Financial Management Flipbook_2022

$28,000 Average cost of a wedding (in 2021) $12,350 to $13,900 Average annual child-rearing expenses for a middle-income family (per child) Life’s Expensive Milestones How Debt Can Stand in the Way of Progress Here’s a hypothetical example that demonstrates the true cost of carrying a large amount of credit-card debt. For someone with $25,000 of credit-card debt (15% interest rate) who consistently makes $400monthly payments, it would take 10 years to pay off the balance — and add up to $23,938 of interest. On the other hand, if the same $400 was invested monthly in an account earning a hypothetical 7% rate of return, the account could grow to $69,232 over the same 10 years. The difference between these two results— the investment opportunity lost to credit-card debt — is a surprising $93,170. When you think about it that way, it might make more sense to pay off high-interest credit-card debt before youmake any other investment. This hypothetical example is used for illustrative purposes only and does not represent any specific investment or credit card. It assumes a 7% annual return on the investment and a 15% annual interest rate on the credit cards. It also assumes a 10-year repayment schedule for the credit-card debt with no new charges added. Actual results will vary. Investments with the potential for higher rates of return also carry a greater degree of risk of loss.