4 Easy Credit-Debt Solutions
How was your weekend?
Did you go out to a nice restaurant or have a few drinks with your friends?
Maybe you hit the shopping mall to beat the heat?
I hope you enjoyed your night out on the town or your day of shopping. But if you paid for your weekend of fun with a credit card, this could cost you a small fortune.
That is, if you don’t, or can’t, pay off the debt before your next bill arrives.
Americans Are Drowning in Credit Card Debt
If this sounds like you, don’t feel too bad. You have lots of company — tens of millions of Americans, in fact, habitually take on credit card debt.
Collectively, Americans owe an unbelievable $1 trillion on their credit cards, with an average unpaid balance of $5,331, according to CreditDonkey.
That’s on average. And the numbers are deceptively skewed by millions of Americans that have credit cards but pay off their balances each month, like I do.
The problem with credit card debt is it is the most costly type of debt to carry.
The average interest rate charge on credit cards today has risen to 16.91%, the highest since 1994.
This all at a time when savings rates are still hovering near all-time lows.
The average American with $5,331 of debt is paying $900 a year just in interest without paying a dime on the principal.
Paying the minimum is tempting, especially if you’re tight on money, but the less you pay now the more you’ll pay later.
According to NerdWallet, Here’s how long it would take to pay off $6,081 of credit card debt:
- Making the minimum payment: 169 months (about 14 years)
- Double minimum payment: 65 months (about 5.5 years)
- Minimum payment plus $100: 41 months (about 3.5 years).
You could be paying off that fabulous sushi dinner for the next 14 years!
We’ve all been in this situation before, even I. But over the years I’ve learned that you can get out of this type of situation pretty simply.
Never, EVER Say, “Charge It!”
The road map to getting financially ahead in life is as follows:
- Earn more
- Spend less
- Save more
- Invest right.
It’s not always as simple as it sounds, but I’m absolutely convinced that the root causes of most people’s financial woes are spending problems, NOT earnings problems.
Of the four steps I mentioned above, the one that you have the most control over is your spending.
So I will lend you the same advice I lend my own two daughters…
Quit going to Starbucks and brew your own coffee at home. Stop paying $15 for lunch and brown bag it a few times each week.
Also cut back on your weekend dining and drinking, and don’t treat shopping as a recreational sport.
And most importantly… Never, EVER say, “Charge it!”
If you follow these simple rules, you’ll be amazed at how quickly you could pay off your credit card debt and grow your savings.
Here’s to growing your wealth,
Chief Income Expert, Mike Burnick’s Wealth Watch