FMOOD 0130: Interest vs. Interest - a podcast by Tom Merlino | Tom is inviting you to follow him on his journey to get out of debt and get into prosperity.

Will your interest in the purchases that you make on a credit card or by taking out a loan outlive the interest that you'll pay? In most cases, probably not. When I was younger and less financially savvy, I would see something that I liked, buy it, and eventually got bored with it. I put most of these purchases on credit cards to the tune of two almost maxed-out credit cards. I paid interest on these purchases for quite a while, and I'm sure that I lost interest in these items well before the time that it took for me to finally pay these purchases off in full.

 

Don't make the same mistakes that I did way back when. If you can't pay cash for a purchase, at least take some time to consider the purchase that you're going to make before you swipe the plastic or sign on the dotted line. Realize that interest paid on a purchase means that you will always pay more than the purchase price that you're considering. The only way that you get the deal promised to you is if you are paying with cash.

 

The question that you need to ask yourself is this: will your interest in the item that you're considering outlive the interest that you'll end up paying? If the answer is no or even if you're not sure, hold off on that purchase for now. Save up and pay cash for it. If you can't wait to save up cash, then be honest with yourself. Is the real price that you'll be paying, including interest on the purchase if you swipe the plastic or sign a piece of paper, be worth it? Don't just look at the price tag; consider the total purchase cost including any interest charges before you make a decision. You at least owe yourself that if you're not paying with cash.

 

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