The most powerful force known to man!
When asked what was the most powerful thing he
had ever witnessed, Albert Einstein responded simply, “compound
interest.” Here are two scenarios which illustrate the hallmark
of his genius.
- A $2000 sofa financed at 19.8% interest
with minimum monthly payments will take 31 years and 2
months to pay off and you will pay more than $10,000. The
interest alone robs you of $8,202 that you sweat for decades
to earn. In fact, you will have to earn about $12,000 gross
to net $8202 for the interest just so you can have your
$2000 sofa. What could possibly be worth paying 5 times its
But it gets worse. If you were to put that
same $8202 of monthly payments into just a 10% mutual fund
over the same 31 years, it would yield $45,540 in personal
- Look at a second example. Let's say you
regularly buy a new car and pay $300 per month. If you do
that for just 1/2 of your working life or twenty years, you
will be giving up money which if invested at 10%, would
build to $227,810.65. That amount would generate $1,936.39
per month for the rest of your life.
Let's be very clear about this. You are
giving up nearly $2000 a month income so that you can spend
$300 per month on payments now! It just doesn't make any
sense except to the finance company--- to them it makes
terrific sense! Who do you suppose gets that lost income?
Interest is far more than the little bit your
friendly creditor requests for the use of their money, as seen
above. But we do it every day. And until we remove the siphon
hoses that have been rammed down our throats, we will never
produce any wealth for ourselves. We need to live by one rule.
We need to memorize it, stamp it on our forehead, ingrain it
into our every fiber. And the rule is this: If I can’t afford
something in cash, I can’t afford it! If I can’t afford
something in cash, I can’t afford it! If you say it to yourself
over and over, day in and day out, eventually it will become a
part of your life.
Is it necessary? I don’t know. How’s your
financial future looking? Do you really appreciate paying 5-6
times the value of something? Is it really worth juggling the
monthly payments, month after month, year after year? If it is,
fine. Keep on keeping on.
But if you are tired of the scam, if you are
tired of having your future wealth stolen from you, if you are
tired of sweating your life away just to fatten the bottom line
profit of the finance company, then repeat to yourself, [font
color="#ff0066]If I can’t afford something in cash, I can’t
afford it! Beat the monthly payment scam by getting out of debt
and paying cash.
And if you think operating on cash is a pipe
dream, check out some of the articles at this site especially.
There (among other things) you'll find out how to eliminate all
your debt including your mortgage in about 7 years with the
money you already earn.