You’ll love this nifty little debt reduction planner. I plugged in the average US credit card holder’s balance and this is what it looked like: $17,500 balance, 19% interest, min. monthly pmt. $525 (3% of balance), time to payoff: 22 years, 5 months. Total interest paid $17,900.
Guess what? The bank doesn’t really want you to pay that credit card off.
– never use credit to buy a depreciable asset
– The US is the largest debtor nation in the world
– revolving debt is a disease in The US
– debt is a contract
– you contract your future labor for goods/services
– your creditors are your business partners
– they get a portion of your profits each month
– when a bank finances your purchase, YOU are the only asset
If you’re serious about getting out of debt you need to see what you’re dealing with. Write it down. See where the money is going and track your spending (budgeting). Open that check book register and look at all expenditures for 30 days. You’ll probably be surprised at what you spend each month.
Pay particular attention to eating out at restaurants and entertainment. Cut back on things you can live without. Commit a set amount of money out of your budget to pre-pay your smallest debts balance. You add this commited amount to your minimum payment each month. Watch it shrink!
You’ll be surprised what a difference adding just an extra $100/month to a debt can do. Start with the smallest balance debt, pay it off. Roll the extra and minimum monthly payment from that debt up to the next largest debt balance. Lather, rinse, repeat. Use the debt reduction planner to do “what if” scenarios. So, when will you be debt free?
To Your Financial Freedom,
Greg Whitaker
www.debtshepherd.com
© Greg Whitaker 2011, All rights reserved
