Saving isn't enough to be financially secure, understanding how debt works against us is key

    If we take out a 30 year $150,000 mortgage at a fixed rate of 4% and buy a home, how much debt are we in? Most accounts and bankers would say that's easy $150k. We have just committed to $760.03x 360mo.= $273,000 that's $123,000 in interest over that 30 year mortgage. We may be 150k in debt technically, but in reality we're going to need 273k plus cash flow to pay back that loan. Understanding this reverse compounding is a key lesson in personal finance. If we aren't careful about borrowing, any savings we accumulate will just be spent paying back loans.

   Let's save an instant 80k. Take out a 15 year $150,000 mortgage at a fixed rate of 3.5% and we pay back only $1072.32x180mo.= $193,018. We just saved 80k in interest to invest or spend on other things. Few people ever notice that payments on 15 year loans usually increase our monthly payment by a manageable amount not 100%. In the above example paying another $300 a month over 15 years we save 80k, that's a lot of coin. Finwiz.