You’re not paying interest, so why pay it off? Just because it’s 0% doesn’t mean it’s not costing you.

We’ve got a few reasons that might change your mind about not paying off zero interest loans.

 Alright guys. Here’s the deal. Everybody wants to tell us about their very smart idea.

Their, they’ve really thought this through, and why would they bother paying off a zero interest loan? Because it’s not, they’re not paying any interest. Why would they take any money and worry about that? Why does it take precedent? Like we have a lot of people when we. They come through coaching, we’ll really analyze their debt tracker sheet and talk about what is the best strategy based on their specific situation.

Because it literally is different for everyone. And a lot of them are like that one’s their interest, and they move on. It’s hold on, let’s talk about that. Now it may not make sense for them to do it right now at this moment. But we wanna talk about why it’s important and why you should really think about it.

Yeah. And I love that you brought that up, Vanessa, because a lot of times we’re looking at a bigger picture. There’s a lot of debts going on, and some of them might be zero interest and some of them might not. And so in that instance, perhaps it might make more sense to just focus on the ones that you’re paying interest actively on, but that doesn’t mean that we’re not gonna pay attention to the ones that have zero interest when we, if we have time, and this is especially true, I’ve had several clients lately that will come in and they’re like that one will be paid off by October.

Because they’re paying the amount that they have to pay in order to not have the interest accrue, but they’re just willing to pay that payment for the next six months. And that’s where a lot of these conversations come up too. Yeah. In their mind it’s that one’s already set. Yeah. So I can move on to something else.

When reality, there’s a lot of other factors that we want you to look at and think about before you decide if that’s the right decision for you. Okay, so there’s several. So let’s just jump in. First of all the first thing that comes to our mind, ’cause you know how our minds work. The first thing that we think is, even if you’re not paying interest.

You’re not making interest either. So we are going to teach you to save money, for the things that are unexpected, that are coming up all of your big dreams and goals, right? That money can actually be making you money, right? So if you’re, let’s say you’re paying $300 to a zero interest loan a month and you’re not paying any interest. So good job you did that, right? That’s better. But you also could be putting $300, that $300 into a savings account that’s making you three or 4%. Or more depending on where it went each month. And you’re making money instead of paying interest.

You’re making interest. And I think this idea really was a light bulb moment for one of my clients when she came on and she had $4,000 left on her car. Like she barely had an. Any left, but it was like an $800 payment. And I think the zero, the percent was 0% at that moment for to pay out of her car.

And she just totally blew past it and was like, Nope, not gonna do that. And I said, okay, but you have the money to go ahead and pay that car off. That’s $800 back in your budget each month. And then, like Shayna said, then that’s $800 you could be putting towards savings every month. Yeah. So I think that process of understanding how that works and how that’s literally money back in your pocket, then literally money that you can move into a high interest or you can be investing or whatever you wanna do with it.

Where you can be making so much money on this quote unquote 0% interest, that it’s technically, it’s harmless, in your eyes. Yeah. And okay, so that goes along with the other part. The other big reason we don’t want you to just sit on these 0% interest loans. So one, the opportunity cost is there because you could be making money in interest instead of just pay not paying interest.

But the other thing is your budget, first of all, your budget is way more complicated the more debt you have, right? It’s just there’s more going on. There’s more you have to worry about. But these zero interest loans, you’re usually, they’re actually, your payments are usually pretty high. High. Because you’re trying to get a big amount done in a short amount of time. And if you imagine that 300, 400, 800, like Vanessa said, that you could have back in your monthly budget. It that you could have it either to pay on other debt, you could have it to save for things. You could have it for spending vacation travel like it could be in your monthly budget.

You have that much more extra money and that much less money that your income is just getting eaten up at before it even has a chance to do anything fun. That money could be back in your budget. Your budget could be more simple, less complicated, less weighed down with that. Yeah, and the reality too is that you’re still.

The borrower is still slave to the lender. Yeah. So even though it’s a zero interest loan, even though in your eyes it’s harmless, it’s no big deal. Like it’ll get paid off in three or four months. But if you have the cash to pay it off. So you have that weight lifted off your shoulder and now you get to decide how you wanna spend that extra money. Yeah. If it’s gonna go on another debt, if it’s gonna go for a future vacation, if you’re gonna invest it. Like now you have, you get to make that decision, but before you don’t have that, you don’t have any freedom. Yeah. I think about. The idea of debt is like weighing you down.

And this is just one more string that you can cut off. It is holding you back. Even if it’s 0% interest holding you back, it’s still holding you back. And I think this is a weird analogy, but let’s just go with it because why not? You know how baby elephants. They would get tied up on a chain on a pole when they were babies, and they can’t pull it off because they’re not strong enough.

And then even by the time they become adults, they could pull it off. But they’re so trained, so used to being chained and not being able to do it, that they won’t, they don’t, they won’t break free. There’s that analogy out there. Here you are, you’re just so used to having debt. You’re just so used to not, to always having half of your paycheck go to debt or a quarter of your paycheck when you just don’t even know that you could just be free of that and have all of your money.

And the, like Vanessa said, it is a spiritual, it is a mental thing to owe money, even if it’s at zero interest. You owe somebody. Your money, your none of your money is not all yours ’cause you still owe and that’s not a good feeling. And we want you to get rid of it. We have a lot of people that come to us and it’s oh, I’ll just always have a car payment.

I’m like, why? But I really believe it’s been years in the making for you. This is, maybe it’s what your family has always done, so that way you think that you’re gonna be in the same boat. My father-in-law. Love him so much. He literally gets a car, a new car, probably every year, every two years, every three years.

And in his eyes, he will always have a car payment. That’s just what he does and when my husband and I got married, I was like, yeah, I don’t function that way. And so that was really. That was interesting, coming together with two completely different outlooks on finances and trying to find a middle ground on what that looked like for us.

But again, it’s that mindset shift of, oh, I’ll just always have this. No, you don’t have to. And what could that, what is this new budget, this new life for you? What could that look like? I have to I wanna add on that because we all, we, you all don’t know, but, my husband likes to buy a new car too.

Every, and that’s fine. And we still don’t have car payments. So there’s a, there, there is a lot of things going on. You can still pay off a brand new car. Vanessa did it. We did it. Like you can do it. It’s possible. And you don’t have to have a car payment. Yeah. And here’s another thing.

Let’s think about now just in case. Just in case. Just in case Shayna’s husband like to say just for fun, but I’m not I’m not really sure. Y’all yeah, we, yeah, we have to do the Just for fun, the husband’s hot take. Yes. Because we were planning this and he wanted to give us his. His part, his take.

And he wanted, I do think you have to say the, just for fun, you just have to tell him later that it’s not. Yeah. So we know it’s not. So we were planning this episode and he walked by and we were like, what is your take on this? And he said. Half people, just for fun, make a budget if they lost their job.

Oh. And I’m like, I don’t think people are thinking it’s just for fun. So hold on. Like the whole sentence just for fun. Make a budget. Okay. You lost like most people there. And then add, you say you add lost, like you lost your job. I’m like that. None of that is fun. None of that is exciting. So no, none know.

That seems like a good time. Yeah. If you were to lose a job or some situation happened, you got sick or something. You don’t want to have all of this in all of these loans hanging over. You don’t wanna have all these payments that you have due. So whether they’re 0% or not, our goal for you is to get them gone.

Yeah. Remove them from your budget. Pay them off as fast as possible so that way you have the flexibility to quit your job. Or if you lost your job, you’re not as stressed as you would’ve been. Yeah hi. So we were just talking on another podcast, like putting on paper, like seeing is believing sometimes.

Yeah. So what his mindset with that was, if I put it on pa, if I look on paper at my budget and I lost my income, how much less severe is that If I don’t have any debt? Yeah. How is that gonna affect everything? Even the 0%? ’cause 0% you still have to make payments. Like you still have to pay it at some point, right?

And it’s still going to weigh you down. But if you didn’t have that, losing your job or losing one income or something is much less. Scary. It’s still not something we wanna do for fun, Uhuh. No. And we’ve, but it’s, you can see the difference it would make if you have those or you don’t.

Yeah, absolutely. And we’ve actually had clients come to us say, I don’t wanna pay off debt in case something happens with my job. Because they wanna use the money in their savings to as income or whatever. And I’m like, yeah, but. Then you still have to make, like Shana said, you still have this $800, $300, $400 payment to make if you paid that option.

And don’t a paycheck. Yeah. You no longer have that if you have a paycheck. And so things are just easier. So just some things to think about. We do recommend, even though there’s zero inches we get where people start with this mindset of they try to math, do the math. Yeah. This weird math a mental math, but it doesn’t work.

Like it doesn’t add up. We suggest Yes, look at the numbers and try to pay it off.