Mistake No. 13: Making only minimum payments on debt
Many people put off dealing with their debt problems, often choosing to just pay the minimum due on their bill each month. That’s a lousy plan, though, and here’s why: Imagine that you owe $20,000 on your credit card(s) and that you’re being charged a 25% interest rate. If your minimum payments are 3% of your balance, you’ll start out paying a whopping $600 per month, meaning you’ll have to come up with $150 per week. If you can’t pay that, your balance will be growing, digging you deeper in debt.
What if you do make that $600 payment and all future3% payments? Well, according to a Bankrate.com calculator, it will take more than 30 years to pay the debt off, and your total payments will exceed $63,000 — all for a $20,000 balance owed.Don’t make the mistake of racking up credit card debt — and if you have such debt, pay it off pronto — you can do it.