Part 2/9:
Interest on debt compounds annually, meaning your debt grows faster the longer you delay repayment. For example, owing $100 at a 20% interest rate will turn into $120 after a year. The next year, interest is calculated on $120, leading to even higher charges—$24—resulting in a total owed of $144 for the same initial amount. This compounding effect can cause debt to grow faster than your ability to pay it off, especially if left unaddressed.
Actionable advice:
Prioritize clearing these high-interest loans before pursuing investments. Reducing debt not only saves money in interest payments but also improves your credit profile, making future borrowing cheaper and easier.