Debt: Face the Numbers
These are real numbers that served up a does of reality-shock. Maybe others will think of these numbers when they are planning to carry a putchase on credit.
Relevant Factors: the numbers start with a ‘beginning’ balance of $34,340.20 and an average interest rate of 16.65% in January 2000. Purchases were continually made throughout this time. 9 months of data, including payments and balances, are missing from these records.
| YEAR | Jan. Balance | Interest Accrued | Min. Payment | Amount Paid |
| 2000 | $34,340.20 | $5,585.24 | 6,384.08 | $13,787.08 |
| 2001 | $30,971.82 | $5,267.83 | $7,190.00 | $14,025.74 |
| 2002 | $30,299.80 | $4,497.22 | $6,169 | $16,977 |
| 2003* | $25,314.91 | $1,802.91 | $2,608 | $7,643 |
| 2004 | $22,253.63 | $3,855.94 | $5,267 | $5,279 |
| 2005** | $26,026.44 | $3,823.13 | $4,752 | $10,310 |
| 2006 | $26,770.20 | $3,230.73 | $5,767.95 | $15,322.76 |
| TOTALS | $28,063 | $38,138.03 | $83,344.8 |
* six months of data missing
** three months of data missing
Important: These numbers are not representative of a debt reduction plan. New purchases were continually made – about $48,000 in new purchases if my math is right – and this is simply a record of overall activity.
In 6 years, the credit card companies have made $28,063 in interest – ouch. Imagine if the partner had only paid the minimum payment required.
Kudos: In light of these numbers (or to break out of the shadow of them), I want to point out the recent strides the partner has been making toward debt reduction. When we first started getting serious about the long term potential of the relationships, his credit card debt was $30,503.71 – a number I almost decided was too high for long term partner potential. However, he was taking action to reduce that number and continually increased those efforts. As of the month of the wedding, the debt was down to $20,835.39. As of October, the credit card debt is at $18.861.
The chart above is just for reflection and consideration. It is also evidence that you can’t hide from the numbers and long term debt relationships are financially draining.
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