Being in debt is extremely stressful and if you feel as if you are drowning under an insurmountable amount of it, it can be downright depressing. Credit Card debt is the most insidious. That piece of plastic in your pocket gives you the ability to spend beyond your means. Furthermore, the cost for using that ability, the use of their money, carries a very high rate of interest. The good news is there are things you can do to get a handle on it and improve your credit situation.
First, it is important to understand real life examples of credit issues. Let us say you used a credit card while you were in college to buy $1500 worth of assorted goodies. The card carries a 19 percent interest rate (not unusual for consumer credit cards) and you only made the minimum payment due each month – that’s probably going to be about $50 to $60 per month.
It will take you nearly 10 years to pay off that debt. Not only that, you will have paid more than half of the total original amount in interest – about $900. The original items you purchased for $1500 in reality will cost you nearly $2500! And that’s assuming you have a relatively high minimum monthly payment. If you are only paying $30 or $40, you will be in your mid-30s by the time the debt is paid off!
So what is the lesson here? It might seem surprising, but it is not to not use credit. Instead, it is to use credit wisely.
Also be sure you are smart with your card, because sometimes the problems people have with credit have nothing to do with their spending. Never lend your card to anyone, always be cautious about sharing your account number with anyone, and only carry one or two of the cards you know you might need in an emergency. Also be sure to report lost or stolen cards immediately.
If you would like more information on managing credit or you want to learn how to pay down your debt, give us a call!