One of my favorite personal finance blogs is The Simple Dollar. You could spend hours on that site gaining insight from its contributors and learning from their experiences. A post on Dec. 5 reiterates the true cost of debt.
Doug Hoyes wrote:
- Interest eats up your budget
- Amortization is not always your friend
- Debt is a deterrent to saving
- Debt limits freedom of choice
- Debt delays retirement
- Debt has an unexpected life cycle
- Debt strains marriage
He wrote: “Simply put, debt is complicated. Yes, you will pay interest — but you will pay much more.
- Debt grows faster than you expect.
- Debt takes longer to pay off than you expect.
- Debt adds risk when life throws an unexpected curveball.”
I couldn’t agree with Doug more, especially about interest eating up my budget. It has cost me to delay moving to another city or to give up trips. As a little exercise, I totaled up the interest charged on four credit cards, one of which I paid off, in 2014.
- Card 1 – $577.55
- Card 2 – $517.68
- Card 3 – $346.98
- Card 4 – $53.25
Grand total: $1,495.46.
Yep. That’s a sizable emergency fund. A great vacation to a beach locale. A nice Roth IRA deposit. ARGH!!!
The numbers don’t lie. They’re telling me that I dug myself a deep hole, and I must climb out of it ASAP.