This was a little surprising to me the other day where a person was telling me how on their credit card the maximum limit is $500 and it has been that amount for years. My initial assumption was with that amount credit it must be easy to manage and not overspend. I was wrong apparently as they did happen to pay interest on that card every month due to not paying off the debt. I then inquired how much they paid to that credit card a month and the answer was about $10 and sometimes maybe even less. So they were essentially in a cycle where each month they are giving the credit card provider free money.
I’m not sure what everyone else’s reaction is, but to me only disciplining yourself to pay $10 a month to pay off that credit card debt seems insanely low by any standards. I then asked if they had any plans to actually pay that debt off and the answer was they were going to use this year’s tax return to hopefully wipe out that debt once and for all in a few months. I was then thinking, why do you have to wait until you can pay the full amount off to take action? Like in this case I was thinking with a $500 credit card debt that would mean you would need to come up with about $16.60 a day on a 30 day month to simply wipe out that debt right now.
By the sounds of it too the person made a whole lot more than that in an hourly wage. I personally always viewed a tax return as extra funds as opposed to money that I am depending on. So in that sense, when it comes to any kind of expense or say debt I think it is wiser to base your action plan to not involve the tax return. I guess another way to think about it is even as a kid I wouldn’t say rely on money that I would receive on my birthday as an essential part of paying for school materials. If anything those funds are “extra” and budget wise I should be organized enough where my say regular work is self sufficient in managing my financial situation/needs. Basically, no shortcuts or easy fixes to having a debt free scenario as it should be a constant lifestyle choice throughout the year.