In Debt? Who? Not Me!
by Bob Michaels
I guess I must have been living in la la land not to think about this before.
Why would anyone ever think that I was in debt? Well, c’mon, everyone has bills. I can always pay my bills. Oh, I guess when I don’t pay my bills is when I start getting “in debt.”
With credit cards though, everyone can always pay their bills – at least, they can pay the “minimum” on the credit card balance. No sweat, right? So, as long as I can pay the minimums on my credit cards, I’m not really in debt, right?
I have friends who have 6 to 10 cards totaling over $100,000. What? Credit card minimum payments sneak up on you. The whole idea is that banks make you feel that you are NOT IN DEBT – so, you will continue to keep using your credit cards. And, you constantly get offers for more and more credit cards.
How much would I end up paying in total by just paying the minimums?
If you continue to make minimum payments on your accounts, you will generally pay for 20 to 25 years, and you will end up paying 3 to 4 times the account balance, depending on your interest rate. Example: With a $50,000 total debt, you’ll generally end up paying $150,000 to $200,000.
Wait a minute. That means I could save $100,000 to $150,000 by paying off my credit cards, instead of just paying the minimums. Yes, Virginia.
And, there’s another problem. What if something bad happens to me the I wasn’t expecting? Like: I get sick and can’t work; I lose my job; I get into an accident and get sued by somebody; etc. etc. etc.
So, there are now 2 big reasons to pay off those credit cards as soon as possible: YOU’RE PAYING TOO MUCH and YOU MAY NOT BE ABLE TO PAY.