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Did Poor Debt Management do This to You?
Poor debt management can quickly get you into serious financial trouble. Here’s what often happens without people even realizing it… ...They get caught in the Credit Card Whirlpool. The credit card whirlpool describes the feeling that overcomes a person in debt. They cannot free themselves from the constant downward swirl. The interest accumulates so fast that is seems like they can never get free of it. For example, assume a person applied for a new credit card, began overspending their income by $85 per month, and increased their credit card balance by that $85 each month. This is called negative margin and can be depicted like this... 
Also, assume they did this for five years and then decided to change course and pay it off over the next five years. Given the impact of accumulated interest, to pay off the overspending during the first five years, this person would have to under spend by $148 each month to have the card paid off in five years. It is the significant difference between the overspending and the under spending that creates the whirlpool. As a result, the total amount paid back just to get back to zero would be 75% more than was borrowed! That can easily become a trap. Many people find it difficult to escape. The other aspect to that is the impact on the individual's lifestyle. Let's say that this person has monthly take home pay of $1,000. During the first five years, they lived on $1,085. To pay it off they would have to live on $852. What many people fail to realize is that just to get back to ZERO ... they have to live on $233 less ... or a 21% drop in their lifestyle! This is another aspect to why the credit card whirlpool can seem like an impossible place to get free from. From the credit card whirlpool, many often are caught in the
debt trap.
If this has happened to you, there is hope- we will show you money management skills to eliminate your debt and gain financial freedom. If this hasn’t happened to you, Congratulations. You are wise and have good money and debt management skills. Please share your knowledge with others so they can avoid this trap. At Financial Freedom Trail, not only are we interested in helping you with debt management skills, but we also help people manage their money wisely, reduce spending and learn ways to increase their income. Please take a moment to visit our
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to discover some ways that we can teach you personal finance skills to achieve financial freedom. Financial Freedom Trail Home
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