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So You Have Some Debt? It’s Time to Go To War!

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First off, most people have some kind of debt. Debt on a mortgage or car loan is not the end of the world, however we should still strive to get that paid off as soon as possible. The debt I am talking about is credit card debt, lines of credit, etc.

It is very important to understand that borrow money typically doesn't benefit the borrow, but the borrowee. When a bank issues you credit and you use it whether it be a credit card, loan, line of credit, etc - the bank is making money off of you. Each and every month you need to pay interest and possibly even other fees such as insurance, etc.

What's scary is most people have no idea of their interest rates and how much they are actually paying, more importantly, it's almost always compound interest, which means you are paying interest on top of interest.

Below is a quote taken from businessinsider.com

Compound interest: Why the poor stay poor and the rich stay rich

To take another example, let’s think of compound interest on credit cards for the average American household.

Let’s say you are an average American household, and you carry an average balance of $15,956 in credit card debt.

Also, as an average American household, let’s assume you pay an average current rate of 12.83%.[4]

Finally, let’s assume you carry this average balance for 40 years, between ages 25 and 65.  How much did your credit card company make off of you and your extreme averageness?

Answer: $2,629,618.64[5]

So, in sum, your credit card company will earn from the average American household carrying a credit card balance for 40 years, $2.6 million. [6]

Scared yet? I hope so. Now if you have current debt, that's ok, it's just time to get it cleaned up. This is where we need to go to war on our debt! We need to pay as much as possible as quick as possible and get the balance down!
Now that we've hopefully scared you to wanting to get your debt down, Stay tuned for some strategies to help!

Comments (1)

 

  1. debT debS says:

    It’s a horrible trap to fall into. I’ve learned the hard way but am cleaning up my mess.

    I want to spread the word so that young people do not end up like me in my fifties with way too much debt.

    It’s the least I can do.

    Thanks for spreading the message too!

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