There is no quicker nor sure-fire way to improve your current financial condition than to pay off high interest debt, especially high interest credit card debt. Remember that “a penny saved is a penny earned” and you’ll save yourself big bucks in interest charges. Whatever you don’t spend on high interest debt is just like earning that same amount of interest on your money, and if you put your money into a savings account, your rate improves even more.
Over 60 percent of those with a credit card in the US carry a balance with rates in some cases as high as 26 percent. If you’re like the average American who carries about $10,000 in credit card debt, you’re probably giving away between $1,800 and $2,600 or more per year to credit card companies. What could YOU do with that extra cash?
- You could save for your retirement (also known as investing in your future).
- You could save for a child’s college education so they don’t have to go into debt for their education.
- You could help someone who really, really needs it.
- You could start a business of your own.
- You could purchase your own freedom.
High interest credit card debt is the scourge of our society and has become a prevalent practice around the world. It has given us a false prosperity, a thin veneer of success and accomplishment, but in the end, it bites us back. We pay for those throwaway items over and over again because the payments always seem to pay the interest, never the principle.
Even if your took that ten grand in a cash advance, thinking you’d make your fortune in stocks, just remember that the S&P 500 has a historical average of 10 to 12 percent. You’re still falling behind by 6 to 16 percent! And THIS year, the old S&P has lost money — a lot of money — down by almost 50 percent in the past 12 months, about half of that in the last 3 months.
Such high interest rates on credit card debt means that it should tower over student loans, most car loans, mortgages, and other debts in how you prioritize your debt payoff plan.
Give yourself the best gift of all this holiday season … shred your credit cards and feed them to the Grinch!
photo credit: Pro-Zak
[tags]grinch, holidays, credit, credit card, guaranteed return, interest, money, financial, finances[/tags]