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Paying Off Pizza

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A $30 Pizza?! Why Managing Your Credit Cards is So Important!

You may need a credit card for convenience, travel, and emergencies, but managing it responsibly is just as important! Remember, when you start paying high interest rates on everyday purchases, clothing, and home accessories, you waste a lot of money and are in danger of getting in credit card trouble.   

Paying Off a Pizza

How do you double the cost of a $15 pizza? You charge it on a credit card—and then you spend the next 10 years paying it off with minimum payments!! 

If that seems unlikely, but then this happens: You charge a pizza with plans to pay for it as soon as your credit card bill arrives. Before the bill arrives, you need to buy new shoes for work, and you put those on the credit card. The bill arrives and it’s more than you thought it would be—plus you need money for laundry and a haircut. So you make a minimum payment because one month extra month to pay it off won’t hurt. But, then next month hits, and something else comes along, because it’s always something! As your credit card balance grows, you have every intention of paying it off but then holidays hit, or something else happens. You tell yourself that you are going to pay it off, but something always seem to come up; it’s called life’s unexpected financial curveballs! Now the debt has grown so large, that even with more than the minimum payment and interest adding up, it just makes it tougher and tougher to pay it off!! Have you seen or heard this before? 

I realize that actual payments and debt interest rates vary, but the table below gives an idea of how quickly things can add up! 

Item

Initial Item Cost

Credit Card Interest Rate

Plus Interest Over 12 Months

You Paid an Extra

Plus Interest Over 5 Years

You Paid an Extra

Happy hour

$20

24%

$22.69

$2.69

$34.52

$14.52

Haircut

$40

24%

$45.39

$5.39

$69.04

$29.04

Cellphone bill

$70

24%

$79.43

$9.43

$120.83

$50.83

TV

$500

24%

$567.36

$67.36

$863.04

$363.04

Car tires

$700

24%

$794.30

$94.30

$1,208.25

$508.25

The moral of the story is that credit cards are like “plastic grenades” because when they explode, they can cause lots of financial damage. Rationalizing charging something is never a good recipe for long term money success, so the best tip of all…”if you are going to charge something, then makes sure you can pay it off…QUICKLY!” Remember, paying credit card interest is money out of your pocket into someone else, be fiscally responsible!

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