How much am I spending on interests?

How much am I spending on interests?

A question that I get asked sometimes is how much am I really paying on interests?

For example, if you have a $ 200,000 student loan with an interest rate of 7%, you would calculate how much you are spending on interest daily like so:

Interest rate/number of days in a year * student loan amount

For our example, that would look like 7%/365*200000 =38.35, which is how much you spend on interests towards your student loans every day.

And if you want to know how much you’re paying for the month, you multiply that number by 30. And for our example, that’s $1,150 every month. So that gives you an idea of how much you are spending towards interest only.

How much are you spending on interest rates towards your student loans? For me, it used to be about $ 20,000 per year. Ridiculous! The sooner you know your number, the better.

Disclaimer: The post is for informational and educational purposes only.  Please consult your financial adviser for appropriate financial advice. 

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