 | This is what we refer to as the “Pay Forever Plan.” The Pay Forever Plan requires you make your minimum payments at the exorbitant interest rate charges that unsecured debt yields. It would take an average 6 years for every $3,000 of debt to become debt free on this program. Obviously, this is the most preferred method of repayment by credit card companies. Doing nothing costs you thousands in fees and interest. Think about that...thousands in interest! A consumer with $50,000 in debt at 10% interest rate that makes only the monthly minimum payments (based on 2.5% of total debt) will take 336 months (28 years) to pay that debt off and stands to pay $24,888.58 in interest alone. That money could be invested or put to better use than just being thrown away. What would you do with an extra $24,888.58? |
Doing nothing can also hurt you physically as well as financially. You will continue to feel stress over the inability to pay bills in virtually all areas of your life. Debt related stress can affect your health, your performance at work, and even your relationships. Taking action will improve the way you feel and your long term financial situation.
Unfortunately even if you are doing nothing, your creditors will definitely not do the same. This will most likely result in harassing phone calls, lawsuits, and repossessions. Ignoring your debts will never make them disappear, but it will most certainly cause you more grief and stress in the short and long run.
When you are in a struggle to make minimum payments on your unsecured debt, you must look at all your debt relief options to determine which option is going to free up your cash flow problem.
Debt Amount | Pay Back | How Long Will It Take |
$10,000 | $26,276.59 | 42 yrs 9 mos |
$15,000 | $55,370.41 | 48 yrs 11 mos |
$20,000 | $74,464.22 | 53 yrs 3 mos |
$25,000 | $93,557.98 | 56 yrs 7 mos |
$30,000 | $112,651.77 | 59 yrs 4 mos |
$35,000 | $131,745.58 | 61 yrs 8 mos |
$40,000 | $150,839.39 | 63 yrs 9 mos |
$45,000 | $169,933.22 | 65 yrs 6 mos |
$50,000 | $189,027.02 | 67 yrs 1 mos |
$60,000 | $227,214.61 | 69 yrs 10 mos |
$70,000 | $265,402.22 | 72 yrs 2 mos |
$80,000 | $303,589.81 | 74 yrs 2 mos |
$90,000 | $341,777.43 | 76 yrs |
$100,000 | $379,965.06 | 77 yrs 7 mos |
$110,000 | $418,152.62 | 79 yrs |
$120,000 | $456,340.27 | 80 yrs 4 mos |
$130,000 | $494,527.82 | 81 yrs 6 mos |
$140,000 | $532,712.48 | 82 yrs 8 mos |
$150,000 | $570,903.04 | 83 yrs 8 mos |
Number of years to pay off a credit card balance based on 19% interest and a minimum monthly of 2.1% of the outstanding balance. Most cards require a minimum monthly payment between 2.0% and 2.5% of the outstanding balance.
Source: CNN Money
If you can afford to pay off the full amount of your debt on your own then this is the best option for you. However, by continuing to pay only the minimum monthly payments to your creditors, it can take decades to repay the full debt, cost thousands in interest alone, and require you to pay back over three times what you currently owe. Unless you are able to repay the entire debt relatively quickly, this is one of the slowest and most costly ways to get out of debt.
