How much do you owe?
Do you know the exact figure or a rough guess? Do you avoid adding it up. Does it hurt your head?
If you’re like me, owing anyone any amount of money feels like a noose around your neck. But somehow we’ve been conditioned by society that owing money to a Bank or Financial Institution is ok. Why is that?
I used to be the kind of person that used my credit card for everything. My salary would go into one account but I’d use my Credit Card for most spending & then pay it off each month. It would clear down to zero, so technically I wasn’t paying interest on it.
But … then came the new iphone or camera (I’m a tech nerd) and suddenly the wheels start turning … “what if I used the credit card & paid it off each month like other people do”. I can have what I want now rather than waiting until I have the money & theoretically it’ll only take me xx months to pay it off. Thats way less hassle than getting a loan out.
Besides … you deserve it, you’ve been so good with your money. Its a little treat! (Just like that chocolate cake after having been on a diet the whole week!).
But then life happens. That little twist of fate.
The fridge breaks down or a pandemic strikes. Now you’re battling to pay off the credit card. Hopefully you have an emergency fund to help buy a new fridge … if not you’re leaning on that credit card again & we all know how high the interest is on those things.
Calculate your debt
I suggest you get a paper & pen out & write down how much debt you have. Face up to it. Then make a plan on how you’re going to clear it.
How much do you owe in your :
- Credit Card
- Student / Educational Loans
- Car Loan
- Any other Bank / Savings Acc/ Credit Union loans
Do you know the interest rate on each of these? How much the minimum payment is & when you’ll finally clear the debt?
I got a fright when I looked at my ‘small’ credit card bill only to see a note on the last page saying “if you pay the minimum payment your debt will be cleared by 2030”.
2030???? 10 Years to pay off a small credit card debt. Thats crazy. But then I realised at 16% interest, I’m paying more in interest than in purchases.
I strongly encourage you to look at your Debt Number. Its an eye opener.
Awareness is the 1st step to change