For many American consumers, the use of credit and debt is a common occurrence. For all too many, it is a daily occurrence as people often cannot cover their basic living expenses due to the amount of debt they carry. In order to make ends meet they use their credit cards. It appears that we have dug ourselves in to a deep hole that seems almost impossible to get out of at least anytime soon.
Here are a few statistics on current personal debt in the U.S. found on http://www.debt.org:
- More than 160 million Americans have credit cards.
- The average credit card holder has at least three cards.
- On average, each household with a credit card carries more than $15,000 in credit card debt.
- Total U.S. consumer debt is at $11.4 trillion. That includes mortgages, auto loans, credit cards and student loans.
We may think credit is a new concept, but it dates back many years in America. Merchants and consumers used credit as far back as the late 1800s. Department stores and oil companies began issuing their own credit cards in the early 1900s that were only for credit at their store. The first actual bank credit card that could be used for purchases appeared in the early 1950s.
How long would it take to pay off the average credit card debt of $15,000 at an interest rate of 15.9 percent with only the minimum payment? If you made a monthly payment of $349, it would take you 5 years and 5 months to pay off the $15,000 debt and it would cost you over $7,300 in interest! In order to pay the debt off in 3 years, you would need to make a payment of $527 per month which would cost you a little less than $4,000 in interest. As you can see, sacrificing a little more per month to make the additional payment will save you $3,300 in interest and will cut 2 years and 5 months off the amount of time it will take to pay the debt in full.
This week take a look at your current debt and payments and work with your budget to find extra money that can be designated as extra debt payments. The amount of sacrifice you make now can make a substantial difference in your net worth. Save on interest payments by always paying more than the minimum payment. Make a conscious effort to knock out your debt quickly so you can be better prepared for your financial future. Once the debt is paid off, avoid getting back into debt. Stop the vicious cycle of debt for yourself and for your family!