The profits and cost of money

Interest rates are the cost of money. When you save or invest money in an account that earns interest or a return, you are charging someone else to use your money just as a lender charges you interest on a loan. Chapter 4, Borrowing Basics, will provide a more detailed explanation of compounding interest, which is the reason that it can be so advantageous to invest your money in an interest-earning account, as well as so dangerous to take a loan with a high interest rate.

Savings and investments
For those things on your asset list that earn interest (savings and investment products), you should know what type of return you are getting on your money. List all your accounts and the interest rate you get for each using the Savings and Investment worksheet. You may need to look at your most recent statement or call your bank to get current rates, if you don't know them.

Paying a lender
Another way to look at loans or debts is by how much it costs you to use each person's money. In the world of loans, there's cheap money and there's expensive money. You want to try and use cheap money whenever possible of course! Copy your list of loans on a new sheet of paper, this time ordering them from highest to lowest interest rate.

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