Letâ€™s suppose you have a credit card and you have been making large purchases and living beyond your means. You donâ€™t want to stay in debt, but youâ€™re only paying the minimum required payments. According to AARP, credit card minimum payments are usually only 2% of the balance. By consistently paying minimum payments, you will have a hard time getting out of debt. That is because of interest. By paying only a small amount of what you owe, the APR interest on your card will make your balance rise every single month.
Paying your debt back
As a result of a rising balance due to interest, it is best to pay more than the minimum payment. How much? AARP suggests that you pay back 15% of your monthly income. That way you will be debt free sooner rather than later. But, if you are working just to make ends meet, how could that be possible? There are a few ways to find money to pay down your debt. One method is to use your savings. Some people may be afraid to touch their savings, but those people are not thinking in the long term. If you owe $2,000 and can pay $1,000 from your savings, then you will owe less money in the long term because there will be less debt that can accumulate large amounts of interest. You can always replenish your savings, but you cannot stop interest from accruing.
Sometimes, when you are in debt, it may not be possible to pay it all back. That is when bankruptcy comes in. Bankruptcy is a useful tool chosen by many people to relieve them of most of their debts and to get a fresh start. Mr. Lutzky is a Bronx, NY attorney who handles personal bankruptcies. He offers free in person consultations to help you determine if bankruptcy is right specifically for you, so call 718-514-6619 to learn more about our office or to set up a consultation. Visit www.MyNewYorkCityLawyer.com to learn more about Jayson Lutzky and his 30 years of legal experience.