What happens if I don't have the means to make all my monthly bills? What happens if I am only able to pay the minimum payments owed to my creditors? What if I am constantly robbing Peter to pay Paul? How long will this take to dig my way up to financial freedom?
These are just a few question people suffering the grips of debt ask themselves. Often, when people are confused as to what solutions are available for their personal struggles, they don't realize there are several options that exist to assist them out of debt. People who don't know about these programs think the only answer for their debt is to go it on their own.
As trusting individuals, we believe the credit card companies when they tell us we can pay off our debts to them by making minimum monthly payments. But what we don't realize is that this approach is stretching the truth.
When only the minimum payments are made on a month to month basis, we aren't even paying towards the balances of our debts. Instead, we are paying only a fraction of the interest we now owe to the creditors since we've not made any payments that exceed the monthly minimums.
If we keep this up, we will be making minimum payments and continuing to drown in interest fees anywhere from ten to eighty years. The reason for this exaggerated amount of time is due to the percentage rate you are paying back by just making the minimum payments. Most credit cards require a minimum payment between 2.0% to 2.4% of the total outstanding balance. Another stipulation about making the minimum payments is that the cards are typically based on a 19% interest rate, which in turn accrues a greater overall principal balance that the credit companies will profit off of.
When people choose this method of repayment, more than likely they don't realize how long they will be in debt. They are also unaware that the money being used to pay the minimums each month is actually not really doing much of anything to reduce debt.
In reality, people need to be informed and educated that there are other options available that suit their needs to assist them out of debt. These options include bankruptcy, credit counseling, debt consolidation, debt settlement, etc. Once individuals learn of each, they should in turn choose the best option that fits their debt situation.
So to all fellow debtors, good luck on your journey seeking and selecting the debt relief program that will best help you gain financial freedom!
