What Self-Discipline Can do For You!

Are Americans Too Comfortable With Debt?

Travis Pizel, debt management plan customer with leading provider of debt relief, CareOne Services, Inc. Travis Pizel

Travis is a contributing writer for the A Straight Talk on Debt blog. He is also a very active member of the CareOne community forums. Travis is currently enrolled in a CareOne Debt Management Plan (DMP). Travis candidly shares his personal journey to pay off his debt and the tips he's learned along the way. As a father and husband he provides a unique perspective on balancing debt, finances, and family in Minnesota. You can also read more from Travis on the Enemy of Debt blog, where he is a featured blogger. Compensated Blogger for CareOne Debt Relief Services.

To connect with Travis on Google+ click here

You can follow Travis on Twitter @DebtChronicles


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  • As a Tax Accountant, your blog really got my attention.  It's amazing how much money we're throwing away on interest.  While I haven't had time yet to calculate my interest paid during the year, I do know that I'm going to calculate it two ways.  First, the interest I'm paying now and the number of days I need to work just to pay that.  And secondly, the interest I WAS paying before joining CareOne.  I'm sure the number of days necessary to work to pay off that will be many more.  And that's what I was doing for years before joining CareOne!

    Hopefully seeing how much CareOne is saving me each year in interest and working days will help me stay positive and focused on getting to where you are and being much, much closer to becoming debt free (except those pesky student loans)...

  • That's a great idea. ondecker....I wonder if I could get my hands on statements from when I started (2009) to figure out how much interest I was paying pre-program...and how long I would have had to of worked to pay it.  I'd really love to see that.  If you figure it out, I'd be interested in knowing what the difference is for you - if you're comfortable sharing it that is.  Thanks for sharing your thoughts, ondecker!!

  • OK, here goes...  I really wanted to see how much CareOne has saved me just by joining.  Since I just started with CareOne in May, I was able to get a very good comparasion of interest paid each month (I used April and June's statements for my before and after amounts).  When you go back and see what your 2009 interest amounts were, they will be much higher than your interest now since you have paid down so much of your principal debt...but that's a great thing!

    Before joining CareOne, I had to work 32 days each year just to pay the interest on my credit cards, car payment and bank loans.  After joining CareOne, that number drops to only 21 days of wages to pay that interest.  So, CareOne has saved me 11 working days of wages each year.  That's wonderful!

    Once I included my mortgage, I have to work a total of 31 days each year just to pay interest.  Just like you, six weeks of my working wages are being thrown away on interest payments.  Sad, but not too unreasonable.

    Lastly, I did the scary part.  I calculated my student loan interest payments.  I owe a lot in student loans.  I owe a lot more than I ever borrowed.  Sadly, I didn't understand the magnitude of compound interest and how quickly the loans would grow while I was in school and they were deferred.  I have to work 58 days each year just to pay the interest on my student loans.  Once that's added to my other debt and mortgage, it becomes a grand total of working 89 days each year just to pay the interest.  :(  That's very depressing.

    But, there is a bright side...  In less than three years, all my credit card debt and revolving debt will be paid off.  In the fourth year, my credit union loan will be paid off.  That will give me an extra $1800 per month and allow me to begin paying extra towards the principal on my student loans.  Also, I'll keep working side jobs and tax season and use that "extra" income towards my debt.  If I wouldn't have joined CareOne, I wouldn't have that light at the end of my three-year repayment plan tunnel to work towards...

  • I'm completely on board with attacking all interest, including mortgage, which I think everyone is way too comfortable with.  We refinanced this May into a 15 year even though it stretches our budget a bit, but I really don't want to worry about giving the bank any more $$ on our house than I have to (and I know paying extra each month isn't an option because our family will just spend it in other ways).  

    Can't wait to eliminate all interest, and I completely agree with your thoughts.

  • @ondecker - it's interesting that our estimations came out to right around the same amount of time!  I wonder if we had a larger sample size if we'd find that this was a coincidence, or if by some magic that's an average for most people??

  • @Sbro - Glad to hear you're kicking some butt and taking some names with your mortgage.....I'm looking forward to getting on that train in 5 months.  :)

  • That trend is seemingly reversing now, and we want to get rid of the interest-only second mortgage and get everything locked into a fixed-rate loan. As my wife and I pulled into the bank parking lot, she asked me a very valid question: Can we even refinance

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