But even when you go into debt for good reasons, it weighs you down. Limits you. Makes your life just that much harder.
Credit card debt is quite simply a strain on the finances.
I've been working for a few years myself trying to get out of credit card debt. I had been solidly on my way when we were slammed by some medical bills that wiped out all my progress and then some. It has taken a year to recover from that and get to where I feel as though I'm making progress again.
In the meantime, we've had to live more frugally than ever. Keeping up with all the bills becomes a struggle. The added debt was in a good cause, but dealing with it has been a strain.
What to do, what to do?
First thing to do is to live frugally as you try to get rid of the debt. Figure out what you can cut from your lifestyle to save money. There are many different ways to do this, such as eating out less, sticking to a paid-off car rather than replacing it, even cutting back on retirement savings.
With this extra money you need to work hard on paying off that debt. Do not pay the minimum. Even a tiny bit over that will be a help in the long run. The more you can pay, the sooner the debt will be gone.
Cutting back isn't enough?
It may be time for a second job or taking a chance on a home business. You decide. But in any case, bringing in some more money is a great way to pay down your debt faster. It's a big sacrifice, especially if your current job already takes up much of your time and leaves you feeling tired, but sometimes that is what it takes.
The home business option is not for those who need money immediately. There's risk involved. You probably won't earn significant amounts quickly. But it can also be a lot more fun.
Debt is a terrible thing in so many ways. It stresses relationships. It limits what you can do financially, even beyond what your current earning levels may do. It takes away money that you could use much more effectively. Once it becomes possible to rid yourself of debt, it is a very good idea to do so.
The average time it takes to pay off these credit card balances today by making the minimum monthly payment is: never!
29.99% compounded daily!
Unbelievably, there are many credit card companies that charge 29.99% and even more on their customers' balances and, if that's not bad enough, they compound the interest daily. With a 29.99% card you pay about 2.5% interest per month on your balance.
So, if you owe $2,000 on a card that is charging this excessive and unseemly rate, you would be paying $50 the first month just in interest! I say the first month because if you don't make your payment on time or if the minimum monthly payment due is less than $50, your total amount owed will increase the next month.
Many credit card companies will set your minimum monthly payment at less, or about the same as the 2.5% interest you will be paying each month. If they do this, and you continue to pay the minimum, you can see how you will never pay off the total balance or even pay it down at all!
However, if you would pay $70.00 a month, instead of $50 on this $2,000 total, you will be paid in full in a little more than 4 years. Do you think these credit card companies want you to pay your balance in full? You can bet they don't!
High interest credit card companies hold you hostage!
Why would a credit card company want you to pay your balance in full when they are charging an interest rate 5 times the prime rate?
Is all of this making you sick? It should be, but if you have a particularly strong stomach, read some of the other wonderful things these great credit card companies do.
1-If you are late, they hit you with a late charge, which is usually $35.00! Even if you're total balance is $10.00! In this case they would be realizing a return of 4000% on a yearly basis.
2-If you pay over the phone, they charge you $10 to $15 for about 2 minutes work.
3-Many of these scoundrels have a minimum finance charge. So, if you have a balance of only a few dollars, they will charge you a $10 fee anyway!
4-If you're late with a payment, even though they love it because they get to rob you out of another $35.00, they'll report you late to the credit bureaus so eventually they can ruin your credit rating altogether! Nice guys!
Why would a credit card company want to give me bad credit?
I am 100% convinced it is impossible for anyone to get ahead financially while having high interest credit card balances. These credit cards have destroyed the credit of millions and the companies are happier than pigs in mud that they do.
As long as they can keep your credit rating low, you will not qualify for good loans with reasonable terms. So these horrible credit card companies can force you into taking their horrible deals!
How do I start getting rid of high interest credit card debt?
If you want a shot at becoming financially successful there is one thing you must do. Get rid of high interest credit card debt. Cut up all your cards. Get a debit card and never charge anything on one of these cards again.
Pay off all the balances on all the cards by paying a large amount toward one each month. Pay the one with the highest interest rate and when it's paid start on the one with the highest interest rate of those remaining.
If you owe $10,000, paying off $500 a month will have you paid off in a little more than 2 years. I know people who are paying $500 a month now and are not paying down their credit card debt at all because they are getting hit with late charges.
Refinance your mortgage to pay off high interest credit debt if you have to. It will be well worth it in the long run. If you don't own a home or you can't swing a refinance, go to a non-profit credit counseling service. They can get lower rates for you and set it up so you can make one payment a month to them. Just make sure you go to a non-profit debt management organization and they will handle your debt situation without charging you more fees.
It's a sound financial move.
I can guarantee if you asked financial advisors, economists and/or financially successful people, "what is the first step to becoming well off?" Every one of them will tell you, "Do whatever it takes to pay off your high interest rate debt. Period." Exclamation point!
Both Stephanie Foster & Ed Lathrop are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Stephanie Foster has sinced written about articles on various topics from Credit Cards, Shopping and Pets. Stephanie Foster blogs at about credit cards and ot. Stephanie Foster's top article generates over 823000 views. to your Favourites.
Ed Lathrop has sinced written about articles on various topics from Wedding Photography, Mortgage and Adware. Ed Lathrop is a successful real estate investor and a series 3 commodities futures broker.He has extensive knowledge of the credit/mortgage markets. He has a Website to help people keep on top of credit card debt. Come visit. Ed Lathrop's top article generates over 14800 views. to your Favourites.