Page 20 - Workbook1E

Where does your money go?
If you’re like most Americans, you’ll earn at least $1 million over your lifetime. Do you know how you’ll probably spend it? Take a guess...
Here is what the average American spends his money on over a lifetime:
Source: US Census Bureau
Surprised? Americans have on average $8,940 in credit card debt. If you only pay the ongoing minimum payment starting at $103 each month—and reducing monthly—how long do you think it would take to repay it at 13.72% interest? How much would you end up paying?
You may be shocked to find out it would take 30 years to repay the debt and you would have paid about $24,460... or $16,270 in interest alone. Now you know where the banks get all that money to lend you. Lenders know the power of interest.
This chart shows you how the same debt would change if you made more than the minimum payment. It’s a striking example of the power of interest:
ORIGINAL DEBT: $8,940—Interest 13.72%
Monthly Payment Total Interest Total Amount Paid Time to Repay
$200 $3,660 $ 12,600 5 yrs 3 mos.
$300 $2,160 $11,100 3 yrs 1 mo
$500 $1,560 $10,500 1 yr 9 mos.
$700
$860 $9800 1 yr 2 mos.
16 Workbook 1: Building a Spending Plan that Works
See the point? It’s miraculous how much you save by paying more than the minimum payment! You can drastically reduce the amount of interest and pay it off much sooner. Putting the power of interest to work for you instead of against you... it just makes sense.