Do you know how much interest charges on your debt are costing you per month?
This is not a question to put you on the spot or make you feel bad.
It’s just a way to bring awareness to your finances….and realistically, there’s probably a heckuva lot of people out there who don’t.
Quite often, people just look at the bills, see how much the minimum payment is, and take it from there.
But that’s really not going to cut it if someone is serious about breaking up with their debt.
Taking control of your money means change, but the changes don’t have to be big…for example, if someone doesn’t really pay attention to their financial statements…maybe one of the small changes could be committing to a few minutes a day to look through them….
I know sometimes ignorance can be bliss…but not when it comes to debt…
One great reason to take the time to pay attention to your financial statements, and learn how much you’re dishing out for interest charges, is so you can create a plan to reduce the amount you’re paying.
Imagine how great that would be!
Facing reality is a big part of the get-out-of-debt process…as painful as it may be.
Calculate the Cost of Your Debt Interest
If aren’t already doing it, here’s a little exercise to help you gain a clear picture of what your debt is costing you on a monthly basis:
1. List out your debts along with the interest rate, amount owed and minimum monthly payment for each.
2. Calculate the monthly interest cost for each using this formula:
(Balance x interest rate) divide by 12 = monthly interest
Store Credit Card
Balance owing: $2500
Interest rate: 28%
($2500 x .28) = 700 /12 = $58.33 (monthly interest cost)
The monthly interest cost may not look like much for one debt, but when you add up the monthly cost for all your debts….it might be a more of an eye opener.
So what do you do with this information?
Well… now it’s time to look at how to reduce the amount of interest you’re paying.
One option is debt consolidation.
Debt consolidation can be done in a number of ways:
If debt consolidation is not an option, speak directly with your creditors. Many institutions have programs in place to help people in difficult financial situations.
Reducing the amount of interest you pay is not a one-size-fits all solution and each option has it’s own set of pros and cons.
Before you sign on any dotted lines, make sure you know exactly what you’re getting into…and if you have questions, ask.
If you want to reduce the interest you’re paying and you would like me to help you figure it out… send me an email.
Let’s explore the options that may be available for you.
Have a fantabulous day and always let your awesomeness shine!
Until next time…