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yournamehere · 11-04-2009, 12:46 PM

I've given you the depressing side of your situation; I might as well give you the optimistic side, too.

First of all, you've only got one credit card with a balance. A lot of people have a half-dozen or so, so don't feel like all is lost!

Secondly, your interest rate is not that bad for a credit card. I've heard of CC interest rates in the 30% range.

And finally, you're still in school. Take this as a good lesson learned early, pay what you can until you've started your career, and pay it off ASAP once you're making some real money. If you're wise, once you pay off the card, you'll keep making the same payment to an IRA or 401K plan. Let compound interest work for you, instead of against you!

Remember the Rule of 72 - compound interest will double your money every X years, where X=72/interest rate. For instance, at 5% interest, your money will double every 72/5 or 14.4 years. That $300 you put in your IRA every month will double 3 times in 43.2 years, giving you a monthly retirement income of $2400. And that's only at 5%. Most 401Ks make a lot more than that (despite the last two years) And an employer-matched 401K, if you're lucky enough to get one, will double it at the beginning again, giving you $4,800 at retirement for that $300 you put in.

I wish someone would have sat me down and taught me that when I was your age.

Compound Interest is some pretty powerful stuff - that's why the banks like to use it against you.

11-04-2009, 12:46 PM	#23 (permalink)
yournamehere Invisible Location: tentative, at best	I've given you the depressing side of your situation; I might as well give you the optimistic side, too. First of all, you've only got one credit card with a balance. A lot of people have a half-dozen or so, so don't feel like all is lost! Secondly, your interest rate is not that bad for a credit card. I've heard of CC interest rates in the 30% range. And finally, you're still in school. Take this as a good lesson learned early, pay what you can until you've started your career, and pay it off ASAP once you're making some real money. If you're wise, once you pay off the card, you'll keep making the same payment to an IRA or 401K plan. Let compound interest work for you, instead of against you! Remember the Rule of 72 - compound interest will double your money every X years, where X=72/interest rate. For instance, at 5% interest, your money will double every 72/5 or 14.4 years. That $300 you put in your IRA every month will double 3 times in 43.2 years, giving you a monthly retirement income of $2400. And that's only at 5%. Most 401Ks make a lot more than that (despite the last two years) And an employer-matched 401K, if you're lucky enough to get one, will double it at the beginning again, giving you $4,800 at retirement for that $300 you put in. I wish someone would have sat me down and taught me that when I was your age. Compound Interest is some pretty powerful stuff - that's why the banks like to use it against you. __________________ If you want to avoid 95% of internet spelling errors: "If your ridiculous pants are too loose, you're definitely going to lose them. Tell your two loser friends over there that they're going to lose theirs, too." It won't hurt your fashion sense, either.