Repair Your Credit | Relieving the Burden (Pt. 3)

What about making minimum payments?

You want to know how to get out from under the burden of credit cards. You want to “Repair Your Credit.” CLICK HERE if you missed the previous segment of this story.

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If you only make the minimum payments on your accounts, then you are like Atlas. You should plan to bear the weight of your debt upon your shoulders for eternity, because those credit cards are never going to be paid off. Minimum payments may make you feel like you’re saving money because you have more in your pocket afterward, but in the long run, making the monthly minimums actually means that you will pay the maximum amount possible.

Look at it this way (installment loans are better)

Let’s say you have a credit card with a $1,000 balance. The APR is 18 percent and your the monthly minimum payment is calculated at 2.5 percent of your current account balance. That would make your minimum monthly payment $25.

If in fact you make the unfortunate choice to pay the bare minimum payment of $25 each month until your account is paid in full, it would take you 153 months. That’s a shade under 13 years. By paying off  $100 each month, it would only take 11 months to pay off your account. What a difference paying as much toward the principle balance as possible makes each month!

Just in case you don’t believe me, see for yourself (safely, mind you). Here’s a tool from Bankrate.com that can show you just how long it will take you to pay off a debt like a credit card if you’re only making the minimum payment each month.

Want some other tricks for taming monthly expenses?

Sure, cutting down on the impulse purchases and reliance upon revolving credit are essential, but they aren’t enough to supercharge your savings and repair your credit. Here are some ways to cut back on regular monthly bills:

1. Choose to have one telephone only. Many people have a cell phone and a home phone. Choosing one or the other, instead of both, can save you anywhere from $10 to $60 per month, perhaps more.
2. Sign up for a less expensive cell phone plan. Eliminate the data option and surf the World Wide Web from home, don’t pay for extra texting, lower the minutes, whatever.
3. There’s too much bad television. Cut back on all the channels you’re paying for but not watching.
4. Shop smarter. Avoid the many prepackaged food that’s expensive and unhealthy. Whether it’s fast food or grocery fare like Pop-Tarts, sugary cereals, ice cream, or anything similar, you don’t need it. You’re paying for convenience when just a little bit of prep time in the kitchen will end up costing you less money and be better for you. More nutritious, less expensive options include oatmeal, fruits, nuts, vegetables, pastas and small amounts of lean mean.
5. If there’s a sale and you need something, go for it. Clipping coupons is also well worth the effort.
6. Heating and cooling are big price gougers. Try lowering the temperature on the thermostat before you leave for work. Worn weather stripping/caulk around doors and windows can make a significant difference in your heat bill as well. If, upon close inspection, you can see light bleed in from the outside, replace ASAP.
7. Saving water is another positive goal. Take quick showers and do larger loans of laundry at a time.
8. CLICK HERE to continue…