A very common problem: people think math is too hard, then ignore it and rationalize by saying that it’s no big deal, or that “it’s not real money”. (I’ve heard people actually say that, with a straight face. No kidding. And if you’re one of them, please stick with me here. I genuinely want to help you avoid tragedy.)

Well, a basic understanding of math will save you literally YEARS of your life. And what’s more, ignorance of even simple math principles will cost you a very large part of your life.

Question: on a typical home mortgage, what’s the difference if you are able to pay it off asap in 5 or so years (i.e. one typical borrowing term), versus paying the minimum each month for the full 25 to 30 years?

I’ll save you the boring numbers and tell you the answer: depending on the exact interest rates, and a few other factors (like accelerated vs monthly payments, etc.)…

### …you could end up paying your loan TWICE, in extra interest!

Maybe you feel like paying about \$600,000 for a home that’s only worth \$300,000. I sure don’t. How many years of your life will you have lost to the bank? Or do you like working for nothing, as a bank slave?!

The exact same problem applies to credit card debt. Most people are drowning in debt, and don’t fully realize it… and don’t even care. The consequences are NOT imaginary. You could lose everything once interest rates go up – and eventually, they have to. It’s a hard fact of history.

Here’s another inconvenient fact that most people want to avoid facing: inflation. Question: if you have \$100, and the authorities reassure you that inflation is low, say around 4%… how long does it take for your money to shrink to half its value? Answer: about 18 years.

So, if you work for about 40 years, your life savings will be worth HALF as much in about two decades, and when you retire, you’ll need \$400 at that time, just to buy something that you could get today for \$100. Or, maybe you’ll never be able to retire. That’s the point: too many people without basic math skills will end up in poverty, and never even know why!

If you’re starting to worry a little, then that’s good. But if this concept is new to you and you’re not scared, then you are in big trouble.

A car salesman, or real estate agent, or bank mortgage rep will smile to you, and say that it’s “only” an extra 1/4% interest, so no big deal, right? Well, ask them to cover the “slight additional cost” from their pockets!

Final point: knowing and doing are two separate but related things. Once you get the concept, you have to have enough discipline to make clear decisions.

So, yes, I know that math is boring for many people, but your life literally depends on it. At least, if you want to get half your life back.

You can buy lots of expensive junk today, and eat dry pasta in your old age (without the sauce!)… or you can do something about your life before it’s too late.

Young people again have the advantage, because you have many more years to reverse the financial destruction and allow your savings to grow geometrically, or even exponentially. (There is more on this in another article – click here. Don’t you want to know how much richer you can be, for doing the same amount of work?)

After all, people know that smoking is bad for them, and so is eating unhealthy food, but… as we talked about elsewhere – click here

Your choice. Please take better care of yourself. 🙂 And remember to use your money for good causes.

Dr Ling 🙂