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New Year, New (Financial) Goals

First and foremost, Happy New Year to our members and communities! Thank you for your amazing support in 2021. NorthRidge continues to grow and prosper. We are so excited for what’s coming in 2022 that helps us to serve you even better. Mobile wallets have been activated on your NorthRidge cards, our new building in Hibbing is opening this summer, and many more things are coming later this year!

A new year brings new opportunities and new goals. Have you spent some time thinking about financial goalsetting? If not, let’s do it now. It can be difficult to set goals if you aren’t sure where to start. Let’s talk about two things that can make a huge difference in your money goalsetting: compound interest and debt consolidation.

Compound Interest

Compound interest is a topic that can be confusing, so let’s do a quick refresher. The simplest definition is that compound interest is interest that is earned on interest. For easy math and demonstration, say you have $100 that earns 5% interest per year. At the end of the first year, you’ll have $105. At the end of the second year, you’ll have $110.25 – This is because you earned interest on the $100, but you also earned $0.25 on the $5 of earned interest from the previous year. While $0.25 seems small, it adds up fast. And remember, this is earned without even having to add any additional money to your initial investment. Imagine how fast it builds when you’re adding money every month. 

Graphic of compounding interest

A simple equation to determine approximately when your initial investment will double in value (without adding any more to it) is the Rule of 72. The Rule of 72 is 72 divided by your interest rate. Using the numbers from the above example, 72 divided by 5 is 14.4. That means every 14(ish) years, your investment would double in value without ever adding anymore money. Imagine if you saved $50 per month, $600 per year, at 5% interest. After 10 years, you’d have over $7,600 from saving $50 per month ($1,600 more than if you were not earning any interest). Use this calculator from to help you set some savings goals!

Debt Consolidation

Debt consolidation is exactly what it sounds like: consolidating your debt (from credit cards, higher interest loans, etc.) into just one payment. We talked about compound interest… debt also has compounding interest, but it works the exact opposite by creating more debt. Most credit card companies compound interest daily, so at the end of the month you’ve got a pile of interest to pay in addition to your principal.

Debt consolidation

By consolidating your high interest debt with a lower interest loan, you will save money on interest and pay down your debt faster. Here’s a situation when debt consolidation would make sense: Let’s say you have 3 credit cards with various interest rates that range from 18.99% to 24.99%. You always make your payments on time, but you’re only able to afford the minimum payment on all 3 cards (and it takes a looong time to payoff credit cards when only making the minimum payment). With a debt consolidation loan, your interest rate could be cut in half or better, and your monthly payment would likely be less than the combined 3 payments you make on your credit cards. This saves you money every month and gives you a sooner payoff date. Now… take that money you save every month and throw it into an savings or investment account with compounding interest, and you’re making some great money moves!

NorthRidge has many options for debt consolidation loans, we have helped many of our members save money and get out of debt faster. Give us a call to find out how we can help you!