It may also be a reality check you should give yourself.
A heads up for those of you who might be sick of reading me write about interest rates and be tempted to click over to the next blog on your reading list. Please wait. Yes, this is yet another post about the subject, but stay with me on this. Today I want to share with you how much doing stupid with zeros is costing us. Much like sharing how much debt we are battling, this is equally difficult to admit. It is also something that I didn’t realize was quite as bad as it is. If I ever needed another reason to feel the urgency to dump our debt, this sure gave me a doozy!
With my excitement to see how much we would save by doing all these balance transfers, I first needed to see how much interest we were paying each month. While the individual amounts always made me cringe, I felt even sicker after adding them all up. My estimate was in the high $300s. Not even close. Last month we paid a whopping $528 in interest alone! Without a doubt, this exercise was a painful thing to see. It was so awful that I even went as far as to double check the numbers not twice, but three times! Talk about another reality check!
The good new is that after the dust settles with all of these balance transfers, we will reduce the interest to right around $75 per month. That is $453 more that will go towards the principle! The math was fairly simple. As most of our debt will be at zero percent, I took the remaining number and plugged it into an online calculator to give me the interest. One loan (our car) is at a fixed 1.99%, so I just used last month’s interest for that.
I also realize how much having debt is hurting our future as it is less we can save for our retirement, so please don’t remind me of that! I won’t go there as one can only take so many stomach punches in one day. Perhaps I’ll tackle that another day. Right now, I need to concentrate on eliminating this debt ASAP.
While I do believe it is important to look at the positives of how far we have come, I also feel it is equally important to see the entire picture. Why it took me so long to calculate this, I think was a combination of many things. Denial of how much we were throwing away each month and perhaps even some fear of seeing and admitting how much stupid with zeros cost us.
For those of you also battling debt, do YOU know how much your debt is costing you? If not, I strongly urge you to find out. Even though we are now reducing the interest we pay, any amount is still too much. I, for one, am sick and tired of throwing our hard earned money away and will continue to push hard to see this craziness end!
It’s not the debt that is a killer. It’s the interest! I am a strong proponent in zero-interest financing. You just pay the price of whatever you bought and that’s the end of that! $500 a month in interest is what keeps people poor or poorer. The banks get richer while people fall in between the cracks.
Good for you!
You’re doing great!
Just make sure you pay those zero-interest bills on time. Look at the pay off date. It’s always different from the regular monthly payment date. That’s how they snare you and then all the interest is due from the very beginning of the loan. UGH! I usually mark my calendar one whole month before the due date and try to pay it off by then. If not, I have ample time to roll it over onto another zero-interest card.
Good luck!!!!!!
Thanks, Cindi! I am doing just as you suggested and marking these offers to be paid at least a month before the expiration date. I’m beyond sick and tired of giving these banks our hard earned money.
Ouch! That’s a lot of interest. Been there, know exactly how you feel. Now you will have an extra $453 towards your debt each month without having to earn more or cut back What a huge snowball amount towards debt! Have you calculated how much sooner you will get out of debt with that extra $453 a month going towards it? My DD just did a no interest card with Best Buy to buy a tv (their hand me down died) and I made sure to remind her of Cindi’s advice, otherwise she’d get dinged for the whole interest amount.
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Not having to earn more or cut back, even more, is what makes this so great! With my seasonal job ending, I was cringing at what it would do to our debt payoff. No estimates yet on how much sooner we will get out of debt, but I know for certain this will make a huge impact. I keep a pen and paper flow sheet of our debt. Next to these offers, I’m putting a “must be paid by” note. While the interest won’t go all the way back (at least for the offers we took), they will start charging horrendous fees on any unpaid balances. Not going to let that happen! Good thing to remind your daughter of this, as store credit cards tend to be some of the worst.
Many people live a lifetime with their heads in the sand in regard to their finances and debt.
Good on you for facing yours.
I know it’s painful now to see what you were paying to interest but it’s a wake up call and going forward, it gives you a renewed purpose to get this done ASAP!
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Thanks, Sluggy. I figure better late than never! This truly was a was a wake-up call to keep pushing to get it done.
I like the way you keep it real! I don’t know exactly how much we pay in interest each month, but… I know it’s a lot. A painful amount. Our plan is to use our side hustle cash to make some big dents in our higher-interest debt over the next few months. Eventually, when we are closer to payoff, we will move those balances to 0% interest cards.
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Thanks, Susanne. It was anything but fun to find this out, but really gave me yet another reason to conquer our debt once and for all. If may be worthwhile to check into a balance transfer now. With what we were paying each month, the savings will more than cover the fee to do the balance transfers. The worst they can say is no! We had very good success with Citi and they have a longer no-interest period (21 months) that buys us some time as we work on paying off our other debts.
Knowing the exact numbers makes you miles ahead of so many. The debt road is a long one but you are definitely on the right path. Each time you do something like this balance transfer to reduce the amount of interest you pay/pay off debt is another step in the right direction! Keep your chin up 🙂
Thank you for your kind words of encouragement. This mess didn’t happen overnight, and it will take some time to clean it up. Doing these balance transfers is going to help immensely. Eventually, we will get out from under it.
Yes, I am fully aware of the amount of interest I pay. And just when I think I am getting ahead, the stupid feds will hike them up again. And like you said, the mess did not happen overnight.
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All these interest hikes make it tough to make a dent. Frustrating for sure, but we will prevail!
Hi Lucy! Dear Husband and I are also in our second half century and digging ourselves out of debt. I do know how much interest we are currently paying per month. (You might want to sit down.) 900 per month. Ugh, it’s a painful amount, but I think it’s better to take a good look at it square on so we know what we’re fighting against. After all, it’s hard to fight something you can’t see.
My hunch is that there are a lot of us out here facing debt at this age. I commend you and others who actually took a good long look at what this debt is actually costing. Extremely painful, but as you said, it is hard to fight something you can’t see. Knowledge is power, as this applies to battling debt as well.
I took a quick look at your blog. Love it!
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