Crush Your Credit Card Debt

Do you have credit card debt? Are you ready to crush your debt? This is the year to finally kill the credit card and live debt free.

We have a problem with debt

In the United States, credit card debt is a sobering reality. Americans owe a collective $807 billion on credit cards. Here is the good news and the bad news:

  • The Good: 55% of American households have no credit card debt.
  • The Bad: 45% of households with credit card debt have an average balance of $6,270.
  • The Ugly: In 2021, the average credit card annual percentage rate (APR) is 20.28%. Credit card debt is typically the most costly debt in each household.

5 reasons to crush your credit card debt

Here are five reasons to get out of credit card debt.

1. Credit card debt is extremely expensive

The average American household credit card debt is almost $6,300. This is too much! The average interest rate is 20.28%. This is too expensive! The average household with a credit card balance pays over $1,200 interest each year.

To see how much it would cost to pay off a credit card with minimum payments, see the Credit Card Payoff Calculator. Let’s assume $6,000 and 20% interest rate. First, enter $6,000 credit card balance and 20% interest rate. Second, the typical minimum payment is 2% each month. So, enter $120 as the monthly payment which is the $6,000 x 2%.

Here are the results:

If you make $120 monthly payments, the credit card will be paid off in 108.4 months. That’s 9 years! The total interest paid will be $7,008 plus the principal of $6,000. The total payoff is $13,008. That is more than double the original balance and way too expensive!

Increase your monthly payment:

What should you do? If you increase your monthly payment to $150 per month, you shorten the payoff by 42 months and save $3,038. See the table below for different payment amounts.

If you increase your payment to $250, you will save over 6 years and $5,282. Increase your monthly payment and your will get out of debt much faster and save thousands!

Monthly Payment$120$150$200$250
Months109674231
Total Payments$13,008$9,970$8,387$7,726
Total Months Saved426778
Total Dollars Saved$3,038$4,621$5,282

Credit card debt is expensive and destroys your financial freedom.

2. Less debt is more freedom

Debt is financial slavery. Remember the borrower is servant to the lender. If you have credit card debt you are in a hole that is getting deeper fast. The interest is too expensive and the payments are too high.

What if instead of a credit card, you saved the $126 every month in an account that grows at 6%? At the end of the 112 months, you would have $18,855 in your account. Pay yourself rather than the credit card company.

When you start to pay off the debt, you will have more freedom. Freedom to save and spend the way you want to.

When you are debt free you are free indeed. Decide that this year you want freedom instead of debt.

3. Great guaranteed tax-free return

What if you heard of an investment paying a guaranteed 20% tax free with no risk? You would invest in a heartbeat! If you have credit card, you can get a 20% return by paying down your balance. The math is incredible!

For every $1,000 investment in paying down your debt you will save $200. $10,000 paid off will save you $2,000. Awesome!

You don’t have to pay taxes on any interest savings, so it is a tax free return to you. Paying off debt is better than a 20% taxable return. It is an investment in your financial future!

Pay off the debt and avoid the interest. It is the smartest investment.

4. Increase your net worth

It is not what you make it is what you save. You should not focus just on your income. You should focus on your net worth. Net worth is your assets minus your debts. Paying off debt will increase your net worth.

You do not have to have credit card debt. You can choose a different path. Saving is the opposite of credit cards. If you save, you are planning for the future. You will be reluctant to spend your hard earned money if you have saved it over time.

Credit cards may make you happy now but make life harder tomorrow. This is not a good tradeoff. Save money today for a better tomorrow.

5. Discipline = Freedom

Saving money requires discipline. Nothing that has value is easy. To do the easy thing is worthless. Doing hard things builds character. Paying off debt is the hard thing to do but it is worth it.

Here are a few excerpts about debt from the Beverly Heirich article The Easy and the Hard.

  • Spending is easy. Saving is hard.
  • Borrowing is easy. Paying back is hard.
  • Poor is easy. Rich is hard.

Today is a great day to start

Start today to ditch your credit card debt. Get out of the hole. Start going forward. Improve your net worth today.

Use the debt snowball method to start. You need a plan and here is how to do it:

  1. List your debts from smallest to largest.
  2. Pay all your debts minimum payments except for the smallest one.
  3. Attack that smallest debt by paying all you can afford.
  4. When that first debt is paid, take your payments and add them to the second debt.
  5. Repeat until all your debts are gone.
  6. Never worry about credit card debt again.

You can be debt-free!

You can do this. It takes hard work, commitment and discipline. Being debt-free is freedom. Make this year the year to finally get rid of your credit card debt.

Credit Card Payoff Calculator Video



Jeff Mankin

Jeff Mankin teaches financial literacy. His website is FinallyLearn.com.

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