Truth-In-Lending laws were created in 1971 to help disclose to people borrowing money what the real costs would be. If you borrowed $1,000 at 12 percent annual interest, you will pay $10 each month until you pay off the balance of $1,000, and let’s just assume that you can’t get the money you need to pay this loan in full for five more years. That means you will have paid $600 in interest over those five years for a total cost of $1,600.
However, if you took this $10 and loaned it to someone else at 12 percent interest, you would earn the $600 over five years. So if you can get someone to pay you 12 percent a year for the use of your money, you can make a ton. In 30 years you will have earned close to $30,000.
It has been well established those that understand interest, collect it. Those who don’t, pay it.
Over many years this interest expense can drain you of all your wealth. To help you calculate your own personal lost opportunity in terms of interest expense, go to www.moneymastery.com and sign up for the free BASIC online training and create your own Get Out of Debt Report. This will show you how much you will actually pay in interest over the life of all your loans and all your lost opportunity costs. It can also show you how to get out of ALL debt (including your mortgage in under 10 years). This is how your wealth is being drained away from you each day.
Here is a link to a video that explains “volume” of interest expense and how big the lost opportunity can be. This is the real truth about interest and how the harmful effects are concealed.