2014-01-06
The holiday season can be a joyful time, but can also increase the stresses of everyday life. While the holiday stress doesn’t last forever, for those with debt struggles, the New Year brings no relief. The expense of the holidays can increase your debt challenges and the New Year can bring the reality of those troubles home.
When caught up in the emotion of the holiday season, the decision to charge all costs to a credit card and make monthly payments seems reasonable. After all, you might reason, the cost per month probably won’t be that much. Individuals make promises to themselves to gain control of their finances in the New Year and to deal with problems after the holidays.
The real consequences of that holiday spending are easier to understand if you consider an example. If you charge $2,000 to a credit card at an interest rate of 18%, the minimum monthly payment is only $50 per month, if you are required to pay interest plus 1% of the balance. $50 per month seems very affordable. However, if you only pay the minimum payment, it would take you approximately five years to pay off the total balance.
Most people will look at this example and will suggest it is their intention to pay more than the minimum payment to pay it off faster. This is a better approach, but it still presents some concerns. A regular payment of $100, for example, will still require 24 months of payments before this balance is paid in full. And in that two year period, it will also cost you an additional $396 in interest charges.
Even if you can afford to pay $100 per month in your current household budget, what happens when something unexpected comes up in your life and you don’t have the money saved for unforeseen expenses? For many individuals, this is the start of the cycle of debt: each year the debt load increases and the cost of carrying that debt becomes a source of stress and anxiety.
If you are caught up in the endless cycle of debt, either because of holiday spending or because you’ve used credit to pay for things you did not have money to buy, it may be time to give yourself some peace of mind. At MNP, we will meet with you in person to discuss all of your available options for dealing with debt. Start the New Year by making a plan to be debt-free.
2025-01-08
Lifestyle Debt
Imagine this: you’ve just signed up for a gym membership, bought into a timeshare, or switched to a new service plan after someone convinced you it was a good idea. Now, you’re having second thoughts. It’s called buyer’s remorse, and it’s more common than you might think. But here’s the good news: buyer’s remorse laws exist to protect you.
2024-12-18
Lifestyle Debt
The holidays are a time for gathering with friends and family, sharing laughter, and creating memories. But hosting a holiday party can get expensive, especially with rising costs these days. Thankfully, you don’t need to spend a fortune to throw a memorable celebration. Here are some ways on how to host a fantastic holiday party on a budget.
2024-12-03
Lifestyle Debt
Debt can be a double-edged sword. On one hand, it can be a valuable tool to build credit and achieve financial goals, like buying a home or pursuing higher education. On the other hand, bad debt—like unmanaged credit cards and payday loans—can spiral out of control and lead to significant financial stress if not managed carefully.
