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The Simple $10 Debt Elimination Solution
by James H. Dimmitt
Ask a friend what resolutions they made for 2004 and your bound
to hear them reply "Pay off my credit cards." Ask them how they planned on
reaching that goal and many of them will not have a clear cut answer.
The obvious first step to paying off credit card debt or paying
down credit debt load is to cut back or eliminate the use of your credit cards.
For some people this first step can often be the most difficult. If you're used
to spending freely with plastic and worrying about the consequences later, it's
difficult to break free from this "buy now, pay later" attitude.
To gain control of their careless credit card spending habits,
some people cut up their credit cards therefore making it impossible to use
them. Others lock up their credit cards or hide them in a safe place and vow to
use them only in an emergency.
The second step to paying down credit debt is to pay more than
the minimum balance due. Most credit card companies require a minimum monthly
payment of 2.5% of the outstanding balance. For example, if you have an
outstanding balance of $1100.00 on a credit card charging an Annual Percentage
Rate (APR) of 18.9% your minimum monthly payment would be $27.50. It will take
you 66 months or 5.5 years to pay off your balance of $1100.00 making the
minimum payments. The credit card company will make $676.94 in interest from
your use of their credit card.
Monthly payments are purposely kept low by the credit card
companies so that they can earn as much as possible from the interest rate
charged to you the consumer. Paying just the minimum payment will keep you
tangled in credit's web for years and years to come.
If you've been paying only the minimum due month after month,
ask yourself this question, "Do I have an extra $10.00 I could apply to this
month's payment?" I'm sure that most of us could find some way to come up with
an extra $10.00 for the month. Try cutting out a few cups of coffee or lunches
at your nearby fast food outlets and in no time flat you'll have saved up the
extra money that you need.
Now, it's time to unveil "The Simple $10.00 Debt Elimination
Solution." Take that extra $10.00 and add it to the minimum monthly payment
above, therefore making a payment of $37.50. By adding just that $10.00 a month
to your minimum payment, you'll trim 23 months or nearly two years off of that
credit debt! On top of that you'll save $277.00 in interest alone! That's money
you can put toward savings or paying off other debts. Imagine how much you'd be
able to save if you applied this same simple strategy to each of your other
credit card debts!
Paying down credit debt doesn't always mean having to make huge
monthly payments or sacrifices. It just takes some basic planning and a simple
effective strategy to make it work.
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© 2004,
www.yourfreecreditreportnow.com Author: James H. Dimmitt. James is editor of
"TO YOUR CREDIT", a weekly free newsletter to help you manage your personal
finances. Subscribe to the newsletter by visiting
http://www.yourfreecreditreportnow.com.
He is also author of "Identity Theft -
How to Avoid Becoming the Next
Victim!" available at
http://tinyurl.com/bc45
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