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!