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One of the biggest struggles we face when approaching our debt is overcoming that feeling of not being in control. As you look at bill statements and overdue notices, the flood of bad news can be crushing to any sense of motivation you’ve had in getting rid of debt.
As with most things in life, it’s always beneficial to have goals. Having a target and an end-point in mind helps frame your focus and your intention.
What you want to understand about your debt is:
One of the great things about credit card debt is how incredibly high their interest rates are. Who wouldn’t want to pay 20% extra for everything they buy right? OK, no one wants to do that, but if you’re behind in your credit card payments, seeing just how much you’ll be paying in interest is a great MOTIVATOR for getting angry.
You should be angry at yourself for allowing this to happen, and you should be extra motivated to get rid of this debt as soon as possible.
A credit card debt calculator is a great place to get started. Simply plug in how much you owe and your interest rate, and you’ll find out how long it will take to pay it back. That time-frame might shock you.
Remember that the minimum payment amount on your bill is not a good plan for you. Making minimum payments only serves the credit card companies to keep you in debt longer and maximize the amount of interest you pay. They don’t care if they get their money today or in 5 years, and the 5 year plan will end up costing you much more money.
You might be shocked at how long it COULD take you to pay off your debt. The great news is that you’re angry, and it’s time to get serious. Literally every dollar will help, and debt calculators are a great way to see that happen.
We said before that goals are important, and now you can actually see the result of your hard work before you do any! Play around with the numbers and see what an extra $20, $50, or $100 a month will do to your debt.
Once you realize that smaller contributions will greatly speed up your debt repayment, it’s so much easier to regain that feeling of control.
We’ve used credit cards as an example, but this philosophy works just as well with car loans, student loans, or mortgages. Debt is debt, and it’s always important to have a plan. For other calculators and tools, check out Debt.ca.