3 Easy To Understand Videos Explaining the Interest You Earn and Owe

…in this video, simple and compound interest is explained by showing how the math works..

…he does some factoring in it, so it might get confusing around minute 9…

…however, basically what he is saying is that you can earn interest in the same amount every year (simple interest)…

…or you can earn interest on the amount as it grows every year (compound interest)…

…interest can be compounded annually, monthly, daily…

…it’s important to understand how interest is being calculated on what you earn and what you owe…

…trust me, this isn’t easy however if you take the time to learn this, you’re already very close to becoming financially free…

…as you will start making better choices about what to do with your money…

…have you every heard of mortgage payment shock?

…if you haven’t, it means the shock that someone gets when the book their first morgage loan and realize that it costs way more than they thought it would…

…instant house poverty…

…why does it happen?

…because people don’t understand all of the points, fees and other costs that they have to pay in their mortgage payment…

…this video does a good job of introducing these concepts by explaining how we compare rates using an Annual Percentage Rate (annual means the interest is calculated based on a year)…

…and how we need to think about how much money we actually pay…

…meaning, the rates can sometimes be illusions because they do not include the upfront fees that we have to pay in advance…

…one of the biggest expenses that people have is their mortgage…

…working for a bank I understand how the banks calculate interest and principal payments on a mortgage and did you know most banks collect most of their interest in the first year?

…I like this video by Suze Orman because she explains why you want to pay off your mortgage early, if you want to keep your home…

…and she tells you how to do it…