How My Obnoxious Daily Interest Rate Motivated My Debt Repayment

Need a kick in the pants with your money? Figure out the daily interest rate on your debt. Your daily interest rate is the amount of interest your debt accumulates each day. When I finally sat down to look at my finances, I found that my daily interest rate was more than what I earned working two hours a day at work.

My Daily Interest Rate

My daily interest rate number was over $50. $50 a day is more than I pay in rent each month. It amounts to $18, 250 a year, which is more than I borrowed for my car loan. And it is just the interest! Paying that money doesn’t even touch the principle of my debt.

To say that I was utterly disgusted by the realization would be an understatement. I’ve since lowered my daily interest rate. I’ve still got a long way to go. It continues to be a kick in the pants to get myself out of a debt repayment rut.

How to Calculate Your Daily Interest Rate

In order to calculate your daily interest rate, you are going to need to know how much you currently owe on the loan and the current interest rate. [(loan balance) x (interest rate ex. 7.6% = 0.076)] / 365

So for example, my car loan of $5844 and its interest rate of 4.5% has a daily interest rate of $0.72 (5844 x .045)/ 365 = $0.72

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How Your Daily Interest Rate Changes Over Time

While my daily interest for my car loan is $0.72 now it used to be more, because my balance used to be more. As your balance changes so does your daily interest rate. Calculating your daily interest rate on a quarterly basis and seeing how it changes is a great way to track your progress. It also continues to be a great motivator.

Looking back at how far I’ve come since I first calculated my daily interest rate keeps me motivated. Every time I calculate it is a kick in the butt. But it’s still more in a OMG I can’t believe I’m losing this much money to interest kind of way. Whereas when I look at how much it’s changed, it motivates me in a holy crap I’ve come so far and am saving so much more of money than I used to kind of way.

For example, when I started to focus on my credit card debt, it alone accounted for $3-4 of interest each day. Which is well over $1k per year.

Pay Down Your Debt Faster by Making Extra Payments

The more you put towards your debt each month, the less interest you’ll pay. Not only do I split my monthly payment to save on interest, I also make an extra payment. One way I’m making extra debt payments is with Qoins. Qoins will help you pay down debt faster by applying an extra payment for you using your spare change. Qoins rounds up what you spend to the nearest dollar and sets aside that amount to be applied towards your debt once a month.

Though if you want to look at a free service to help you build up an extra payment, Qapital is a great free option. Qapital lets you set rules, like put a dollar aside everytime you hit your step goal, or set aside $5 every time you splurge on iTunes.

You can set up rules for whatever goal you have. So, in this case, it would be a debt repayment goal. You could set a goal to put an extra $30 a month towards your debt. Set up the rules, and Qapital will start saving for you. The only downside is that you have to manually make that extra payment towards your debt. It’s the price you pay for not paying for Qapital.

Wrapping it Up with a Bow on Top

If you are struggling to get motivated with your debt repayment or are just in a debt repayment rut, taking the time to calculate your daily interest rate can be a great way to get moving. It can also be a great way to track your progress when you feel like you aren’t getting anywhere. Lastly, don’t discount the difference making an extra payment each month can make to speed up your debt repayment.

Money tools & resources i recommend

Chime (for saving) works by starting a spending account (takes 5 minutes) and opting into the automatic savings plan. (Learn more about getting started with Chime).  Every time I use the Chime Debit Card it rounds up my purchase to the nearest dollar and puts in in savings. Right now they also offer a double round-up bonus on those savings. All those withdrawals add up over time. Chime is free to use, with no monthly fees. With Chime, you end up saving money without having to think about it.

Qapital (for building savings & reaching money goals) Qapital can help you reach savings goals. Once you have the Qapital App installed and a bank account (or in my case three) connected you set up a goal or goals.  Then you set savings rules for each of your goals. For example, I have a round up to the nearest $2 rule, a guilty spending rule -when I buy Dominos. Qapital is free to useBonus, when you use my link you'll get $5 after your first savings.

Qoins (for debt repayment) When you sign up for Qoins, you connect your bank account and then spend as you normally would. Qoins will round up your purchases to the nearest dollar and put that change towards an extra debt payment. Learn more on How Qoins Can Help You Pay Off Debt Faster

SoFi (for refinancing) If you have private loans or your debt to income ratio allows, consider refinancing with a company like SoFi. Learn more about what it's like to refinance with Sofi. Refinancing my bar loan with SoFi ended up saving me over $1,000. Use my link to refinance your student loan and you'll get a $100 bonus.


Liz is a blogger and podcaster helping people with personal finance and working for themselves. She shares her own journey to debt freedom and helps graduates dealing with above average student loan debt on her site, Less Debt More Wine. She currently resides in NC after calling Massachusetts home for nearly a decade.


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