Relocate to Wisconsin : How Long Will it Take to Pay Off Credit Card Debt ?

How Long Will it Take to Pay Off Credit Card Debt ?

     As agents who work in both the niches of short sales and divorce, we are very often keenly and confidentially aware of the credit card debt that has been accumulated.   To compound  the TOTAL of the debt...the couple may not always have a sterling credit rating which means the interest rate is very high.

    credit card debt In addition, if some part of the balance has been cash withdrawals the rates on those balances are even higher. It may seem at the time to be a very temporary even "one time" remedy to a shortage of cash...but in our experience reviewing financial information, it can often become a habit.

   Like "snitching" from the cookie jar or opening that bag of chips,...the limit to "just one" never seems to work before the diet ,...be it calories or debt is long forgotten and the taste of pleasure takes over consuming the consumer.

    In divorce there are various ways to divide income and assets...someone or both people has to be responsible for the credit card debt.  This debt can easily have mounted into five figures....and for people who foolishly only pay the debtminimum balance...while continuing to add to the balance, the situation only becomes worse.

      When we first began working with short sales, we were referred to a couple who applied for more and more credit cards all the time. He was unemployed in the construction trades and hopefully believed that he would working soon. While we gave him A+++ in his hopeful attitude, they kept using one credit card to make the minimum payment on another and were now bankruptcysix figures in credit card debt. We had to explain that while we could help with the mortgage debt, they should seek the wise counsel of a bankruptcy lawyer to deal with the rest of credit card debt.

  We always suggest...IF we are asked that clients examine their credit card debt and how long it will take to pay off using various figures of payments...the results are always a shock to them when they realize how very out of hand the debt has become.   This charge now/figure it out later syndrome is NOT at all reserved for people having small five figure incomes...just the opposite is true in many instances...where the income may be well into six figures...and it matches the accumulating debt.

    We suggest that people go to a website that enables them to see in Black and white how long credit card debt will take to pay off.  Click here for one of the sites we recommend.

      To drive this point home, let's use an example of $60,000 in debt with an interest rate of 17%. Let's imagine for the sake of this illustration that this balance represents only goods and services and no cash withdrawals. Let's also "plug in" to this equation the figure of  $875 a month in regular monthly paymenDEBT OVERFLOWts also not figuring that additional purchases may be charged thereby increasing the balance. For purposes of this illustration, we tried using lower payments and got an error message that indicated that a lower amount did not even cover the interest and we needed to increase the monthly payment.  Using this example, with NO additional purchases, it would take 252 months OR 21 YEARS TO PAY OFF THIS DEBT !

       In divorce where the debt may be assumed by one spouse as part of the settlement...it is EXTREMELY dangerous for the other spouse to agree to such terms.  For however many YEARS it takes to pay off this debt...this is part of the debt to income if it remains in both names for both people....a "forgotten" payment continues to ding the former spouse's credit rating while he/she is trying to improve it.  If such a proposal is made to you....Just say NO...there may well be other assets...a retirement fund, inheritance ....etc. that can be used to pay off or pay down this debt so that it doesn't continue to contribute to the credit ruin of both people .

   anchor While we can't legislate high school curriculum...we strongly advise that you sit down with high school and college age children and show them some of these illustrations so that they can begin to comprehend what after graduation appears to new found "financial freedom" can quickly become an anchor of debt.

      This is a financial public service message brought to you by Sally K. & David L. Hanson, Broker Associates with Keller Williams proudly serving southeastern Wisconsin.

Sally K. & David L. Hanson, ABR, CDPE, CSS, e-Pro,ILHM, REDS


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Comment balloon 39 commentsSally K. & David L. Hanson • June 23 2017 07:00AM

Comments

And paying the minimum is EXACTLY what the credit card companies want!

And remember the 72 rule.  Dividing an investment return into 72 gives you the amount of time it takes to double your money.  So a credit card company charging 17% is doubling its money every 4.17 years!  So, in the 21 years in your example how many times has the company doubled their money?  And at whose expense?

Posted by Jay Markanich, Home Inspector - servicing all Northern Virginia (Jay Markanich Real Estate Inspections, LLC) 8 months ago

Good morning Sally.  I have not had a credit card in over two decades.  If we can't afford it, we don't buy it.

Posted by James Dray, Exceptional Agents, Outstanding Results (Fathom Realty AR LLC) 8 months ago

Happy Friday Sally. Getting debt under control is great advice for all consumers. With discipline, there is freedom in financial stability and security.

Posted by Anita Clark, Realtor - Homes for Sale in Warner Robins GA (ColdwellBanker SSK Realtors ~ 478.960.8055) 8 months ago

Credit cards are intoxicationg until they smother you...and its easy to get hooked!

Posted by Dennis Swartz, ABR, CRB, CRS, GRI, CMCA, MBA...experience counts! (Rickert Property Management) 8 months ago

This is very useful information. It's amazing how fast credit card debt can rack up. It's too easy to use. I do think classes should be taught on things like credit cards, debt, credit scores, while in high school!

Posted by Kat Palmiotti, The House Kat (Grand Lux Realty, 914-419-0270, kat@thehousekat.com) 8 months ago

Good morning Sally K. & David L. Hanson ,

Credit card debt for some is an on going battle especially with companies always sending you an application! The definitely want you to pay the minimum they make the most when you do. Good advice to get yourself on the road for financial freedom!

Posted by Dorie Dillard, Serving Buyers & Sellers in NW Austin Real Estate (Coldwell Banker United Realtors® ~ 512.346.1799) 8 months ago

Good morning Sally and David.  I understand that some folks have trouble with finances, but I think it's better to do without than to pay interest on credit card debt.

Posted by Gabe Sanders, Stuart Florida Real Estate (Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales) 8 months ago

Excellent points.  I suppose the debt should be settled and/or make sure all credit cards/assets are properly separated.  What a shame when one responsible former spouse has issues because the other one doesn't pay. I'm sure it happens all the time.  Oh yeah, and those minimum payments can you into real deep debt.

Posted by Debbie Gartner, The Flooring Girl & Blog Stylist -Dynamo Marketers (The Flooring Girl) 8 months ago

It took us many years to recover from a bad credit card decision. It feels so good when it's gone. Hopefully we have impressed on our kids what not to do. 

Posted by Scott Seaton Jr. Bourbonnais Kankakee IL Home Inspector, The Home Inspector With a Heart! (SLS Home Inspections-Bradley Bourbonnais Kankakee Manteno) 8 months ago

Congratulations on your feature recognition. This is good information to share.

Posted by Roy Kelley, Roy and Dolores Kelley Photographs (Realty Group Referrals) 8 months ago

These numbers produce a cary reality that so many consumers do not grasp, or prefer to 'sweep under the carpet' and not accept.  Great Post You are ReBLOGGED!

Posted by Sandy Padula and Norm Padula, JD, GRI, Presence, Persistence & Perseverance (Realty One Group) 8 months ago

Credit cards are simply a method of preying on the gullible, much like student loans. The idea of "free" money is appealing but it doesn't take long for it to enslave the user.

Posted by Nathan Gesner, Broker / Property Manager (American West Realty & Management) 8 months ago

Thank you for the information. I will bookmark it and share with others.

Posted by Gita Bantwal, REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel (RE/MAX Centre Realtors) 8 months ago

Good morning Sally and David. I need to send this to every legislator in Illinois who lack understanding on balancing the budget! Thanks! Enjoy your day!

Posted by Wayne Martin, Real Estate Broker (Wayne M Martin) 8 months ago

It is pretty amazing to see how much credit card debt most families have.  When asked to list all their debts, it becomes an eye opening situation.  You can end up paying 30 years on a steak dinner.

Posted by Jeanne Gregory, The most important home I sell is YOURS! (RE/MAX Southwest) 8 months ago

I remember at a younger age that my debt service wasn't even paying off principle. It is a sad thing that there is a large industry that works to get people in debt. I now keep zero balances by paying them off every month with no interest paid and buy nothing on time, except mortgages.

Posted by Joe Pryor, REALTOR® - Oklahoma Investment Properties (The Virtual Real Estate Team) 8 months ago

Oh my, that's no way to reduce a credit card debt. This person needs guidance for sure!

Posted by Lawrence "Larry" & Sheila Agranoff. Cell: 631-805-4400, Long Island Condo & Home Sale Specialists (The Top Team @ Charles Rutenberg Realty 255 Executive Dr, Plainview NY 11803) 8 months ago

Sally and David:

I suspect many buyers do not realize how much in debt they are and how long it will take to eliminate, especially if they are only making minimum payments. Credit card companies just make it too easy and a strong temptation for those who have not learned, or can't, manage their use of credit.

Jeff

Posted by Jeff Dowler, The Southern California Relocation Dude - Carlsbad (Solutions Real Estate ) 8 months ago

Good morning, Sally and David -- excellent post and definitely gold star worthy.  I agree that it's past time that consumer education should be a part of high school curriculum.

Posted by Michael Jacobs, Los Angeles Pasadena Area Real Estate 818.516.4393 (Coldwell Banker Residential Brokerage) 8 months ago

Sally & David, EXCELLENT post, and getting into credit card debt is definitely hard to dig back out of that black hole.

Posted by Joan Cox, Denver Real Estate - Selling One Home at a Time (Metro Brokers - House to Home, Inc. - Denver Real Estate - 720-231-6373) 8 months ago

Such an excellent post, Sally K. & David L. Hanson.  I always told our kids that destroying your credit takes no time at all compared to the amount of time it takes to rebuild it.   It's sad that this occurs, but when it does it's good to know that there are professionals such as yourself (and those you refer) that can help. Seeking that knowledge and expertise is the most important first step ...

Great post, Sally ...

Gene

Posted by Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi, 708.921.6331 - 40+ yrs experience (NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656) 8 months ago

Not to affect your FICO score, you will need to keep your balances UNDER 25%, if it goes over, you will be affected with higher mortgage rates. To keep your credit score, pay off some cards but DO NOT cancel them. By cancelling its like you have NO credit any more!

Posted by Eva B. Liland with Century 21 Doug Anderson, Glad to be of Service (Century 21 Doug Anderson) 8 months ago

This was a good post. The example is a perfect way to show people what credit card debt does.

Posted by April Swenson, CRS and Managing Broker - Ocean Shores Real Estate (Coldwell Banker Ocean Shores Brokers) 8 months ago

Its like having a pet piranhha...One day, it will bite you bad!

Posted by Richie Alan Naggar, agent & author (people first...then business Ran Right Realty ) 8 months ago

Interesting article and I love how you've worked in the illustrations to better help make your point.  Thanks for sharing!

Posted by Raymond Edler, #1 Real Estate Office in DFW (Keller Williams Realty Dallas Fort Worth 214-552-2091) 8 months ago

Sally and David unfortunately people think that if a court says the credit card debt is going to be the responsibility of one of the spouses, it does not relieve the other of the liability of the debt in the debtors eyes.  The only way they stop being liable for the debt is by taking it out of their name.

Posted by George Souto, Your Connecticut Mortgage Expert (George Souto NMLS #65149 FHA, CHFA, VA Mortgages) 8 months ago

I was once in debt myself, only $7,900, couldn't even pay the minimum, the credit card company called me and said if I only could pay 25%, TODAY, they would forgive the rest... Of course, they "sold" my debt to a collection agency.

Posted by Eva B. Liland with Century 21 Doug Anderson, Glad to be of Service (Century 21 Doug Anderson) 8 months ago

This is such good information thanks for the empowerment.  Financial literacy is a key component that is missing from so many facets (i.e.,., child rearing, education, our careers, etc.,.) of our society.  It could make all the difference in the world if it were a mandatory part of the curriculum starting with elementary kids all the way through college.  Could you imagine how financially literate/monetarily equipped our kids would be as they grow into successful adults.  Okay enough of my 2 cents, thanks for the article.     

Posted by Barbara Brockus, MBA 602.421.2651, GRI, ABR, SRS and MRP-covering Arizona (EXIT Realty Expanded Vision) 8 months ago

Another solution is to secure a reputable credit card debt reconciliation company, especially if the debt is huge and let them negotiate your debt service and payments. 

There are so many essential elements our education system doesn't provide our children, especially about money and how money works. As long as liberals select the curriculum, our children will likely always be dependent on the government or others for financial aid. 

Money is simply a tool to get stuff yet money can only be earned two ways. The most important factor about money is the rule of 72, however, how many high school seniors and how many parents are aware of this. The key to this dilemma is education.  Great post.

Posted by Kimo Jarrett, Pro Lifestyle Solutions (WikiWiki Realty) 8 months ago

Thank you Kimo Jarrett for the Rule of 72, actually had to Google it. You can also use that rule to find out how  your debt will double if you do not pay down your balance. Pretty scary stuff!

Posted by Eva B. Liland with Century 21 Doug Anderson, Glad to be of Service (Century 21 Doug Anderson) 8 months ago

The government does not regulate interest rates for those who have to charge with several credit cards to make ends meet. 17-18% is steep compared to big banks that pays savers 0.025% interest.

Posted by Sam Shueh, mba, cdpe, reopro, pe ( (408) 425-1601) 8 months ago

Thanks for a well written and much needed post on the affects of credit card debt. It is a major problem with so many people who want to become home owners.

Posted by John Wiley, Lee County, FL Real Estate GRI, SRES,GREEN,PSA (Jones & Co. Realty) 8 months ago

Good Morning Sally and David - this is good information.  The real problem is changing behavior.  At some time real sacrifice and pain must occur.  Robbing Peter to pay Paul does not work.

Posted by Grant Schneider, Your Coach Helping You Create Successful Outcomes (Performance Development Strategies) 8 months ago

We need to teach this sort of thing in school so it is understood and just how detrimental debt can be and how destructive as well.

Posted by Nick & Trudy Vandekar, 610-203-4543, Tredyffrin Easttown Realtors, Philly Main Line (Long & Foster Real Estate Inc 610-225-7400) 8 months ago

I learned a very long time ago that I didn't want to ever face a credit card debt situation and have been lucky enough to pay off my card every month. This is great information for those dealing with this....happy to say it's not me!

Posted by Sharon Tara, New Hampshire Home Stager (Sharon Tara Transformations) 8 months ago

Great post and it can take years to pay of credit card debt.... It all depends on if you can stop charging on them. Get a plan of action in place and stick to it... No more keeping up with the JONES ... just stop and put yourself first ... Stand strong and say no more... Feel proud of yourself when you can say no. 

Posted by Laura Filip RE/MAX UTOPIA | 903-271-4978, Your locally owned RE/MAX OFFICE (RE/MAX UTOPIA , Serving all of Texoma ) 8 months ago

It's too bad you can't legislate high school curriculum - or maybe it should start in grade school. By the time a child finishes 12th grade, they should know how to balance a checkbook - and know the meaning of compound interest.

Schools would rather teach social awareness, diversity, etc.

Posted by Marte Cliff, your real estate writer (Marte Cliff Copywriting) 8 months ago

Sally

Great post . . . . Great information. Debt is a big issue in the country.

Good luck and success.

Lou Ludwig

Posted by Lou Ludwig, Designations Earned CRB, CRS, CIPS, GRI, SRES, TRC (Ludwig & Associates) 8 months ago

Sally and David

Congratulations on receiving the feature for an outstanding post.

Good luck and success.

Lou Ludwig

Posted by Lou Ludwig, Designations Earned CRB, CRS, CIPS, GRI, SRES, TRC (Ludwig & Associates) 8 months ago

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