Some expenses in life are simply unavoidable: food, utilities, transportation, and many others. However, there’s one expense that I try to minimize as much as possible: interest.
Now, if you have a mortgage it’s not realistic to cut out all your interest expenses. However, interest on a mortgage is also generally much less than the rate of interest you’re paying on other types of loans or on your credit cards.
When you’re paying a lot in interest everything month it restricts the amount of cash you have available for purchases, and that could lead to you purchasing even more on credit and accumulating even more in interest expenses. The spiral can be never ending once you get into it, and it can be a tough habit to break for those that are caught in it.
You don’t get anything from an interest charge, and that’s what makes it frustrating: you’re paying for nothing. In essence you’re having to pay even more for a product because you either aren’t able or don’t want to pay for an item outright.
Auto loans and credit card debt are some of the worst sources of interest expense and are the most avoidable as well. While there may be the temptation to buy today and reach a little beyond your means, it’ll do more harm than good in the long run and could create a dangerous cycle for your finances.
With debt levels continuing to rise for consumers, interest is a big expense for many people, and one that shouldn’t be ignored.