Looking @ my 3/5/08 statement, my previous balance was $9,323.79, w/a minimum due of $262.83. I paid 262.93 and made a mental note my next bill would be around $9,060.86.

It was actually $9,205.81.

Curious as to why I was so off base, I looked @ the bottom of the statement. In the purchases box (mind you I don't use the card) I saw a "purchase" charge for $145.00. It was labeled finance charges. I felt sick. For that amount of loot, I could've walked into Target and gotten myself $145 worth of stuff.

Taking a deep breath, I did some googling. That was the day I learned about compound interest.

I opened up my 4/5/08 statement. Previous Balance, $9205.81. Paid $265. Finance Charges $153.03.

It felt like for every two steps forward ($265 payment) , I was talking a step back ($265 -$153 finance = $112 actually paid).

Now I can't get too upset w/myself. The way I structured my debt pay off, to go from smallest to largest was for a valid reason. I need the mental hooray that comes w/each debt I knock out.

I know myself, had I attempted to pay this card off first, I'd still be paying it down, granted there'd be a considerably smaller balance maybe in the 3k range, but I'd also have 8 other mini debts nipping @ my heels. Visually, I like focusing on 4 debts, so while I an gripe, I am realistic and used my energy to figure out this money maker worked for Target and it goes a little something like this:

Average daily balance x daily interest = monthly finance charge

Got it?

How do they figure daily interest you say? Easy. see that annual % rate, mine is a tasty 19.99%, you take that and divide the # of days in the year, this case 365.

That gives me 0.054767123287671232876712328767123%, let's say 0.05476% for short, as my daily interest.

Now take the average daily balance, in my case $9,014.65 and multiply it by 0.05476% (be sure to hit the % key) it'll give ya 4.93642234, lets just say 4.94. Which really means $4.94 in daily interest. Finally, we multiply that by the days in the billing cycle, 31 and voila, $153.14 in interest. Just wow.

Learning that tidbit, has made me extra focused on paying off this debt and made me check out the interest on what I have left. Granted my student loan debt is simple interest and it makes more sense to pay the least amount of money possible, I am just @ the point where I'll just consider it a lesson learned and continue paying my debt smallest to largest.

It irks me that in a years time I'll have forked over $1800+ in just finance charges, but @ this point, it's a silly debate to have w/myself.

This was much longer than I intended, so here's another promise ;), I'll pick up the other 4 topics in a few days.