1. Jenny will be paying this bill for at least 15 years before she is even halfway done, and it may even take her 20 years. Who wants to spend the best ten years of their life, the 20's, paying credit card bills and stressing over interest rates? I'd much rather be apartment hunting or watching the Pats on a Sunday night. And, uh, buffalo wings for the game? Use your debit card.
2. So Jenny put $2,500 on her credit card. I'm assuming the purchases she was making were things like clothes, gas and entertainment. Now get this - by the time she's done paying off this bill, she will have paid over $12,000 for those things. She will end up paying $12, 483.63. I'll be honest - that's three times the price I paid for my car. Oh. My. God.
3. How is that 19.8% interest rate sounding? Good? Not so much. That insane interest rate cost Jenny almost $200 in interest payments - $188.68. I would think that she could spend that money on a Coach purse instead, since it is her irresponsible shopping habits that got her into this mess in the first place. At this point, I'd be just plain embarassed to be Jenny.
4. Now here's some irony. It's going to take 47 years for Jenny to pay off this bill at this rate, but interest isn't entirely to blame. Her very last monthly payment ever, the last one of her 47th year of payment, will include a bigger charge for principle than for interest. She will pay $9.91 in principal and $.09 in interest. This won't be a first though, because the same thing will happen in her 45th year of payment - she'll pay $6.48 in principal and $3.52 in interest. So let's not blame the Interest Monster for Jenny's lack of responsiblity, here. Hopefully, such a brutal interest rate taught her a lesson. It's getting increasingly difficult to feel sympathy for me.
5. Okay, time for some fun - a 25 year high school reunion. Wouldn't it be awesome to reunite with your fellow classmates and explain that you are still in credit card debt 25 years after you created it? Fabulous. So Jenny gets to chat it up with old friends and explain her $873.23 that she still owes. Little bit embarassing, I'd say. While most people are talking about marriage and children, Jenny gets to share the joys of credit card debt related stress. Woo, go Jenny!
6. Jenny could have done several things to avoid this entire problem. First of all, she should have refused the credit card offer in the first place. No credit cards until you can afford to pay for them. Secondly, if she insisted on having a card, she should have shopped around for a more decent interest rate. That could have lessened the blow of interest payments that took $10,000 from her over a time span of 47 years. Thirdly, she could have looked also for a card with a higher limit while she was out shopping for a better interest rate. Duh. A fourth idea is an easy one - pay more than the minimum amount every month to avoid dragging out the process. She could have done this in ten years instead of almost fifty. And finally, Jenny could have asked for help. Help from family or friends, help from even, eek, a bank. Anything to get this paid off faster.
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