Perhaps you have been thinking about my challenge to you yesterday to come up with financial goals for 2009. Part of you may be thinking that sounds like a great idea to eliminate your debt fast. But, you may also be thinking that it's kind of nice to only be paying your minimum monthly payments. In fact, you may be getting along just fine by doing so. When you look at your monthly cashflow situation, you can eat out, buy new clothes, and you still have money left over at the end of the month.
Well, consider how much more money you would have each month if you weren't making payments to the credit card companies and toward your student loans. Don't just think about the interest you pay each month, but the entire amount of your payments. Once you pay your debts off, you will free up a lot of cash for savings, investing, college funds, etc.
If you want a clearer idea of what the interest is costing you, please check out the two links below. Input your information and it will give you some startling results.
Cost of paying minimum payments
What will it take to pay off your balance
Say you have a credit card with a $5000 balance, with an 18% interest rate. It will take you 26 years to pay off that card if you only pay the minimum amount due. You will also end up paying over $7100 in interest over that time. And this is assuming you never use the card again in your life.
After you find out how much you will pay in interest, consider what you can do with that money if you invest it. What a difference!
My intention is not to end the year with depressing information, but to motivate you for the exciting days ahead.
Happy New Year, everyone!