Start Paying Off Debt Today
It sounds very cliché to say, but now is the time
for all good debtors to begin reducing that debt. Of course I
suppose that a "good debtor" has not allowed the debt to
take over and is well in control. The point I am making here is
that when we are talking about anything involving interest, like
credit card debt and loans, time is very important. Every day the
debt grows. Even if you are making your payments, it is fighting
back against you.
Every time the interest is posted, you have either taken a step to
reduce your debt, or you have missed an opportunity to do so.
Putting off your debt reduction costs you money in the form of
higher interest charges every month. You have done research, you
checked the debt reduction calculators, and you have even come up
with a plan in your mind, but if you have not started yet, you
have wasted your time. I have heard many excuses from people who
are waiting for a better time to start reducing their debt.
There are a lot of people who think their bills are under control
and although a little help could pay them off faster, they are not
in a financial crisis, so they do not need to hurry. Others have a
goal in mind, but the debt calculators say that to achieve this
goal they need to use 10% of their monthly income for debt
reduction, and they can not spare that 10% so they are waiting
until they can. Still more are waiting for some sort of windfall
to take down a big portion of their debt, so that they have a
smaller hole to dig themselves out of. Then there are the people,
like me, who want to start now, but something always comes up.
The something that comes up can range from major necessary
expenses such as needing a new refrigerator or furnace, to trivial
things such as that new video card that, although it will be
obsolete in 6 months or a year, you just have to spend the $150 to
obtain. I am being generous here, because most people in this
category want to have the really good card so they can say they
have one of the best until its own need to be replaced arrives.
These will cost $300-$500 easily and some may even require new
secondary cards to achieve their full potential. I am not saying
that you should wait until you are debt free to upgrade your
computer equipment, but instead of shelling out every cent that
you have to do so now, you could put aside $100 this month
and use the rest to pay down your highest interest credit card. In
a few months, you have enough for that upgrade, and you
have made an impact on your debt.
Those waiting for a windfall may have a little extra money each
month, but their debt is either too large for them to see this
money as able to make a difference, or small enough that said
windfall will pay it off so why not wait. Perhaps they are waiting
for their tax return and see no need for debt reduction for two
months or so while they wait. Maybe they are expecting a bonus
check or a raise at work, or a gift is on its way. Paying what
they can at this time may actually result in tens or hundreds of
dollars saved in interest, but they would prefer to wait. The
other important thing for this type of debt reducer to think about
is that if they adjust their monthly spending a little to generate
a small amount to pay down their debt while they wait for their
ship to come in, so to speak, they can send this money to some
sort of savings account or retirement fund once the debt is no
longer looming overhead.
People who feel that they cannot free up the amount that the
calculators or economists recommend, need to look at the big
picture. Sure, most say that you should use 10% of your income to
tackle the debt that you allowed to get the best of you, but you
can start with whatever amount that you can spare.
Every $100 that you can afford to send on top of the minimum
payment on a credit card with 12% interest is roughly $1 saved on
every month's interest charges for the remainder of the time you
pay on said card. This may not sound like much, but if you are due
to pay on a large credit card for several years, those $1 savings
each month add up fast.
The second month you are actually sending an extra $101 if you
consider the decrease in interest. This makes the interest savings
$1.01 this time, because you are not paying interest on that $1
you saved last month. So in two months you have knocked $202.01
from the principal and saved $2.01 on the third month's interest
charges. Once you get this bill paid off, you can add the minimum
deposit from it to your $100 and work even harder on the next bill
that you target for elimination.
If you think you are in control of your debt and therefore are not
interested in paying it off sooner than the minimum payments will
accommodate, are you aware how much interest you pay each month?
Take a look at all of your monthly bills. Add up the interest paid
on all credit cards, car loans, student loans, and any other loans
that you may have. The total amount of interest that you are being
charged is effectively a monthly fine that you are paying for
allowing yourself to live with debt. I don't know about you, but I
try hard to avoid paying any fines as I have enough things that I
want to spend my money on, or save it for. Reducing or eliminating
even manageable debt is the smart choice.
THIS CONTENT IS FOR INFORMATIONAL PURPOSES ONLY. THIS IS IN NO
WAY GIVING ANY LEGAL ADVICE OR REPRESENTATION. THE INFORMATION
CONTAINED HEREIN WAS COMPILED FROM VARIOUS ARTICLES. FOR ANY LEGAL
ADVICE OR REPRESENTATION SEEK YOUR OWN LEGAL COUNSEL.
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