Part of growing up is learning to confront the ugly, ugly truths in life. While you may subscribe to some form of the “money is no object” policy today, eventually you’ll have to confront your looming pile of soul-crushing debt.
Don’t worry, this can be fun!
The Federal Reserve has a fancy Credit Card Repayment Calculator that can show you how long it will take to pay down your credit card if you only make the minimum payment each month. All you need is your balance and the interest rate.
Seeing how long it takes to pay off these sums, as well as how much interest you’ll have to pay over that time, is a great motivator for paying off as much debt as you can afford, as soon as you can.
Even if you have a balance as low as $1,000 with 20% APR, and you only make the estimated initial minimum payment of $20 per month, it will take 9 years to pay off. On top of this, you’ll be charged $1,169 in interest over this period.
The site isn’t all doom and gloom. It offers suggestions on how you can pay the balance off sooner. Input either a specific number of years in which you want to pay off the balance or an amount you can pay every month.
Either way, the sooner you start to get out of debt, the better.
--Cody
Photo taken from this photostream and used with permission of a Creative Commons license.
Thanks for the article, Cody. I'm always astounded by the incredible amount of money that people have to pay in interest, it's crazy!
Well, Jessica, I hope that means you're one of the lucky ones that have managed to say out of debt.
So far I have -- I'm lucky to have had parents that taught me how to manage my finances.
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