Have you ever added up how much money you spend on interest each month?  You might be very surprised at what you find.   You might be spending almost half of your income on interest alone.  Most people find that hard to believe but with a mortgage, car loan, and credit card interest they all add up.  Not only is interest expensive it also reduces your quality of life.  If the annual percentage rate on your debt is 12% you are 12% poorer from using that debt.  This article will help you take your money back by avoiding the three biggest problems with interest.

The first way to lower your interest spending is not to buy the biggest house you can afford.  With loan interest rates so low its very tempting to get into your dream home.  But dream homes can quickly become nightmares as the bills pour in.  Those that have over bought and have adjustable rate mortgages (ARMs) are being forced into foreclosure.  Not only will you lose a lot of money in interest theres a good chance youll loose your home if you bought too much house.

Cars are the second biggest waste of money on interest.  You might consider driving an old beater.  Why? Because youll own it completely.  You wont be spending a penny on interest or extra insurance on your car.  Thats not to say youll have the nicest car on the block but it will get you around.  This is a motto to live by Buy your dream car with cash.  You might take the saying a little further and make it Buy every car with cash.  Saving up for a car and paying cash can be a rewarding experience. You will save thousands of dollars in interest.  This piece of advice is invaluable as some of the richest men in the world drove old cars even after they made billions. Sam Walton, Warren Buffet, and the founder of IKEA Ingvar Kamprad all drove older cars.  As a matter of fact the IKEA founder just passed Bill Gates as the riches man alive.  Did driving old beaters make them rich? Probably not, but separating their identities from their vehicles was probably one of many things that made them different.

Pay with cash instead of using credit cards.  Using credit cards for large purchases you cant afford will have you paying a lot more for everything you buy.  With the ease of using a card you might not carry cash. You may prefer to carry bank cards or debit cards for my purchases.  As long as those cards are tied to a checking account they work fine.  Its when credit cards are used frequently that the trouble comes.  Switching to an all cash budget can be a rude awakening. The payoffs are huge and youll be keeping more and more of your money.