A $450,000 loan at 5.5% costs $919,000 over 30 years, with $469,000 in interest alone. Paying it off in 10 years saves $325,000. Using business profits instead of wages to pay debt faster keeps more money in your pocket and stops the bank from taking the bulk of your earnings.
If you're paying principal and interest, you're working for the bank. You're not working for your own business. If you've got a loan of, a loan amount of $450,000, over the course of your 30-year principal and interest, you're gonna pay a total of $919,000. Your interest component of that is $469,000, which is more than the cost of the original loan, more than the cost of the original loan. And this, by the way, is based on a 5.5% interest rate. So kind of based on what we're looking at right now. If you were to pay this off within 10 years, you'd wind up saving yourself $325,000 in interest. And this is another consideration that we want to be setting up. Profits are better than wages, right? And this is true when we're talking about using profit chunks to be able to eliminate your debt.
