Finincial Decision A

I have made a rather big financial decision in the last few days.

Mainly, I have decided to stop focusing on my credit cards long enough to build up the money to pay back the last of the loan I took out from my 401(k) a few years ago. This will actually take me until the first pay period in October, and basically entails me making the basic (or close to basic) monthly payments, instead of much higher payments that I had already planned to do.

This is a good thing, I feel.

The bad news is, at the end of that month, I plan on taking out another 401(k) loan, which I would rather not do, but I will be using what I get from that to pay off a loan with a much higher interest rate. Paying 6.25% in interest is much better than paying ~27% in interest for the same amount. And yes, the loan I am going to be paying off with this does indeed fall into the, "what was she thinking?" camp of questioning. (The answer being that I thought it was a good idea at the time.)

I am actually beginning to feel there should definitely be a cap on how much interest a bank can charge people.

Do you know, I did the math, and if you take out a mortgage on a house for $100,000, with a horrendous interest rate of 10%, over 30 years you'd be paying the bank a total of $297,000? In essence, you're paying the bank double the amount of what your house is worth, just to borrow the money from them. Granted, the incredibly low interest rates we have going on right now are very nice, but with a 5% interest rate, you're still essentially paying the bank twice the amount you took out.

This is actually making me dread buying a house, but I still want my own place, eventually (read as, not my parents').