Toastboy’s Tech Tips

Compound Interest goes both ways

What I mean by “Against”.

We all know that compound interest is the best tool we have to building large sums of money, when its working for us.

When you have an abundance of debt, be it credit card or other the interest is compounding against you. So instead of YOUR money building the DEBTOR’s money is building at an exponential rate.

So the most important step to building great wealth is to alter the Bad interest into Good interest.

1. To do this gather up all of your monthly debts. (credit cards, loans, etc.)
2. Organize them first by Interest rate Highest to lowest.
3. Calculate what your minimum payments are.
4. Decide how much extra you can afford to pay above and beyond the minimum payments. And add that to the highest rate card first. Regardless of how high the balance is. Eliminate this debt first.

Once this one is gone. Take the money you were spending on this debt (minimum payment and additional) and apply it to the next highest interest rate debt.Do this over and over until all debt is gone.

Debt Consolidation 101 Get your debt in control. A complete guide to dealing with your debts.

Now that the debt is gone. (should not take more than 3yrs)

Find some long term investments that pay a GOOD interest rate to you, either in the form of dividends, or straight interest on your money. And invest the monthly debt payments to this new wealth building endeavour, and now your money is working for you.

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