Let's Make a Deal

Monty Hall was best known for his TV game show, Let's Make a Deal.  His fans dressed up and in hilarious costumes hoping he would notice them and invite them to play.  In the real world, all of us are playing games with our mortgage companies.  The banks always win because they get guaranteed money and we lose because we're giving them our hard earned bucks for up to 30 years.  Your mortgage "game" doesn't end until you make that final payment.  The same is true with credit card financing and auto loans.  You don't have to look behind door #1, 2 or 3 to find out how bad your losses are.  I'm going to show you right now so you can decide for yourself when you want to stop clowning around with your creditors.

Remember this – the longer you play the game, the more money you lose.  For example, if you owe $100,000 on your mortgage and choose door #1, a 30 year plan with 5% interest, you pay the banks almost double  what you borrow at $93,000 in interest payments.

Door #2 is a $100,000 mortgage with the same interest rate for 15 years.  You cut your interest payments by over $50,000 when you go with door #2.

Door #3 is the same as #2 but your deal is now for ten years.  Drum roll, please.  You saved approximately $66,000 by choosing this option over door #1.  Congratulations.  By the way, the banks will usually lower your interest rate when you decide to reduce the number of years you want to play games with them.

There's a reason many people stay in the game even though they know they are getting humiliated by their banks.  They feel trapped because of what they owe in car payments and credit card payments.  The best way I know out of this mess is to get some debt discipline.  I focused on one debt at a time until it was paid off before moving on.  The debt game will be over in 3 years when the mortgage is retired.  The banks will get $5,000 of my money as opposed to the majority of Americans who foolishly opt for door #1 and $88,000 for the rights to clown around with their bank.  What door will you choose?  Have a great day.