I have heard several people saying like “I paid over 5,000 dollars against a 7,000 debt in less than 6 months and the debt is still the same”! A very common picture. Isn’t it? Most of today’s credit card companies trapping their customer with low introductory interest and complex calculation.
I think it’s time to understand that trap. What is actually causing you give away so much & the debt be unchanged?
Why am I feeding my hard-earned money to this monster!
It’s not enough to pay the minimum payable amount, they said. Give as much as you can to reduce your debt. Use all your savings to get out of debt first. There is no utility of getting 1-3% interest from your savings account and paying 12-18% interest on your debt. Simple? huh!
Now take a look at this simple example. This will show you the real picture.
Say you have a debt of $10,000 and the minimum payable amount is 4% of the debt.
Say you paid 4% of your total debt i.e. $400.
Next month(2nd month)again you pay $400.
Same happens in the 3rd month. You pay $400. The debt is still around $10,000, because along with your payment reduction, the interest is added up and the resulting owe statement becomes merely same. This occurs often, if one pays the minimum payable amount only.
So at the end of (say) 1 year, your total payment is 12X $400 i.e. $4800 and you still owe $10,000.
See how you are draining your money. So pay your debt as quick as possible. Start paying as much money as possible every month and get rid of the debt. You are feeding those money-monsters. The more you delay, more they eat your money and grow.
