Imagine it’s Friday night, and you’re going to see the latest James Bond movie. Sodas. Hot buttered popcorn. Junior Mints. The bill comes to $75.
Now image yourself paying for that same movie and snacks over and over and over – except you never went back to the theatre again!
Paying for the same thing again and again is what’s happening when you only pay the minimum balance on your credit cards.
You’ll be surprised you’ll end up paying 2 to 3 times what your original purchase cost.
Isn’t that outrageous? Do you want to know how you can fix it?
How much will that broken transmission really cost you?
Robert and Sally are your typical American couple with no savings and lots of debt. John’s transmission went out on his car, and he decided to get it repaired at the Sears auto center. His bill was $1,700.00. Since John doesn’t have any emergency savings fund, he has to charge it to his Sears card to pay the bill.
If John and Sally only pay the minimum amount of money on their Sears card each month, it’s going to take them seven years and nine months to pay off the bill! (Assuming the minimum is calculated by the credit card company to be 4% of the outstanding balance.)
And that’s assuming they don’t charge anything else to the card. What’s going to happen when the washing machine breaks?
But wait – there’s more
The total amount they will have to repay including all the interest is $2,666 or $934 in interest.
How much will that minimum payment cost you?
I was in shock after paying the minimum amount due on my first student loan and finding out later that only $98 out of $100 went to paying interest.
That’s when I got mad and started throwing as much money as I could spare to get rid of that debt.
Paying just the minimum balances on your credit card bills will barely cover the interest you do owe, and never put a big dent in the principle.
Want to see how much that minimum payment is going to cost you? Use this online calculator to find out.
Do interest payments make you mad too?
If you realize you’re throwing away money on minimum payments, please try out this get out of debt plan. When you do get out of debt, you won’t be paying for a movie over and over that you’ve only seen once.