Monthly Archives: January 2014

Pay Down Debt With These Four Letter Words

Oops. Are we not supposed to talk about four letter words?

No, not those four letter words. These are words you can say out loud and on regular television, and they won’t get you a trip to the principal’s office. Words like debt, more, high and time. See? Innocent four letter words.

Let’s start with DEBT:

$15,270.

It’s the price of a 1.13 carat round brilliant flawless finish diamond or a used 2008 Nissan Pathfinder.

It’s also how much the average American household owes in credit card debt (according to NerdWallet.com).

Seem like a lot? Yeah, well, swipe and spend is as American as burgers and fries.

Do you know how long it will take for you to pay down a $15,000 credit card debt?

We didn’t think so, which is why we did it for you using this handy-dandy calculator. This graph shows $15,000 debt, at 18% APR and only paying the minimum payment. In this instance, the minimum payment is calculated at 4% of the balance, which comes to $600 for the first payment. As debt is paid down, the minimum payment is reduced as well.
$15,000 credit card debt paying minimum payment
Wait…that said 14 YEARS. Yes, my friend, it did.

Now, let’s add $25 to the minimum payment, which means you are paying $625 per month, and we’ll continue paying $625 until the debt is gone.
$15,000 credit card debt paying $25 more than minimum balance

I don’t know about you, but two years sounds a whole heckavu lot better than 14 years. Fourteen years is twice as long as the average marriage in America. It’s also about how long a kid has been in school by the time he or she graduates from high school. You remember how long THAT was, right?

Oh, and did you happen to notice how much you’ll save in interest just by paying $25 more per month? (About $5,000, if you are wondering).

One more thing: These amounts are based on the fact that you aren’t ADDING to the debt.

So, let’s nip this in the bud. The above shows that by paying a little bit MORE toward your credit card DEBT can be extremely beneficial. Those are the first of your four-letter words!

Here’s the rest:

HIGH: Got a card with a high interest rate? Pay off that card first, even if other credit cards have larger debt. And in case you didn’t get it the first time, the more you pay, the quicker the debt goes away.

TIME: This is a no brainer. Make your payments on time. Making a late payment could result in a fee. And being 60 days overdue could result in a late penalty fee, which increases your interest rate on that card, and possibly your other cards too! That’s blasphemy! I know, right? But it’s true. Pay on time, people.

Debt, more, high and time. Four letter words that can actually get you out of (financial) trouble.

Consumer Debt is Rising, but Consumers Say Getting Out of Debt “Extremely Important”

With headlines like “US Household Debt on the Rise Again” it’s easy for consumers to fall into the “everyone is doing it” mindset.

Reports indicate that consumer debt is climbing faster than Austin Powers’ Jaguar can go from 0 to 60 (7.4 seconds if you are wondering). Outstanding student-loan balances have reached more than $1 trillion.

That’s right.
Dr. Evil: One Trillion Dollars!A trillion dollars is a million million. One followed by 12 zeros or $1,000,000,000,000. And of those loans, more than 12% were delinquent 90 days or more!

Before you and Mini Me throw up your hands in despair and wonder who is racking up all this debt (because we know it’s not YOU), there’s a light at the end of the tunnel.

A recent survey from Credit.com (Americans and Credit Card Debt) indicates Americans with credit card debt believe that getting out of debt is “extremely important” and plan to shape up their finances this year.

I know we started out talking about student loan debt, and this recent survey is only about credit card debt, but according to this infographic, 75% of those who sought help from a financial counselor had credit card debt. Let’s face it, who doesn’t have one or two…or eight credit cards?

If you are a numbers geek, here’s more survey findings:

  • 55% of survey respondents said they have at least some credit card debt.
  • Of those 55%, half are chomping at the bit to develop a debt reduction plan for 2014.
  • 68% are ready to roll now, as they said it is “extremely likely” that they will start to pay down their debt in 2014. Yeah baby! (That has to be said like Austin Powers or it’s just not as funny.)
  • A little more than 40% of those surveyed say it is extremely likely they will be able to eliminate all of their credit card debt this year. Let’s do it!

That’s what this campaign is all about. Most people know they have debt. Most people know they spend too much. They just need guidance and a little push in the tush to get them going on a path that’s going to make them a Saver Superhero or Debt Destroyer. I mean, who doesn’t want that alter ego following them around?

Money Possible Participant Update

Dolar HammerOur “call to apply” was a success! We received more than 15 applications from credit union members, ready to destroy their debt. The Kansas Credit Union Association is in the process of finalizing the nitty gritty details with each participant.

We are keeping the identities of our Money Possible participants under wraps until the week of January 27, so you’ll have to hold onto your hat for just a few more weeks.

Money Possible segments will begin airing on KAKE-TV (ABC, Channel 10) Tuesday, March 4 so be sure and set that DVR up to record. Are you one of those people who don’t have “regular” TV? No worries…these segments will be available online at momseveryday.com. If you don’t have that “Interweb” thing that Al Gore invented, well, we can’t help you with that one.

Segments will include live interviews once a month, as well as weekly participant updates so you can cheer our participants on, or give a sympathetic nod when things aren’t going their way. Because you know you’ve been there too.

For those with the attention span of a Twitter user, 15 second Destroy Debt tips will air throughout the duration of the campaign. And speaking of Twitter, you can stalk, I mean follow along along at #moneypossible. The best part is you don’t even have to leave your couch to learn tips and tricks that even the most financially challenged person can use. Score!

In the meantime, our participants will be meeting with Consumer Credit Counseling Service to assess the best way to destroy their household debt.

Wait, back up the truck, Chuck. Just finding out about this Money Possible thingy? Here’s the short story: It’s a consumer financial literacy campaign supported by the Kansas Credit Union Association and in partnership with Kansas credit unions and the Kansas Consumer Credit Counseling Service. Read more about the Money Possible: Destroy Debt campaign.

If you want to participate but don’t want to air your dirty laundry, free Money Possible packets will be available during the campaign at Wichita area credit unions to anyone who asks.

Still have a burning question? Contact Melissa Baptista, Research and Development Director, Kansas Credit Union Association, (800) 362-2076, ext. 3016.

New Year’s Resolutions Focus on Finances

The ball has dropped, the party hats worn, and the champagne bottle is empty. Bid farewell to 2013, and wave hello to 2014.

With the new year comes a fresh start. A new page. New resolutions.

According to a survey by GoBanking.com, saving money and paying down debt were the most popular financially related New Year’s resolutions. And according to a Dec. 30 Forbes post, the resolution to pay down debt has tripled since 2010.

Go Banking Top Financial Goals
What’s interesting is that when the responses are broken down by income level, both the lowest income bracket ($0-$24,000) and one of the highest ($100,000-$149,000) reported the highest response rate to both saving money and paying down debt.

This reveals that financial issues affect all income levels, and not just those on the lower end of the income ladder.

Saving Money
The 52 Week Money Challenge seems to be a popular and simple way to save money over a year. Each week, put away the designated amount of money. Easy peasy lemon squeezy!
52 Week Challendge
Paying Down Debt
To jump-start your effort to pay down debt, try paying just $20 more on your credit card bills, loan payments or medical bills. You will be amazed at how fast this little bit adds up.

For example, if you owe $3,300 on a credit card at a 14.96% interest rate, it will take almost 20 YEARS to pay off the debt if you only pay the minimum balance. And it will cost you $7,600! That’s more than double the amount of the debt. By paying just $20 more than the minimum amount, you pay off that card in four and half years, plus you will save about $3,000 in interest fees.