Why 6% Interest Is Really 50% Interest

Uncle Pennybags
Uncle Pennybags

I recently graduated with $175,000 USD of debt. I have a lot to say about college debt, how to avoid it, and how to pay it off, but for this post I want to keep it simple.

Let’s say you have a hundred thousand dollars in debt at 6% APR. How much interest will you pay?

The banks want you to believe that it is a tiny 6%; just 6 cents on the dollar. Well that is one way to look at it. Let’s do some math.

$100,000.00 of debt, multiplied by 6% APR….  $100,000 x 0.06 = $6000. So do you pay $6000 interest? Yes and No.

APR means Annual Percentage Rate. Annual being the keyword here. They charge you interest again and again every year. Did you ever think of it this way?

$6000 of interest divided over 12 monthly payments is $500 per month. Your monthly payment will be about $1000 on average, but interest gets paid first. So you pay the bank $1000 and $500 goes to interest and $500 goes to principle.

Did you see that? $500 of your $1000 goes to interest. That’s half! 50% of your money just went to the bank for profit.

There is another way to look at it as well. As you eventually pay more principal balance down then the percent of interest will decrease. Still, if you pay that $1000 every month you will end up giving the bank $135,000 on your $100,000 loan. That is 35% interest.

The bank isn’t bad for selling their product in the most favorable terms, every business does that. But you should know, you will be paying more than the 6%. It is probably most fair to say that a “6% loan” is really a 35% loan.

Why I Bought My Own Cable Modem

Better Service For Less Money. That’s Why.

The only communications company that I hate worse than AT&T is Comcast. Seriously, If you want to be gouged on prices and have the worst quality, most fragmented customer service ever then run to AT&T and sign up. You’ll hate it!

Comcast is evil. Enough said. …what you want more? Okay here.

By the way, you can’t be for net neutrality and still give money every month to Comcast or Verizon, etc. You’d be a hypocrite. You do like Net Neutrality, don’t you? Don’t pay these companies any of your money!

Both of these companies are offered in my area and I have tried them both, and so it is no wonder I have Wide Open West (WOW). WOW hasn’t done anything to make me angry yet but to be honest, their service isn’t the best. Loot at this recent  graph I got from my cable modem through WOW.

56k land
56k land

The real line on that graph where the speed should be is about a meter above your screen. This graph is one minute of downloading a PDF. I was getting 56k dial-up speeds through WOW when I should have been getting 15,000k. This is unacceptable. I checked WOWs backbone and it is fast, this shouldn’t be an issue.

I used to be a lineman for the cable companies so I investigated. The connection at the tap (the telephone pole), the ground (my house), and the jack were all in very good shape and only 1 year old.

My computer is hand built by me. It has a 6 core i7 with high quality SSD, 16gb of DDR3 RAM… it is a beast, it is definitely not my computer slowing things down. All of our other devices slow down too.

Maybe it’s the router. Well we have a high-quality “N” router, it is very fast. Even if we bypass the router and go straight into the machine from the modem it is still sluggish.

Well, that leaves the modem… and the modem is a flaming piece of trash. It is a Scientific Atlanta DPC2100R2. It is DOCSIS 1.1 which means it is a dinosaur. That’s 1999 technology. The current standard is DOCSIS 3.0 and if you want any future proofing you really want DOCSIS 3.0 because it supports IPv6. Anything older might leave you in the dark one day.

Flaming turd
The Amazing Flaming Turd! Able to slow the fastest internets!

I called WOW and they were very friendly and not very helpful as usual. I mean they wanted to help, I only had to speak to one person who took care of everything, she troubleshooted with me, took my word when I told her what I’ve done to test on my end.  She offered to get somebody out right away and promised a two hour service window (all better than the competition).  Unfortunately, I had to work too much the coming week and I couldn’t be there for them to come.

I asked her if I upped my service from 15mpbs to 30mbps or 50mbps would I need a new modem. She said that I would, because those speeds aren’t achievable on my old flaming turd of a modem. She went on to suggest that I could even buy my own modem and save the monthly lease fee.

Sidenote||| AT&T is usually 45 minutes of getting transferred around to 8 different people, telling your story over again, and getting no help in the end. Comcast is a sales call to them no matter what you called for. They will only help you buy something.

 I started to look into that as an option. As it turns out I have been wrong. I thought buying your own modem was a bad idea because 1) You are now locked into that company for life and 2) it will take forever to recoup your investment. Not true at all. I bought this modem based on good reviews.

I pay WOW $7 per month for modem lease. At a $70 investment for the modem it will have paid for itself in 10 months. I would already be saving money by now if I would have done so in the beginning.

Also, it turns out that this modem is transferable to other cable companies as well. So you’re not “stuck”

As far as speed improvements go….


old modem
On old modem



new modem
The new modem

Remember that 56k graph. Look at it now….

fast internet is fast
9 tabs streaming 1080p

I was already streaming music and had 7 other tabs open. I opened one video streaming at 1080p, then at that very first “V” I opened a second, and then a third at the next “V”. Then it caught up and dipped again, so I opened up 7 tabs all streaming 1080p video, it still dipped so I opened 2 more… needless to say the issue is resolved. Happy internets everyone!

Now just waiting for REALLY fast internet! Come on Google or Lightspeed!


Update: I decided to splurge with the savings and spend $5 of the $7 I am saving each month on a bump in service. Look at this….