According to Alan Barnes, of Debt Regret Inc., almost all Americans carry credit card debt! Below, he outlines what that debt really costs you if you don’t get out of debt quickly.
Did you know that over 40% of US families spend more than they earn? If you’re like most of us, you try not to think about how much money you owe and what that debt is really costing you. If you did, you might not sleep too well. With that being said, it is critical you get out of debt if you know what’s good for you. By not fully understanding your current financial situation you are only prolonging a growing problem. In order to get out of debt, you need to face the uncomfortable and often painful fact: it is very possible that your credit card debts may take you 30 years to pay off.
That can’t be possible you say! I only owe $6,000. I should be able to get out ouf debt in a couple of years. My credit card company would not do something so unethical to me, would they?
As a matter a fact, they would. If you took 30 years to repay your debts, you are an ideal credit card customer. If is the people that never get out of debt that are the most profitable to credit card companies! It’s important to realize that the credit card companies only allow you to make minimum payments, because it benefits them! This is not a good thing for the credit card holder. They do not do this out of generosity; this is how they make money.
By paying only the minimum monthly payment each month, you are virtually guaranteeing that you will be a customer for life and that you will never get out of debt. If you are genuinely concerned about your financial wellbeing, you should be adamant about paying more than only the minimum balance on your credit cards each month. You must realize that if you can’t afford to pay more than the minimum balance on your card each month, you can’t afford whatever it is that you are buying.
When making a credit card payment, your funds are separated into two parts; interest and principal. Traditionally, when you only make minimum payments, most of it goes towards interest that is paid to the credit card company, which is why you never seem to be able to get out of debt. Would you pay 20,000 for an item that is priced at $10,000? If you purchase that item on a credit card that is exactly what you’re doing. If your credit card has an 23% interest rate and you only pay the minimum payment each month you will never get out of debt!
