Refinancing your debt doesn’t accomplish much

refinancing doesn't accomplish much

High interest rates suck but lowering your interest rate does not solve your problem.

Your interest rate is not the problem.

Your behavior and your debt is the problem. Lowering your interest rate does not make your problem go away.

Just because you lowered your interest rate does not mean that you have accomplished something amazing.

If you have $30,000 in credit card debt at 15% and you lower your interest rate to 12%, you are saving 3% per year or $900. That assumes that you don’t pay down the balance over that period of time. If you are transferring the balance to another credit card, you will typically pay a balance transfer fee of 3%, which means your savings just evaporated.

Don’t get comfortable. GET ANGRY!

The only way to get out of debt is to get so pissed off that you are motivated to act. You get so motivated you stop going on vacation. You get so motivated that you stop eating out. That is the way to get out of debt.

Let’s say you are currently paying $500 per month on your $30,000 in debt. It will take you 9 years to pay off the balance and you will pay $25,798 in interest!

What if you put $1,500 per month on the debt? You could pay off the debt in 2 years and save over $20,000 in interest charges.

Here is where things get interesting: Let’s take $500 per month and put it into an investment for 7 years after you pay off the credit card. So instead of making payments on your debt, we are now investing the money. Remember, this is just the original $500 per month you were paying on the credit card before you kicked things into high gear. This is only for the seven years that you would have made the credit card payments. In 20 years you would have $295,800.

In 30 years, you would have over $900,000! All we did was invest the $500 per month you would have been paying to the credit card company. Working hard for two years to pay off your debt results in you almost being a millionaire.

People, this is why we need to get out of debt!

Get mad. Get motivated. Get moving.

P.S. If you kept making the $500 payments for the entire 30 years, you would have $1.6 million. There is no reason to retire broke. Want to run your own calculations? You can use this calculator at


Please note: I reserve the right to delete comments that are offensive or off-topic.

  • So true…for years when I was in debt I kept transferring to 0% credit cards (without transfer fee, which you could back then). It didn’t solve the problem whatsoever. Not until I got mad and said enough is enough did things change as I realized that no matter how much money I made it wasn’t about that but how I managed my money.

    • Kristin Ingram

      Camilla, you are so right! Most people don’t have an income problem. Getting organized and getting mad is the only way to clean up the mess.