There are few things I hate more than the great scam of credit cards in the US. Somehow as a nation we decided its ok to let the bank earn shit loads of money from our desire to live beyond our means.
Don’t get me wrong, credit cards are ok, only if you never use them as actual credit. Use them to get airline points or cashback or to open your door when you are locked out, just don’t open a credit card if you have a slightest doubt you can repay it back every month.
In my line of work, people would kill each other for extra 0.25% of financial return. Credit cards charge you on average 17% interest rate (whaaat???), and currently the rate is the highest it’s been for decades.
By the way if you think 17% is not that bad, that the interest you pay is 17% of your say $10,000 balance, noooooo… mistake. The way these things work, is that you end up paying way more than just stated APR.
The worst thing you can do, is to pay just “minimum balance”. Let’s see. If you have that $10,000 credit card balance at 17% APR, and only pay the minimum, you are probably paying around $250 per month.
If you just do the “minimum payment”, It will take you:
- 24 years to pay off this credit card (forever)
- $13,000 in JUST interest charges (money wasted)
So, to me, the choice is an obvious one…
Get out of credit card debt – NOW
Don’t care how you do it, there are tons of ways. Suck it up. Just do it.
Few ideas:
- Buy rice, chicken and onions. Repeat. Yes, it sucks. So does paying 17% on your credit cards. (And you might loose weight as a side bonus!)
- I’m not even going to say anything about Starbucks, ok?
- Do your nails yourself!!
- Drink at home! Get some friends, and instead of paying $16-a-glass Merlot in a bar, stock up on $8-a-bottle Boujaleas, and throw a house party every week.
- No, you don’t need to drive for 2 hours (spending money on gas) to go to that super organic Amish local farmers market. Those onions you’ll buy for your chicken-n-rice are organic enough.
- Hair. Keanu Reeve’s girlfriend style might be bit too much for us, so this one I haven’t figured out yet – but surely must be cheaper DIY options?
Got the idea?
Look through your credit cards, pick the one with highest percentage, and figure out how much you need to pay per month to pay it all within 12 month.
For example that $10,000 balance, with 17% APR you can pay down completely in 12 months by paying $913 per month.
Bit sooner than 24 years…
So make it a New Years resolution. Pay off the bastards!