When I first started my debt free journey, the principal balance of all my debt was about $80,000. To quantify the achievement, I calculated the real cost of becoming debt free. The real cost of a loan includes the original principal balance plus the interest and other fees over the lifetime of the loan.
A borrower will pay back more than the original amount borrowed when paying for education using a student loan. This is due to the accrual of interest and interest capitalization. By understanding how interest capitalization works, a borrower can be proactive and decrease the amount repaid.
Starting out on your debt free journey? Test your knowledge of common financial terms and phrases used to discuss getting out of debt. Each explanation is followed by Test your knowledge of common financial terms and phrases used to discuss getting out of debt. Each explanation is followed by a tip to help your journey. Comment and share other terms you want to be explained.
I realized I was on a trajectory to live an unremarkably average life. That is, I was living my own life from the passenger side and allowing other people’s beliefs to drive my decisions. I was unhappy living like that and accrued $80,000 in debt doing so. I decided to take control and escape my miserable reality.