Pay it Down

Manisha Thakor: When is comes to credit card debt in America, we’re swimming in it. The average American today has over fifteen pieces of plastic in their wallet. One of the biggest problems is a lot of people think credit cards are free money. They don’t understand that if you charge something on your credit card and you don’t pay for it in full at the end of the month, on an average credit card, what you’ve effectively done is double the purchase price of whatever you’ve put on that card. It’s an awful lot like trying to fill up a mug of coffee when there’s a hole in the bottom. What’s leaking out in the case of credit cards is the interest. If you’ve got credit card debt right now, one of the best investments that you can make in your future is to do everything you can to turbo charge or accelerate your debt pay down. So a great rule of thumb is if your credit card debt is 5,000 or less add an extra 50 dollars every single month above your minimum payment until that debt is paid off. If your credit card debt in between 5,000 and 10,000 dollars add an extra 100 dollars a month. And if your credit card debt is in excess of 10,000 dollars, up that to one 150 dollars a month every month until the debt is paid off. If you follow these rough rules of thumb and you make sure not to charge anything new to your credit card you can get your debt paid off typically in five years or less. So if your sitting on a pile of cards don’t beat yourself up, it’s almost impossible to avoid the temptation of blowing your budget with these kinds of cards. The best thing to do is whittle your stack down to two or at most three cards. So if you’ve got excess, it’s time to take out the scissors and cut up those cards just like you did the pictures of your ex-boyfriend.

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