Debt Costs So Much!
Nothing new here… just me trying to convince you to GET RID OF YOUR DEBT again. I have decided to really hammer this point home in the hopes that I might pass some of my “I HATE MY DEBT” passion on to others.
Here are the other posts I have written about How Much Our Debt Costs. Check them out AFTER you read this article.
- Interest Amount Paid – Establish a Proper Relationship with Your Debt
- How much Interest are YOU Paying?
- How Much Does Your Debt Cost? – on FiveCentNickel.com
So yeah… as you can tell I am really trying to drive this point home.
I decided to do a few things.
- Post monthly updates reporting how much my debt costs me.
- Create a spreadsheet that calculates it out automatically.
- Share that spreadsheet with you! Tomorrow’s article will give more details on this and will have a link to my Google Docs Spreadsheet. It will be free of change and will easy to use… just the way I like it. It will have calculations for each month and will include the cool graph that you see above – which is reporting my actual principal/debt amounts each month.
November Update – How much our debt cost us this month
*Shrugs* Writing about this always makes me mad because I can’t help but think about all the things I would rather be doing with MY MONEY! Oh well… soon enough. Patience young Jedi!
Without further ado…
| October 2009 Interest Paid | November 2009 Interest Paid |
| Mortgage 1 – $587 | Mortgage 1 – $586 = +1 |
| Mortgage 2 – $294 | Mortgage 2 – $294 = 0 |
| Student Loan 1 – $156 | Student Loan 1 – $161 = -5 |
| Student Loan 2 – $115 | Student Loan 2 – $126 = -11 |
| Lending Club – $83 | Lending Club – $70 = +13 |
| Chase Credit Card – $2 | |
| Total Interest Paid – $1,237 | Total Interest Paid – $1,237 = 0 |
You may have noticed several things…
- Our October interest is $2 more than previously reported. That is because we paid off my wife’s Chase credit card in September and were hit with a $2 interest charge on the preexisting balance and I was unaware of it when I posted.
- Our Lending Club interest was quite a bit lower. Hooray! This was because of our enormous extra principal payment in October. We are able to pay a little extra in November too but not nearly as much.
- Our Student loan interest was higher this month. What’s up with that right? Although we did indeed reduce the principal student loan interest is calculated daily and our automatic payment date fell on a Saturday and therefore had to be pushed back to Monday, adding two extra days of interest charges. In the long run it doesn’t effect us because next months calculation will be on two less days so it will look deceivingly lower. This is an important point to note when considering the monthly interest paid on your student loans.
The “How Much Your Debt Costs” Spreadsheet & Graph
As I mentioned above, I have created a really cool spreadsheet that does all the calculations for you and also gives you this nifty little graph allowing you to track your progress.
The spreadsheet will also give you the interest amounts paid for each month in HUGE BOLD numbers for you to print off and stick on your fridge.
$1237 in interest alone each month? Ouch, that is really painful – congrats on whittling it down. I’m trying to get rid of one of my student loans before it is “due” just so that I don’t have to pay *any* interest on it. Of course I need to get rid of my two credit card debts first. Hoping to kill one off by Christmas.
If you were set up through the loan companies autopay the weekend wouldn’t affect your interest for the month. They will forward it to the next month as if you paid on the same date. Which makes sense because I think you said you set auto payments through your bank instead.
What always screws me up is the extra day in 31 day months. Excel doesn’t understand that when subtracting dates it thinks there is 30 days between 10/25 and 11/25! I am a bit anal with my spreadsheets.
I like the way you look at debt in having interest motivate you. I guess I can relate to it. One day I forgot my mega debt repayment spreadsheet and had to do quicker calculations. Thats when I came to the realization that when my interest each month was zero my debt was gone. Its more motivating to look at it that way for some reason.
The extra days interest charged this month don’t matter because they would have been charged later anyway. ie.) Next month I will only be changed interest on 28 days.
There are always a finite 365 days in a year and we will be charged interest on all 365… regardless of how much is charged each month due to weekends and such.
Thank you for bringing this up for clarification.
The nice effect of making that large principle payment to the LC loan is that your monthly interest is _permanently_ at $70 (or lower). It’s the gift that keeps on giving 🙂
FreeMyInterest): I just tried Excel 2002, and it gave me 31 days for:
A1 = 10/25/2009 (formatted as date)
A2 = 11/25/2009 (formatted as date)
A3 = A2-A1 (formatted as number)
Man you are right. That has been bugging me for YEARS. Silly me trying to use more complicated functions (days360) rather then just subtracting. Thanks for helping me perfect my sheet even more. Too bad the extra days added $640 more interest.
“Too bad the extra days added $640 more interest.”
I just spit coffee on my keyboard — hilarious.
I like how you have visualized the your debt’s interest costs. I’m glad you’re attacking the debt aggressively.
new spreadsheet? yippers!! i’m looking forward to it. i pay about $560 in interest each month now that i’m down to just a mortgage. i’m so looking forward to the day when that too is paid in full.
Whoo hoo! Looking forward to the spreadsheet to help save us all. I’ll surely include it in my wrap.
To quell the rage though… $1,200 in interest a month may sound like a lot, but it’s important to see what you’re getting! A home and education is PRICELESS!
The spreadsheet rocks, well… at least for finance geeks like me.
Per debt: I would rather owe nothing and have nothing than owe and have.
Per education: Although I did graduate college, all my income generating sources (IT, Finance, and Blogging) are all self-taught.
Looking forward to the spreadsheet! I’m a closet spreadsheet geek – don’t like to admit it to too many people! =)
Interesting in your last comment about your income generating sources are self taught – that reminds me of SMI’s post about the value of a college education.