Take Control of Your Credit Card Use

Track your spending.

It can be a pain to write down what items you have bought, especially on credit, but you need see the clear picture to make an effective game plan. What is your rent or home payment? How much is monthly insurance and taxes? How much are groceries, gas, phone, electricity, and heat? How much are cable services, Internet services, magazine subscriptions, health club dues, clothing, and other membership dues costing? And of course how much are your debt payments, auto credit card, consolidated loans, equity loans and more? Don't forget extras like Christmas and other special occasions.

You won’t know where you are going if you don’t see where you are coming from? Try and make a budget and then review it at the end of the month. How did it go and what are you going to do about it?

The bottom line is if you are thinking you are getting into trouble with debt, then you probably are. The biggest mistake you can make is right at step 1 in deciding to do nothing. But you are here right now! That means you have a great chance to make a difference.

Here is a way to see what something really costs when you use debt to purchase it. Would you knowingly purchase it if you knew this hidden number? How long do you have to work to earn after taxes the amount calculated to pay for it later?

> Do you not look at your current balances on your credit card statements?
> Are you only paying the minimum balance?
> Are you ever late paying a bill?
> Have you ever missed paying a bill?
> Do you use credit cards because you don’t have the money at the time?
> Are you surviving from paycheck to Pay check?
> Have you consolidated debt to reduce credit cards just to use them again?
> Besides mortgage and rent, do your monthly debt payments exceed 20% of you income?
> Do you a savings account for emergencies of 2-3 months of income?

Spending Cost Calculator
When you spend money on non-essential, non-investment type products or services, you simultaneously give up the right to earn interest on the money you spent ... for the rest of your life. The same is true when you spend more than necessary on essential and investment-type products and services, i.e., you give up the right to earn interest on the difference. In either case, the total of the money you spend unnecessarily, plus the forgone interest earnings, represents the real cost of spending (usually an amount much higher than is actually printed on the price-tag). Therefore, in order to make wise purchase decisions (expenditures that return a benefit of equal or greater value than their real cost), you must be aware of -- and give full consideration to -- the real cost of each purchase. This calculator will help you to do just that. A few things to keep in mind: The stock market has averaged a return of 10% over the long run. If you invest your savings in paying off high interest debt, you could earn an even better return. Be sure to include any sales taxes that might apply when entering expenditure amounts. Some items you buy come with additional costs of ownership -- such as repair and maintenance costs, operating costs (gas, electricity, etc.), insurance costs, storage costs, etc.. The calculations do not account for inflation.
Enter the dollar amount of an unnecessary, non-investment type expenditure you are contemplating:
Enter the annual interest rate (%) you feel you could earn if you were to invest the money rather than spend it:
Enter the number of years you would allow your investment to grow (number of years until retirement, if applicable):

Forgone interest earnings:
Real cost of expenditure:

In only a 30% tax bracket, you would have to work an eight hour day and make $25 per hour to pay for this meal.

You can use this tool with that new TV that is on sale for $999 with no money down with instore financing at 18%.

What is the true cost of that purchase? Would you pay that price today out-of-pocket in cash today?

Think about it!

What if you borrowed money for a trip?

You should live life and enjoy it. But, you also need to make finacial smart decisions.