Tis the season for holiday fun, family, food, and presents! However, a lot off companies are making special holiday offers like this one below. I was personally given this offer for my car payment and I absolutely will not take it. And here is why:
Yes it can be super helpful for folks to skip a house payment, skip a car payment, or skip a credit card payment and extend your loan an extra month just ‘to help you out during the holidays’ BUT what you aren’t skipping is the compound interest that will continue to accrue. Every company that does this knows they are going to make that much more money off of you in the future. My mortgage interest is $433, my car interest is $60, and my credit card interest is $95. Should I accept this special holiday deal, yes I would have additional $$$$$ which would be delightful, however, That is additional $$$$$ you will wind up paying in the future on top of what you were already paying on all of those items. That is $588 per month in interest on top of the regular payment. As the amount compounds, the end total continues to go up until you pay it down and eventually off. If you take that deal every year, then a 5 year loan can easily become almost 5 and a half, a 30 year mortgage will become 32 and a half, and your credit card is dependent, completely subject to your balance and interest rate. This is absolutely not worth it. An extra 6 months or 2- 3 years of debt slavery can easily equal an additional $360 or $12,990. I would prefer to be a bit more lean during the holidays than pay a company over $12,000. That is $12,000 in my pocket in the future vs. in the bank’s pocket.
I always put extra money down on my debts. My car loan is months ahead of schedule right now . This is awesome. It is also not going to happen. I never skip a month. Check your statement and you can see how much total interest you have paid in the last year. And the year before that. And the year before that. Because of my on time payments and putting forth a little extra money each time, I am chipping away at my car loan and have now paid $200 less in interest than I did last year. That is $200 more in my pocket even though I am putting more money forward. I don’t want to give these companies my money. I need them to buy a car but that doesn’t mean I am shackled to them. My goal is always to pay it off as soon as possible so that instead of monthly payments to a company, I can do monthly payments into my savings. And that is a far better use of my money.
Always consider how your present decisions will affect future you and your family. 12 grand can go a long way towards future holidays, vacations, retirement, and savings. Consider what the money can do for you. Is it truly beneficial to you right now? Is skipping that payment going to help your wants or your needs? Needs are different. Wants mean nothing if you are broke and in debt. Keeping up with the Joneses will only serve to further stress you out and continue to put pressure on your financial state. We all want things and we always will. Marketing ensures this. Is skipping a payment truly worth it? I will always say no but it is up to you to decide if your wants outweigh the consequences future you will suffer from. Personally, I would rather pay the now and never worry about it again later on
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