Mighty Bargain Hunter

Carnival of Debt Reduction #151

August 4th, 2008 | by mbhunter |

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Welcome to this week’s Carnival of Debt Reduction! 

Since this is Carnival #151 here’s a debt reduction example based on a credit card payment of $151.

Let’s say you owe $6,040 on a card with 18% APR.  The minimum payment is calculated as 2.5% of the balance, or $10, whichever is greater.  This makes your payment — surprise! — $151.

If you make only the minimum payment, a payment schedule calculator will tell you that it will take 332 months and $8,675.29 in interest to be rid of that debt — more than what was owed to begin with.  If instead you continue making $151 payments until the debt is paid off, you’ll pay it off instead in only 62 months and pay $3,253.28 in interest.

The lesson: You’ll pay a heck of a lot more interest, for a lot longer, if you make only the minimum payment.

Here are the submissions.  Four I liked especially are at the top.  And just because you’re near the bottom doesn’t mean that I disliked your post!

• Think Your Way to Wealth lists thirty-five places that you can find the extra cash to kick off your debt snowball.  This list is a good way to ease into saving money and spending less.
• No Credit Needed gives five free and inexpensive ways to reduce your debt.  (Calling your creditors for a lower rate might give the biggest return on investment of all!)
• Credit Withdrawal talks about getting over the low-motivation times in debt reduction, especially when all of the little dragons are gone and only the big ones remain.  (Keep up the good work!)
• Debt Prison is saving some money by getting a bit more mileage out of his clothes dryer.  Some repairs aren’t all that hard and if you don’t mind them a little ugly (I really don’t) then they can be cheap, too.  (Bonus points for that door latch!)  He also submitted an article on collection agencies.
• Art of the Coupon explains how debt can breed more debt.  (A very good reason to get rid of consumer debt as quickly as possible!)
• If you’re in debt, the last thing you need is identity theft.  Free Money Finance interviews Equifax Personal Solutions about various aspects of identity fraud, and how to prevent it.
• Wise Bread shows how to cut expenses on hair care.
• No Debt Plan discusses cash back rewards from credit card purchases and how to use them wisely.  I’m also of the opinion that credit cards aren’t evil by themselves but not everyone thinks this way, and that’s all right.  If credit cards tempt you too much, then don’t use them; there’s absolutely nothing wrong with that either!
• My Two Dollars proclaims that paying off debt and saving money can be done at the same time.  This is wise if you need to build up an emergency fund.  That way the random brake job on your car or the emergency room visit won’t cause you incur more debt, or at least not as much.
• It’s easy to be down in the dumps about what you had — especially if it was no debt — but Budgets Are Sexy reminds us to be glad for what we have.
• Taking Charge shares that Wells Fargo might be offending some of its at-risk customers by reminding them that they’re there to help.  (If people are offended by being asked to own up to their debts, that’s just too darn bad.)
• How about downsizing to reduce your debt?  Digerati Life believes that this can be freeing, among other things.
• American Consumer News gives five quick tips to trim your energy costs and find a little extra change to knock that debt down.
• Discover Debt Freedom discusses how your credit report can affect your finances.
• A small paycheck makes it difficult to stay out of debt but the Money Answer Guy shows how to live on $600 per month.
• Starting an online store can be a good way to earn the extra money needed to pay off debt, and Gather Little By Little shows how.
• Personal Finance Analyst discusses deferment of student loans.

Have a great week!