Consider this, our standard file: $50,000 of credit card debt.
If the person would like to pay the $50,000 off in 5 years, they would have to pay an estimated $1,541.67 per month for 60 months.
Therefore, the total payback = $92,500
In order to pay back $92,500, one has to earn an estimated gross or pre-tax income of $132,000. Put the $132k in perspective of a gross $25/hr wage; it equates to a total of 5,280 hours of one’s life, just to pay off $50,000. 5,280 hours over a 5 year period actually equates to 88 hours per month of a person’s life, where they will never see the fruits of that labour for 5 years.
Remember, in order for this plan to work, not a single payment can be missed nor can the credit products be re-used even once for emergency or general spending. Considering the potential for life’s challenges over a 5 year period, making these payments without a hitch could be quite a tall order for most people.
My point is, what is the true cost of servicing debt? And by cost, I don’t mean monetary.
There is a better way.
