Monday, April 28, 2014

Paying Off Debt (Part Two)...The BEST Advice I Ever Received

After my last post I know everyone bought the book, listened to a few of the podcasts and made themselves a budget, right? Yeah, I know but I had to ask.

The BEST advice I ever received for paying down credit card debt I heard on the radio. Yep, I said the radio. Since the radio is public domain I am hoping that person doesn’t mind me sharing it with you.

Actually, I first heard it in a wealth building seminar and then I heard it again (same person) on the radio a few weeks ago. Here it goes:

People advise that you pay extra on your credit cards every month to pay them off faster, right? A few years ago credit card statements started including information that etimates if you pay an extra X amount a month, you will have your balance paid off in X months/years.

Don’t do it. I repeat do not do it!

Let me explain…

Let’s take a nice round number and say you have a balance of $1,000 and you are sending extra which makes  your monthly payment $100 a month. According to the credit card company, you might have your card paid off in about 4 years right?

Here’s the math $100 month X 48 payments = $4,800 total

You just paid them over 4.5 times what you ‘borrowed’ to call it even.

The solution?

Pay the minimum. 

Yep, pay the minimum and save the extra.


Because if you save the “extra” instead of paying it to the company you can actually pay it off in 10 months. Here’s how:

Let’s say you can pay an extra $100 a month. Take that extra and save it. SAVE IT! 

What is $100 X 10?

You got it! $1,000

And how much was that bill?

Yes… it sure was. $1,000 total.

It sounds so simple after you think about it. It sounds so elementary when you realize that you are throwing your money away paying a little extra a month while the credit card company is adding interest on your balance monthly. A balance that is barely moving.

But what about the interest while you are saving and paying the minimum? Does it really matter at that point? No, because you have enough to pay it off…in less than a year (depending on your individual budget).

That is the best advice I have EVER received about paying credit card debt and revolving debt PERIOD! I remember everyone’s face after he finished explaining it. We were all looking at him like he had lost his mind but the next day I started a savings account to pay off those last two damn credit cards!

Where do you get the “extra” to pay it off? You can find it after you do that budget we talked about in the last post.

Until Next Time,

Peace & Blessings...


  1. I am LOVING these posts! Keep them coming!!! You are all in my budgeting/pay off my debt this year mind!

    Love the advice at the credit card balances. Seriously, for years I have jumped for joy if I can pay an extra $20 and now you're telling me it's pointless? And they are getting extra money? Talk about eye opening.

    1. I am glad this series is helping someone. It really makes you mad once you add up all the 'extra $20 payments" a month and realize you could've had it paid off. Twice!

      Hoping you can get those balances to zero soon.