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You’re Broke…and You’re Making Everyone Else Rich

You’re better than average, right? I mean…you earn a decent income at your job, you’ve got a double-digit 401k, and you don’t have that much debt. Compared to everyone else, you figure you’re doing pretty good! In reality though, you could be doing so much better, and instead of becoming rich yourself, you’re making everyone else rich around you!

Don’t believe me?

Keep reading.

You’re Broke…and You’re Making Everyone Else Rich

Let’s think about it. What bills do you pay on each month?

  • Your car
  • The house
  • Credit cards
  • Your student loans

And…then you spend a little extra on yourself each month – random tools, a new purse, going out to eat.

This is a pretty common list. Almost everyone on this planet can look at these items and nod their head in agreement. But you know what? This simple list is making you broke, and you’re making everyone else rich with it.

Related: Who Owns Your Paycheck?

Here’s how I plan to prove it.

  • First, I’m going to figure out how much each company (the bank, the car dealership, Sallie Mae, etc.) is earning from you each year (mostly with your interest payments), and
  • Second, I’m going to calculate how much (in total) each company will earn from you over the course of your lifetime. I’m doing this by simply taking the yearly amount that they’re earning from you, and applying an 8% growth rate.

Be prepared for your stomach to be in knots…. Here we go.

1) Average Car Loan = $30,032 at 4.18% Interest

According to The Balance, the average person leaves a car dealership with a $30,000 car and an interest payment of 4.18%, which equates to a $556 payment over the course of 60 months.

When you bought the car, the dealership probably made $2,000 on the sale. Then, you made them even more money by paying interest to them on a loan — $3,328 over the course of 5 years.

In my experience, people that have a car payment typically have one for life. Every time they pay their car off, they just jump into a newer model and start the whole payment cycle over again. So let’s figure that you’ll have 10 cycles of car payments in your life (from age 25 to 75).

Amount the dealership earns from you each year: $1,065.60

Total amount they earn from you with interest: $660,322

2) Average Home Mortgage = $309,000 at 4.1% Interest

The Motley Fool did some digging and found that in 2017, the average U.S. citizen took out a $309,000 loan for their home. The average term and interest rate today is 30 years at 4.1%, which equates to a $1,493 payment each month. After 30 years of these payments, you will have paid $537,510 for your home, which means that you shelled out $228,510 in interest.

Amount the bank earns from you each year: $7,617

Total amount they earn from you with interest: $931,908

making everyone else rich3) Average Credit Card Debt = $5,700 at 16.15%

Business Insider recently ran a post, “Why 20 Million Credit-Card Carrying Americans Probably Aren’t Happy Right Now” and they’re specifically talking about all the people that carry balances on their credit cards for years. On average, people have a credit card balance of $5,700 with an interest rate of 16.15%. And on average, these people will have some sort of a balance for life – we’ll use 50 years in our example.

Amount Visa and MasterCard earn from you each year: $920.55

Total amount they earn from you with interest: $524,394

4) Average Student Loan Debt = 16,723 at 4.45%

Many financial blogs site the average student loan at $30k or more (I think I even have in the past), but this isn’t quite true. That’s the amount of debt per graduating borrower, not the average for each graduate. Even with all the doom and gloom around student loans and the supposed impossibility of getting through school without debt, 40% still manage to do so completely debt free…which leaves the true average student loan debt at $16,723. And, for these borrowers, most lock in their interest rate at 4.45%.

Over the course of 10 years, the student will have paid in $20,749, which means $4,026 went to interest – right into Sallie Mae’s pocket.

Amount Sallie Mae earns from you each year: $402.60

Total amount they earn from you with interest: $6,298

5) All the Other Random Stuff

Alright, admit it. You don’t keep a water-tight budget. At the end of each month, if you were asked where you spent each dollar, you’d probably have about $200 that went unaccounted for. This went toward random gifts to yourself, to lunches, donuts, coffee, and maybe even a $10 bag of popcorn from the Boy Scouts (I may have gotten suckered into this recently). It was spontaneous, and you totally forgot about it, but you know what? Those companies out there definitely don’t mind taking your money! Assuming the products you’re buying have a 50% mark-up, all the “little companies” are earning about $100 off of you each month.

Amount the random companies earn from you each year: $1,200

Total amount they earn from you with interest: $743,606

And the Grand Total Is…..!!!

By now, you’re probably reading this with just one eye open…because you know you’re making everyone else rich…you just aren’t sure you want to know how rich. But, whether you read this with one eye or two, they’re still the fact and this is the reality of your life.

  1. Car dealerships: $660,322
  2. The bank that holds your mortgage: $931,908
  3. Credit Card company: $524,394
  4. Sallie Mae with your student loans: $6,298
  5. The random local businesses you frequent: $743,606

Which adds up to…..


It’s Time to Stop Making Everyone Else Rich

Dang, all those companies are making bank off of you! $2.8 million???!! All from car loan interest, home loan interest, credit card interest, student loan interest, and miscellaneous spending. That’s it. Heck, for many of you the number above is probably a ton bigger (add on your furniture payments, medical bills, home renovation loans, etc.)! And that’s. just. crazy.

I’m hoping you caught on by now…but you know all that money that the banks, credit card companies, and car dealerships are making off of you?

What if they weren’t?

What if…

  • you had no car payment,
  • had no house payment,
  • had no credit card debt,
  • never had a student loan, and
  • don’t waste money spontaneously?

Then that money would no longer go to these outside agencies….

All that money – all 3 million bucks of it – would stay with you.

So how do you make that happen? The answer is easy:

  1. Get out of debt
  2. Live on less than you make
  3. Invest aggressively

Here’s how you can get started. Head over to one of my most popular articles: “How the Debt Snowball Really Works“. In it, you’ll find a FREE downloadable spreadsheet where you can lay out all of your debts and get an accurate answer of how quickly you could pay them all off.

Pay off your debts as quickly as possible, maintain a frugal lifestyle, and pay yourself the amount that you used to pay everyone else. It’s as simple as that.

Are you done making everyone else rich? Are you ready to start paying yourself instead??

Battle of the Mind Money


My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.


  1. Another great post. Keep up the good work, Derek.

    • Thanks Cooper! I was hoping this one would be an eye-opener to everyone that’s carrying along their payments!

  2. This is information I have always known but it was great in seeing it laid out in this format. Much easier to share and understand

    • Great! Glad you liked it!

  3. Yo! That credit card amount is disgusting. Omg… I’m sick just looking at that number. 😱 I try to tell my Mom the dangers of credit cards but she does not listen.

    • Yeah it is! They’re not getting my money anymore. That’s for sure!

  4. Simple and easy points to follow. Thanks for sharing, Derek.

    I came across your site via the Rockstar feed. I’m liking what I see – nice site!

    Thanks again for the post.

    • You’re welcome! It was a fun article to right.

      Glad you found the site, and thanks for the complements! Come back again soon. More good stuff to come for sure!

  5. The high interest rate ones like credit cards can be real killers, especially when you’re just plugging away at the minimum payment. Biggest change I made was deciding to put compound interest on my side instead of the side of the companies I buy stuff from.

    • Exactly. Get rid of the debt and invest the money instead. Beautiful!

  6. Great post. The less debt you have, the more you can save. As you wrote, getting the big expenses under control is the key to financial success. By eliminating or keeping car loans, housing, credit cards, and student loans low, you can save so much more money.

    • Yup! It’s crazy how much extra money you can have each month just by eliminating your debts. For many, this is $2,000+ a month! When you stop sending that out in payments, that can really add up quickly in your own bank account!!

  7. And this is why Silver Betty and I will be together forever. Paid off the car loan in two years and have been driving her ever since. Have you done the best use of capital analysis on the mortgage numbers?

    • Love it!

      I’m a no-debt guy through and through. My vote is always to pay down the house while investing modestly. Then, invest aggressively. I did this back in 2014 and never looked back. No regrets for sure.

  8. Quite irrelevant to the 11 million Americans for whom shelter consumes more than half their income.

    • Thanks Captain Bringdown… But perhaps this is relevant for the other $300M+ Americans…???

  9. Great article, Derek! I am aiming to knock my student loan and car loan out this year and that will free up more money to invest!

    • Great! Nice job slaying the debt. I bet it feels amazing!

  10. You hit gold!

    We live in a world that is full of monthly payments. We sign up for them left and right because we can “afford” the monthly payment, which means we couldn’t actually afford the item we wanted originally. Then after we have these monthly payments, we complain that we can’t invest any of our money because were broke.

    It is really quite simple, and you laid out the steps. Rid yourself of debt, become frugal, then invest AGGRESIVELY! Obtaining wealth is actually a really simple math equation, yet the majority just don’t have the discipline to stick with it.

    Great post!

    • Thanks Sean. It’s true. I paid off my consumer debt in 2013, then paid off my house by the end of 2014. Today, we own three houses free and clear and have over $100k invested in the stock market. It’s insane how quickly wealth can grow with just these simple principles!

  11. Wow! I knew buying what you can “afford” rather than what you need was a rather foolish practice. But I had no idea just how foolish it was. Thank you, Derek, for this very eye-opening post.

    • Turn out that it’s MILLIONS of dollars foolish! Crazy, huh?

  12. Oh may this is eye opening. 30K is the *average* car loan… so that mean some (many) folks have *larger* loans. Wheeww that is not good.

    • Yeah – people sure love their cars. Unfortunately, they’re costing them years and years of retirement. Nobody thinks like that though…

  13. Nice post, Derek. Sounds so obvious when you put dollars behind it.

    • Thanks! Yeah, even I was shocked by the numbers!!

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