Credit card debt is that sneaky jerk who pretends to be your friend.
That credit card can seem like such a friendly little guy. He’s there for you when your friends invite you on that weekend trip but you don’t have the money to go. And, hey, all you have to do is make that $20 minimum payment each month and all is good, right? Not so fast.
That little plastic poser is not as helpful as he’d like you to think. It’s time we exposed just how devious he can be.
The real story
Let’s say you have $6,081 in credit card debt - which is the average for households that carry credit card debt from month to month. And let’s say your credit card has a 14.99% interest rate (which is pretty standard).
Now, by making that minimum payment each month, how long do you think it would take you to pay off your credit card debt?
Ready for a shocker? The answer is over 14 years. Your credit card debt could outlive your cocker spaniel. That’s almost a decade and a half of that little plastic jerk holding out his hand each month, demanding another minimum payment.
Oh, and by the way, when you finally do make that last payment 14 years down the line, you will have paid that little plastic pilferer over $4,000 just in interest charges.
That doesn’t sound like much of a friend.
Think of what you could do
If you didn’t have all that debt hanging around, imagine what you could do.
“In the NerdWallet survey, many Americans who have been in credit card debt said that if they didn’t have credit card debt to pay off, they would save that money for emergencies (57%), save it for a future goal (50%) and/or put the money toward paying down other debt (33%).”
Think about how good it would feel to have a buffer against anything life throws at you. Or, being able to grow your kid’s college savings fund. Getting credit card debt out of the way clears the path for some pretty great things to happen.
How to start
First of all, recognize that your little plastic friend can be a real jerk. Then consider these two ideas:
- Find a quicker way to pay down that debt that works for you. For example, if you’re looking for the most efficient way, you might like the Avalanche Method. If you’re the kind of person that likes to get a quick win and build momentum, the Snowball Method might be right for you.
- Plan ahead. If you can identify expenses that are coming up, you can set saving goals. Then you can look for creative ways you can save money. Here are 12 ideas to get you started.
With the right know-how, you can save yourself a bunch of money – and frustration. And start working on the life you want. A great place to start is a little place we call Wellbeingville. We’ll see you there!