In the past, I'd been rattled by huge debts because of unwisely use of credit cards and lending sources. I became a bankrupt but have learnt some priceless lessons to consciously avoid getting into a deep debt trap. I fought back all my misfortunes and mindless spending habits and got back my lost home and car and even the hope for the future as I'd resolved to win over all my misfortunes for which I was singularly responsible.
My painful and extremely bitter experiences have made me to resolve that I should help others from falling into a debt trap and help those who had fallen victims to debts already.
Check out this scenario: You receive a credit card offer in the mail: borrow up to $2000 and pay only $40 a month. The interest rate is a little steep at 18% but the payment is still only $40 a month. Sounds like a great deal. You've been wanting to buy a new big screen TV with all the accompanying gadgets for ages, and now you can have it all for only $40 a month. Who COULDN'T afford this, right?
Before you sign that offer and run out to purchase your new TV, let's look at the math and see how long it will take you to pay off this purchase at $40 per month, what you'll end up paying in interest, how long it will take to pay off the balance, and the total amount you'll end up paying for your $2000 TV.
The minimum monthly payment on most credit cards is usually calculated as a certain percentage (often around 2 percent) of your total balance. Remember, however, that this payment includes interest as well as payments against the principal amount that you borrowed.
On the $2000 TV, 2 percent of the balance is $40. At 18 percent interest, your $40 payment would include $30 in interest and only $10 towards the amount you borrowed (18% divided by 360 days = .05% per day times 30 days in a month times $2000 outstanding balance equals $30 in interest).
If you pay the minimum balance each month (calculated as 2% of your outstanding balance), it will take you over 30 years to pay off your $2000 TV, which will be gone long before it's paid for. What's worse, you'll have paid nearly $5,000 in interest. The $2000 TV will have cost you nearly $7000!
To make matters even worse, think of what you would have earned if you had simply put $40 a month into an investment earning a conservative 8 percent for the same number of years (30). Your $40 a month would be worth over $60,000 and you would have earned almost $46,000 in interest on your investment.
Many people get caught up in credit card offers that are "too good to pass up." The question is: "good for whom?" Certainly not good for you. The example of the TV purchase illustrates the extremely high cost of paying the minimum balance on your credit cards.
In my experience, a proper debt management solution that leads to the right debt consolidation program will help us get rid of huge debts. No amount of debt is too big if we have sought an expert's help for a debt consolidation at the right time before things go out of our hands completely.
I have discussed on My Website certain very effective debt management solutions and genuine debt consolidation programs which if done properly are sure to shun the nightmares of mounting debts in the shortest period of time.
My intention is that we should educate ourselves about the true cost of credit and the ways some credit card companies entice us to get deeper and deeper in debt. This has given the birth of my website that has already benefited 100s of people.
Credit definitely has its place, but using it unwisely can cripple you financially.
Check it out My Website on debt consolidation and debt management solutions when you could find some time.
Cheer up and welcome to the world of no-debts!!
