I think a lot of the people’s consumer debt stems from charging a large ticket item into “manageable” monthly minimum payments. However, the problem that often arises is that a person only pays back the minimum.
If we take a credit card bill of $5,000 with an interest rate of 15% and the minimum payments at 4.5% (each card decides how it’s minimum payments are calculated) then it will take you 109 months that is ONE HUNDRED and NINE months to get rid of that debt. If we double that payment we will cut that time down to 13 months. On top of that, by doubling the monthly payment you will save over $1,400 in interest paid to your favorite credit card company.
If you would like to calculate how long it will take you to pay off your current credit card at your minimum payment rate, DinkyTown has a great credit card payoff calculator.
I know there is nothing earth shattering in this post, but these numbers should inspire you to create a debt repayment plan and get moving!
NYC Personal Finance Blogger Meet-Up
On a side Note, I had the opportunity to meet some great people this weekend. Flexo over at Consumerism Commentary had set up a dinner in SOHO (Lower Manhattan for those of you not in the area), and I was honored to get the invite (well, it wasn’t so much of an invite as it was not lying to me about the restaurant they were going to lol). The dinner was sponsored by Intuit (that great company which brought you Quicken and Turbo Tax). Beyond Flexo, the participants included
- Kelly from The Centsible Life,
- Darwin from Darwin’s Finance,
- Jon from Betterment,
- Mapgirl’s Fiscal Challenge,
- Pinyo from Moolanomy
- Shawanda from You Have More Than You Think,
- Christian from Money Obedience,
- Chelsea Marti, Ashley Kirkendall, and Emily Johnston from Intuit TurboTax, and last but certainly not least
- Mary Pilon from The Wall Street Journal.
I didn’t get to talk or introduce myself to Mary Pilon before she left, but everyone else seemed extremely nice. If you haven’t checked out their sites in the past you should 100% get on top of that right now. It was an amazing experience to sit down and talk to some of the people that more or less created the personal finance blog niche!
One day, I too will sit at that lunch table. I can’t wait for my invitation. I know that it was lost in the mail somewhere right? Right?!!
Sandy,
Hope to see you there! Where in NY are you?
How cool is that?! SWEET!
Guess it’s tough for me to show my face, just in case the paparazzi start flashing ya know what I’m saying? Women love taking pics, and I’m not saying of me, just in general!
Sam
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What we should do about this I guess is that once we made our purchase in our credit card is to pay them immediately as soon as we received our paycheck so they will not charge us an additional interest if we only pay for the minimum amount due.
[...] the minimum balance each month. Making only the credit card minimum payment means you're sometimes paying twice or even three times as much for your purchases over a longer period of [...]