A thorough assessment of your financial situation is needed to construct your foundation for financial recovery. Knowing where you are today and what you need to bridge the gap is essential. It also helps to ensure that your plan is realistic, reasonable, and one that you can commit to over time. By maintaining your spending plan, the day-to-day worry about what you can and cannot afford will be removed. It will also help provide you with the single most important thing you can do to improve your situation – stop using credit cards to bridge the gap.
We all have our own attitudes, anxieties, and myths that we have developed about money. We believe that these beliefs are not inherited but are learned. They are learned from prior experiences and they impact our money decisions- how we spend, how we save or don’t save, and how a feeling, emotion, or situation can trigger an impulse buy.
It’s important to identify your beliefs and feelings about money especially when they contradict your goal of becoming debt-free. This identification process is sometimes easier when you are able to take a step back and look at your patterns as opposed to individual instances. Identifying patterns and emotional drivers will improve your awareness. When aware, we can deal with our problems more effectively.
Of all the things that affect your debt situation, the most significant is the cost of debt. What is the cost when we can only pay the minimum payment or only pay the late or over-the-limit fees?
To illustrate the consequences of making only the minimum payment, consider the below example.
Below is a short-term snapshot. Over 4 years, total payments made equal $26,443 with $12,778 still being owed in year 5. It will take 14 years to pay off the entire debt balance.
Annual Payments | Interest Charges | Principal Reduction | Balanced Owed | |
Beginning Balance | $26,000 | |||
1 Year | $7965 | $3,982 | $3,982 | $22,018 |
2 Years | $7,304 | $3,652 | $3,652 | $18,366 |
3 Years | $6,093 | $3,046 | $3,046 | $15,319 |
4 Years | $5,082 | $2,541 | $2,541 | $12,778 |
End of 4th Year | $26,443 | $13,222 | $13,222 | $12,778 |
You can find similar information on your credit card statement. In 2009 a new law required credit card issuers to disclose the consequences of making only minimum payments each month, showing how long it would take to pay off the entire balance.
I thank all of you for helping me in settling my debt, and I have been singing ClearOne's praises since I started. You guys have absolutely exceeded my expectations, and I have already recommended you guys to a few people I know. Thanks for everything!
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We do not discriminate on the basis of race, color, religion, sex, marital status, national origin or ancestry. Please also note that all calls with the company may be recorded or monitored for quality assurance and training purposes. Clients who are able to stay with the program and get all their debt settled realize approximate savings of 50% before fees, or 30% including our fees, over 24 to 60 months. All claims are based on enrolled debts. Not all debts are eligible for enrollment. Not all clients complete our program for various reasons, including their ability to save sufficient funds. Estimates based on prior results, which will vary based on specific circumstances. We do not guarantee that your debts will be lowered by a specific amount or percentage or that you will be debt-free within a specific period of time. We do not assume consumer debt, make monthly payments to creditors or provide tax, bankruptcy, accounting or legal advice or credit repair services. Not available in all states. Please contact a tax professional to discuss tax consequences of settlement. Please consult with a bankruptcy attorney for more information on bankruptcy. Read and understand all program materials prior to enrollment, including potential adverse impact on credit rating. C.P.D. Reg. No. T.S. 12-03822
**Disclaimer - We do not charge upfront fees and you do NOT pay our fee until a settlement has been arranged, you approve the settlement, and at least one payment is made towards the settlement. As each situation is unique, fees and costs vary. Please contact us at 888-340-4697 for a free debt analysis and for complete program details.