It is like burning your money to pay that much interest!

At one of my favorite personal finance blogs, Free Monday Finance, the article for today talked about one of my favorite personal finance experts in Dave Ramsey. If anyone knows me, you know I am a sucker for Dave Ramsey related material. You also know that one of my biggest motivators are easy things you can do with your personal finances in order for it to pay off big in the long run.

Dave Ramsey and smart things you can do to get ahead! I am all ears!

Dave in his book The Total Money Makeover: A Proven Plan for Financial Fitness (starting at $9.50, not a bad investment to save you this kind of interest!) talks about a survey of the Forbes 400 richest people in America. When asked, 75% of these multi-millionaires said the best way to build wealth is to stay out of debt!

FMF goes on to quote that the average American will pay over $600,000 in interest in his lifetime. $600,000! (What kind of house, car, financial security could you buy with that?)

To double-check these numbers, I went over to Loan Amortization Calculator and ran the numbers on only $150,000 borrowed at 6.5% over 30 years. Paying the minimum payment of $948.10 each month, your total interest over 30 years is $191,316.73! In total, your $150k house will cost you over $340k! Sounds to me like we are paying our bank twice, if not more.

Give that a few minutes to sink in. No wonder banks have huge buildings while we live in debt up to our eyeballs!

Check back later in the week and I will let you know how much of a difference a small additional payment up front can make in your overall interest payments.

Does this make anyone else sick to their stomach’s? Is anyone else paying extra on their mortgage and not falling into the tax deduction myth?