One of the top evil villains in our society is credit card debt. One of the worst parts of this little scheme is that it is almost impossible with simple arithmetic to work out how long it will take to pay off your credit card debt and how much you will actually end up paying.
I once spent an hour on the phone with customer service determining exactly what all the little abbreviations on my credit card bill meant and how to do the math. Perhaps that will be the subject of another posting. Right now, I will tell you... it is purposefully complicated.
However, the first step in handling any situation is to be able to face the truth about it. How can you ever get out of credit card debt if you don't even look at what it would take to do so.
Now, from an unexpected source (The Federal Reserve) comes a calculator to help you face the reality of your situation.
This is an easy calculator that gives you some startling facts.
Just put in the total of your debt and the highest APR on your cards and immediately you will see how long it will take to pay it off if you pay only the stated minimum payment. It also gives you the startling figure of the amount of interest you will pay.
The first figures I put in of $5,000 debt and 28% interest came back with a statement telling me that I would NEVER pay off the debt because if I only paid the minimum balance, I would never lower the principal!! Wow! I didn't think that was even legal any more.
You can then recalculate by stating a higher monthly payment or the amount of time you want to pay off the debt. Revealing.
OK.... I'm hoping you don't have credit card debt. But if you do, here is the "cold shower" wake up call to get you to cut those little pieces of plastic up and start working on a cash only system... or at least do whatever you need to do to pay off the balance and stop spending beyond your means.
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