The simple $10 debt elimination
solution
Ask a friend what resolutions they
made for 2004 and your bound to hear them reply “Pay off my credit
cards.” Ask them how they planned on reaching that goal and many of
them will not have a clear cut answer.
The obvious first step to paying off
credit card debt or paying down credit debt load is to cut back or
eliminate the use of your credit cards. For some people this first
step can often be the most difficult. If you’re used to spending
freely with plastic and worrying about the consequences later, it’s
difficult to break free from this “buy now, pay later” attitude.
To gain control of their careless
credit card spending habits, some people cut up their credit cards
therefore making it impossible to use them. Others lock up their
credit cards or hide them in a safe place and vow to use them only in
an emergency.
The second step to paying down credit
debt is to pay more than the minimum balance due. Most credit card
companies require a minimum monthly payment of 2.5% of the outstanding
balance. For example, if you have an outstanding balance of $1100.00
on a credit card charging an Annual Percentage Rate (APR) of 18.9%
your minimum monthly payment would be $27.50. It will take you 66
months or 5.5 years to pay off your balance of $1100.00 making the
minimum payments. The credit card company will make $676.94 in
interest from your use of their credit card.
Monthly payments are purposely kept
low by the credit card companies so that they can earn as much as
possible from the interest rate charged to you the consumer. Paying
just the minimum payment will keep you tangled in credit’s web for
years and years to come.
If you’ve been paying only the
minimum due month after month, ask yourself this question, “Do I
have an extra $10.00 I could apply to this month’s payment?” I’m
sure that most of us could find some way to come up with an extra
$10.00 for the month. Try cutting out a few cups of coffee or lunches
at your nearby fast food outlets and in no time flat you’ll have
saved up the extra money that you need.
Now, it’s time to unveil “The
Simple $10.00 Debt Elimination Solution.” Take that extra $10.00 and
add it to the minimum monthly payment above, therefore making a
payment of $37.50. By adding just that $10.00 a month to your minimum
payment, you’ll trim 23 months or nearly two years off of that
credit debt! On top of that you’ll save $277.00 in interest alone!
That’s money you can put toward savings or paying off other debts.
Imagine how much you’d be able to save if you applied this same
simple strategy to each of your other credit card debts!
Paying down credit debt doesn’t
always mean having to make huge monthly payments or sacrifices. It
just takes some basic planning and a simple effective strategy to make
it work.
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