The "REAL" cost to own

I bought my house in 2001. I have to admit...that was one of the proudest days in my life. At the time it signified to me that I had accomplished a level of financial attainment that I honestly wasn't sure was going to happen. I knew that it would, but not that early. When your in high school your plan is for the most part is to go to college, get married, buy a house and have kids. Maybe not in that order but hey? The house was my last accomplishment. So we get the house...and head in for the closing. I sign a zillion papers telling me the house is mine. In the car before I headed to my new home, I begin to REALLY read the paperwork. My heart dropped when I realized how much I'm really paying for my 90k house.

Over $200,000 bucks. THATS PIMPING RIGHT THERE!

I had calculated the percentage rate I was given wrong. I was ignorant to what APR really meant. Over the next thirty years I will have paid over 200k for bungalow style home. Don't get wrong. I like my pad. 4 bdrms, finished basement, 2 car garage, nice yard. Plus I got a great deal. Old couple that lived there before was were the only tenants. But 200K?!?

My question is this. I understand that banks should make a nice bit of money to finance your house for you. But shuold they make more than double what you paid for the house? Thats loan sharking. Those of you who own homes...what did you think when you looked at that thick ass packet showing yor payments over the next 15 or 30 years, however long you financed your mortgage?

Finances are so important to understand. I didn't always do that until about 3 years ago when I got into trouble. Now that I've learned to make better decisions and not live for the moment but rather the future, I talk peoples heads off all the time when I see people wasting money. I'm surprised it has taken me this long to start blogging about money. I thank Bria for letting me be apart of the Oxygen blog.

So anyway, I thought I would give other examples of you really are getting hammered when you finance through banks if your credit is not top notch.

These numbers are crunched using a Annual Percentage Rate calculator which you can find anywhere using Google:

Using pre-established numbers:

House

Total Price for House- $115,000 financed at 6.25%

Closing Costs: $3,100
Monthly Payment: $708.07 not including local taxes & Home Owners Insurance
Total Interest Paid after 30 years: $139,910.47

Total Paid for house: $254,910.47


Car
Total Price for Car- $18,000
8% sales tax
lets say you have a $3000 trade in
You put $800 cash down
Finance the car for 48 months
11% Finance Rate

Total Interest you pay on the car- $3,762.75

And I'm sure if most of you look at your car paperwork. You probably have a higher rate than 11%.


Credit Card

$1,300 Balance
19% interest rate

With a $20 minimum payment It would take you almost 9 years to pay this off. A total of 105 payments. You may think that $1,300 is nothing. Well try having 3 or 4 credit cards with balances like that. Hit a bump in the road with your job, or your spouses job. Now your in a bind.


I'm not saying that credit is terrible. But it has to treated responsibly. Unfortunately I found that out late. But I have recovered through evaluating every financial move with caution. I can't blame the banks or the government for my inadequacies regarding managing credit. Although I have my reservations for their tactics, and what the government allows them charge. Basically they are in bed with each other. But it is up to you to educate yourself and your children to keep from going into debt.

Darkbrotha

darkbrotha.com