You SHOULD be angry…

August 22, 2013 at 8:40 am

file000854083226You need to be angry… Like this chicken.

 

Ok, so maybe the chicken isn’t angry. It looks angry to me. In order to get out of debt, you really need to be angry at the problem. Not to mention, if you realized just what kind of treadmill you’re on, or how much money you have gave away due to interest, you would be angry. If you’re angry, I know how you feel, because that is where I am at. For most people, part of the problem is due to it being out of sight and out of mind. We don’t pay any attention to how much money we leak out. We don’t analyze it, or pay attention to it. Then, something clicks, it causes you to look at things, and then you get angry. At least, that’s how it went for me…

I’m going to do something a little crazy, I’m going to show you the numbers. I’m going to show you two actual examples of my debt, and how much money I’ve lost due to interest in 2013. People typically hide this, and they don’t talk about it. At all. Ever. And, I can tell you why, because I know why. It’s due to shame. People feel ashamed of their debt, I did until very recently. Do not feel ashamed of your debt any longer, talk about it, deal with the problem and get it resolved once and for all. Just think about your income, if you had no expenses except your normal utilities, how much money would you have free each month?

So, I’m going to show you two accounts I’ve got, and how much interest I’ve paid this year. The first example is a credit card I have through Chase, I got it because I was stupid. I’ll explain why I was stupid later. The second example is a store credit account for Newegg.com, and I got it for the same reason as the first. So, those are my two examples, I’ve got more, don’t worry, but these two will do for the purpose of this post. Let’s get into the numbers, shall we?

Chase:

Balance: $1,843.69     Interest Rate: 18.24%    Minimum Payment: $47     Interest Charged in 2013: $206.57

Newegg:

Balance: $3,055.64     Interest Rate: 21.99%     Minimum Payment: $91     Interest Charged in 2013: $539.33

Let me first mention, I’ve got perfect credit, never missed a payment or was late on anything, but yet they still charge those interest rates. If I make the minimum payments on those two accounts, Chase will take 19 years to pay off, and Newegg will take 14 years. To date, for 2013, I’ve lost $745.90 on just these two accounts. $745.90 that I will never get back. What could you have done with that money? These are just two examples, I’ve got several other examples. I don’t even want to look at the others and add them all up.

People, you are getting robbed. Every month, with every payment, a portion of the payment goes to principal, and the rest of it goes to interest. Then, the next month, new interest charges gets posted to your account. This cycle repeats every single month, and it’s like a treadmill, because you make a payment, you see your balance go down, then interest jacks it right back up again to nearly the same line you started at.

While I’ve probably got you riled up, I should mention, it’s not the credit card companies fault. They don’t force anyone to get a credit card, or credit account. At the same time, they also don’t exactly play fair. They know how to work us, and they commit a lot of psychological warfare each and every day. We must train ourselves to resist the impulse to use the credit.

I’m not saying credit cards are evil, because you really can use them as tools, and get a good benefit out of them, if you maintain discipline. My Chase for example, is an Amazon Chase, which means I earn points that are good for many uses on Amazon.com. The problem comes in because I wasn’t disciplined enough to keep the card paid off and instead racked up a balance, which negated any possible benefit I would have received through the points.

I’m going to throw in another example. We signed up for a Target Card account because they offer a 5% discount off of everything. That sounded good to us, and we told ourselves that we would keep it paid off, so that we wouldn’t pay any interest and we’d really leverage that 5% discount. You can probably imagine what happened next. We did good at first, kept it paid off, and the discount was awesome. Then we started slipping, started carrying a balance. Now we pay interest on that balance, at an 18% or so rate. Although they offer a 5% discount in store on items, now that we’re paying interest, we’re losing far more than we’re gaining. This is how they hook you, and you can only win if you maintain the utmost discipline. And this, my friends, is why I was stupid. I knew better than to get those different cards, but I did it anyway. I knew I wouldn’t be disciplined enough to fully leverage the benefits, but I did it anyway.

In my journey to becoming debt free, I’ve declared war on debt. Cristy and I have shredded every card up. We can’t use them even if we wanted to. I even went and removed saved payment methods from different stores, like Amazon. That way I can’t use them without physically having the card.

Why am I becoming debt free? Because I want to be a stay at home dad, and I can’t do that in debt. Once I’m 100% debt free, I’ll have about $1,600 a month to do whatever we want with it. Folks, that’s $19,200 a year. I could buy a brand new car in a year with CASH. I don’t believe that all debt is bad, I believe that debt can be a tool, when used properly. The problem is, we typically don’t use it correctly.

So, my questions to you are, are you fighting the debt monster? What are you fighting for? Leave your responses in the comment section below, or on Facebook or Twitter!

 


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