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Minimum Payments Hurt

Seeing those low minimum monthly payments on your credit card can make them easy to swallow.  This is a very short term way of thinking.  One that can get you into debt trouble faster than you would think and it could take you up to five times longer to pay off those cards.  A quick example of what we mean is say you had a credit card and the balance of that credit card is around $3000.  The interest rate is 18% and the minimum payment is only a mere $10 which would equal 2% of the balance.  Sounds like a good deal right?  You would be very wrong; if you continued on that path it would take you a little over 36 years pay it off and with interest you would have paid around $4500 more than the $3000 you started with.

Another example would be, say you just got a new micro-fiber couch that feels so good to relax with the kids on after a hard day of work and school.  Because you want to make sure there is enough room for everyone to spread out you pay a little extra and get the $1500 model.  You decide that it is a good idea to put it on your credit card because you don’t want to drain your bank account just in case there was an emergency.  After that first month goes by you forget you charged the couch on your credit card and you just make the minimum payments on the card.  Let’s say a little over a year passes by and one of the kids spills grape juice all over the couch and ruins it and now you need a new couch.  You toss that one out and you go out and buy another.  The reason you go get another so quickly is because you assume that you have already paid off the other one by now.  Well, you would be wrong because you are now paying for two couches.

So how long is it going to take you to pay off that kind of debt?  When you only pay the minimum monthly payments on your credit card and the annual percentage rate is about 19.8%, it is going to take you around 22 years to pay off something as trivial as a $1500 dollar couch.  When you are a single father (dad) that is longer that most of your kids will be living with you!  This is one of those classic examples of how quickly having a little bad debt can work against you.  The more debt you that take on the longer it is going to take to recover from it.  So you first priority should be to take care of any and all non productive debt.

When you are looking for debt advice whether you are a single dad (father) or not, please continue you to look at our articles.  They are designed to find your way to some financial help and well as when you seek some financial assistance.

 

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