Chapter 13 and Chapter 7 bankruptcy are great tools for lightening a person’s debt load. With both chapter 13 and Chapter 7, you can eliminate medical debt, credit card debt, and other types of unsecured debt.
Shrinking your debt can be critical to your financial and emotional health. If the load gets too heavy, something will have to give.
Heavy debt loads can lead to garnishments, collection lawsuits, foreclosures, and car repossession.
How much weight can you carry?
How fast will your debt grow if you do not deal with it?
Compound interest is one of the great wonders of the world. It can work for you or against you. When it works for you, life is good. When it works against you, every day just feels like it is getting heavier and heaver. The load on your back grows larger and larger.
May people do not know that their credit card company may be charging them interest that compounds daily. Allow me to illustrate the pain.
Let’s say you owe $20,000.00 on your credit card. Let’s say your annual interest rate is 25 percent (most of my clients have credit card interest rates that are higher). A 25 percent annual interest rate would be .00068493 if calculated daily. Mulitply $20,000 times 0.00068493 and you get $13.6986 per day!
Perhaps you might be asking yourself, “Is $13.69 per day really that much money?” But here’s the catch with compound interest: you actually get charged interest on your interest fees! Using the example from above, on day 1, your balance is $20,000.00. On day two, your balance is $20,013.69. On day three, your balance is $20,027.40 (you are now paying interest on interest).
Let’s do the match over a year. A $20,0000 debt with an annual interest rate of 25 percent compounded daily over a year will equal $5,678.31. A person with this amount of debt has to pay $5,678.31 per year to their credit card before they can even start chipping away at the $20,000.00 balance. If the interest does not get paid, then total debt will just keep on rapidly growing.
Money Chimp has a great compound interest calculator. If you would like to play with it, click here.
Don’t let compound interest break your back. Start shrinking your debt load today. If you live in Georgia, please feel free to call my office at 770-809-3099 if you would like to set up a free consultation. Also, you can fill the contact form to the right.
We have office locations in Marietta, Kennesaw, Dallas, Dalton, Cartersville, and Rome.