The Ugly Truth About Minimum Payments

foreign hey you guys welcome to this episode of the Rachel Cruz show and today we're going to shed some light on the harsh reality of minimum payments if you're someone who is still skeptical about committing full-on that you want to pay off all of your debts well I hope this episode exposes some of the ugly truths about the habit of just paying minimal payments and honestly you guys listen I get it okay our culture has made it so normal for people to spend their entire lives just scraping by meeting their minimum payment mortgage payment and car payment and credit card payment and student loan payment it's like you just pay the minimum what you can do to get by but the harsh reality is that when you settle into that way of life you end up throwing away thousands even tens of thousands sometimes hundreds of thousands of dollars in interest alone those Banks and credit card companies are getting free extra money over time that should be yours taking that money that should be your money but it is going to them unless it doesn't have to be that way okay so today we're going to look at exactly what you're missing out on but before we look at the numbers let's talk about the why so many people have settled into consistent credit card debts specifically so there's a belief out there that you have to have a credit score to make a big purchase like a home or a new car but if you have listened to the Rachel Cruz show any amount of time you know that is not true because we're not gonna be taking out a car loan nope we're gonna be paying cash for our cars and to get a mortgage you can do what's called a manual underwriting where you actually don't need a credit score for that process to get a mortgage because a mortgage is the one type of debt I will not yell at you for but again there's really no reason to say okay well I have to have a credit card I have to keep going into debt to keep my credit score going and listen another common excuse that I hear all the time for having specifically credit cards it's like well I get the points and the airline miles and listen the truth is sure so what you do and somebody you use the system and it works you pay it off every month but statistically there are people that don't do that and on average I think I saw that the average American family owes sixteen thousand dollars in credit card debts and you're going in to debt deeply not always paying it off month for month month and then you end up paying interest and then on top of that if you are someone that says no I do pay it off month to month well the reason you get those airline miles and you get those points is because the banks make a lot of money off of Interest the people that don't do that so people that are struggling are funding this industry that then turns around and rewards you for you know playing their game and so for me personally I'm like the whole thing I'm like I'm good you statistically spend more on a credit card too so I'm like okay the extra percentage that I would have spent subconsciously on a credit card I'm Gonna Keep because I'm going to use cash or my debit card and I can use that savings to go and buy an airline ticket if that's what I want to do so again I know some of you play the game and it works for you but for me I'm like I don't even want to play the game I'm out okay then lastly there's people in another category that say well yeah I'll just go in the deck because I for sure could make them own payment or I'll just pay off the debt soon and it'll be fine what ends up happening is it becomes the norm and you end up keeping it around and if something happens if life happens there's a medical emergency somebody loses their job you have all that risk of all that debt hanging over your head that suddenly comes crashing down so playing the whole debt game is just it's so tough and then on top of the deck game is interest so when you make minimum payments for a long period of time it ends up adding up to so much money okay and let's just pretend that you are somebody that has enough to provide for you and your family and you pay them payments you pay the interest and that's how you live life if you took all of that out and you said okay what if you weren't paying that payment and you weren't paying that interest you would have all this margin to do a lot of stuff you guys you could use that money to invest you could use that money to spend you could use that money to give you could support so many causes in this world and help so many people with that extra money that's going to Banks it could be going to your family to your community and that's that is where real Joy comes from not from all the stuff that we put on for credit cards and car loans and all the stuff so just think about okay where is my money going and how is it being used so I think there's a real heart check there that may help motivate you to say man maybe I don't want to live a life paying minimum payments and paying interest to Banks just to have a bunch of stuff what if I do get my money in order I have margin I'm able to invest and give generously and do all these other things with money that honestly helps so much more in the long run guys I know we're all looking for ways to save especially on health care costs so do yourself a favor and check out Christian Healthcare Ministries it's biblically based Health cost sharing that could help keep your budget under control so learn more today at chministries.org budget all right so let's look at some specifics when it comes to numbers a recent study says that the average mortgage interest paid over a lifetime was over a hundred and forty two thousand dollars and that was calculated at a 2.7 interest rate which now we know is way higher but you guys 142 000 in just interest isn't that crazy in the same study shows that the average auto loan interest and student loan interest paid over the lifetime is almost twelve thousand dollars combined some of you may be thinking oh it's just twelve thousand dollars over my lifetime I mean who cares it's not that much money well let's see what that money could have been if you just invested it so another statistic shows the average interest paid on credit cards that alone is around thirteen hundred dollars each year and remember that's not including the interest that you lose on home Auto or student loan debt so starting at age 25 if you were to take that amount thirteen hundred dollars and invested it every single year instead of it going to minimum payments and interest you would have close to seven hundred thousand dollars saved by 65 years old six hundred and ninety five thousand dollars to be exact you guys that's pretty wild I mean all of that could have been going to you and Building Wealth and using it to say hey I actually want to retire with dignity and have some money at retirement versus sending all that money to it's pretty wild pretty wild when you think about the numbers so I hope you guys that this was really helpful because I want you to see the reality of what's going on I want you to have shame or judgment or fear all the things but I do want you to look up and say man is what I'm doing when it comes to debt smart instead of paying Banks and credit card companies and Motor companies and like all this stuff what if I just paid myself like what if I took my money back in my own hands and did things for myself it's pretty remarkable when you have that perspective so if you're tired of feeling weighed down by debt and payments or if the thought of throwing again money away to interest it sounds terrible to you let me just say number one oh it doesn't have to be this way it doesn't yes you can handle your money in a completely different way which is so encouraging and number two I would say Financial abuse university is a great place to start so this has been teaching people how to pay off debt and experience Freedom with their money for decades and it will equip you to start tackling the seven baby steps and stay motivated throughout the entire process so you can sign up today at ramseysolutions.com and get started on this journey you guys because this is here to help you and to teach you and educate you and also to motivate you so it's really really helpful so please check it out and make sure to share this episode with a friend who might be interested in putting their interest money to better use and remember you guys take control of your money and create a life you love [Music]

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