In the coming weeks, many Escondido residents will be thinking the same thing: How will I pay off these credit card balances? After all, many people in California and throughout the country have been spending the last few weeks buying gifts for friends and family members as the holidays have been approaching. Then, January rolls around, along with the credit card statements. A recent article noted two different approaches to paying off credit card debt - one fast, and one slow.
The slow approach, as our readers can probably imagine, is to simply pay the minimum payments each month. The problem with this approach is that it can be incredibly slow. The recent article gave the example of a credit card statement with a balance of approximately $5,000. If the minimum payment of about $50 was paid each month until the balance was paid in full, it would take 19 years! And, the total amount that would actually be paid would be over $11,000.
The fast approach that the recent article advocates is the so-called "debt snowball" method. In this method, creditors plan to pay a set amount each month that is much higher than the minimum payment. In the same example from the recent article, a payment of approximately $180 per month would pay the total debt of $5,000 off in only about three years, and the total amount paid would be about $6,000.
Many Escondido residents will be facing financial hardship in the new year once credit card statements start arriving. Many others have already been facing financial challenges for years. When a debt burden becomes excessive, including credit card debt, filing for bankruptcy may be an option.
Source: Forbes, "The Fastest (And Slowest) Way To Pay Off Credit Card Debt," Rob Berger, Dec. 15, 2016