Our Problem With Interest

For every mortgage payment that you made, 74% of that payment went to interest for the first year. So the numbers are very similar to what Nelson identified in his book. In this scenario now we're looking at a current mortgage rate. I mean, rates have gone up. Even if this was at 3% rate, hey, that number would be a little bit lower for sure. But the volume of interest is the key here. What people don't recognize is the interest rate on the loan is being charged on the entire balance that you owe on the annual basis. So you're paying on the entire balance old, which is what's creating a volume of money that you have to pay. And so it's not about the interest rate, it's about the amount of physical dollars that you're going to pay tax on, have left over, send to the mortgage company or the car guy or the boat person and never, ever see again. That's really the fundamentals that Nelson was trying to get us to understand. And this is part of the problem.