Disaster

Minimum payments = evil quicksand

I found this infographic on the Mintlife blog today and had to share it. Minimum payments are indeed a monster that will eat you alive, if you let it. Click the image to see it full size.

I am ashamed to admit how long it took me to figure this out. When I got credit cards, I never intended to carry a balance. When our financial situation took a dive, I started using them for living expenses like gas and groceries, plus occasional episodes of retail therapy. I thought, “Well, as long as I can make the minimum payments, I’m good.” Then the economy crashed and the bank regulations kicked in, and suddenly my interest rates had doubled, despite the fact that I’d never even been late on a payment. What started out as debt I considered manageable became a pit of quicksand that it would take me 30 years of minimum payments to dig myself out of. Thirty fucking years! And the credit card companies not only tolerate this, they want you to do it, because the longer you take to pay it off, the more money they make. Paying minimums can effectively quadruple your initial debt.

Don’t fall into the quicksand. Follow these new rules instead:

  • Stay away from credit cards.
  • Don’t pay banks for the privilege of paying them more.
  • Don’t fall into the trap of telling yourself you need credit cards for emergencies – this is what your emergency savings are for.
  • If you must have credit cards, do not carry a balance, ever.

 

 

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