What Does Your August Look Like Financially
Typically, August is the busiest month of the year at Consumer Credit of the Quad Cities. So now’s a good time to keep a close eye on your finances. “Many people have already overspent on summer vacations,” said Brian DeLaney, CEO of Consumer Credit. “Now they’re heading toward back-to-school expenses. Tuition, new clothes, books, sports equipment – it all adds up. Some folks say: ‘I’ll just use my credit card.’ But that’s when the real trouble starts.”
According to DeLaney, people will put expenses on a credit card and then make the minimum payments until it is paid off. That strategy can only lead to long-term headaches. If you owe $2,000 on a credit card charging 19.8% APR, a minimum monthly payment of 2 percent, or $20, means a debt lasting 25 years and four months, assuming you have no new charges and always make the minimum payment. But, a higher payment rate of 5 percent, or $50 per month, reduces the length of the debt to 5 years and 11 months.
“Of course, the best strategy is to pay off a debt just as soon as possible, so you don’t keep building walls of debt around you,” DeLaney said. “If you build enough walls, it’ll start feeling like a prison.” He noted that too much debt hurts your life in unexpected ways. Some employers may not wish to hire an employee with excessive debt. Debts make it difficult to buy or even rent a home – and taking out a loan can be an ordeal. “If your wages are increasing in this better economy, you should direct the extra income to paying off costly credit card debts,“ he suggested.
DeLaney also suggested saving money in IRAs and 401K accounts. “Don’t assume Social Security will take care of you in your retirement years,” he said. “The amount you receive may be insufficient. You might not enjoy a reduced lifestyle – unless you’re a Ramen noodle connoisseur!”
For those who could use input into their financial matters, DeLaney noted that Consumer Credit offers budget counseling for free. If your credit card debt needs to be reduced, firms that assist with debt consolidation, like Consumer Credit, can expedite the matter.
“Working with a non-profit credit counseling company can put your mind at ease,” DeLaney said. “Creditors will often take lower payments, reduce interest rates, and stop late fees. Plus, when the debt is paid off, you’ll have more money at your disposal. It’s like you gave yourself a raise.”
Consumer Credit of the Quad Cities is located at 3509 Spring St. #4, Davenport, and has been offering credit counseling services since 1993. For more information, call (563) 359-8830, visit TooMuchDebt.com or e-mail info@TooMuchDebt.com.