10 Dollars Over the Limit

So one thing I have been doing since moving is trying to learn slowly and unwillingly some real financial management skills.

I figure what better time, then when I have no money, to learn how to pay off debt and save for the future. Although to be honest. The 'saving' part is going to be taking a backseat to the paying part for a little while I think.

One thing I have been doing is reading this book called "Smart Cookies" about a group of young women who started a 'money club' in order to learn some financial literacy.

The book itself is a bit of an 'lets appeal to the broadest audience possible by saying the obvious' but the idea is good one, and a lot of the websites they recommend are really useful. Useful in the way that I wonder how I managed to live my financial life up to this point depending on the Excel calculate function and some inspired "balance transfers".

Take for example Bank Rate's Minimum Payment Calculator The idea here is that you enter all your credit card info and then find out how long you will actually spend paying down the balance, if you only pay the minimum.

There is a second option beneath the minimum that lets you enter the amount you could pay above the minimum.

Since I am a bit broke a bit, I only entered 10 dollars above the minimum and that is how I made the pleasant discovery that paying a mere 10 bucks above the minimum halves the amount of interest you pay, and cuts down your payment time by more then half.

I know everyone probably knows this already but if you don't then huddle in. 'cause this shit is crazy!

For example check out the new 'balance transfer' scheme initiated by yours truly at the behest of PC Mastercard. That one is set at .97, the minimum payment is set at 2.2 % of the balance. I plugged all those numbers (well 2.5 because the site didn't offer 2.2) into bankrate and this is the feedback I got;

Right, so if I pay the minimum it would take almost 10 years to pay that balance and if I pay a mere 10 bucks over the minimum it'll take three.

The weirdest part is that I played around with other amounts, 5 - 10 -20 etc.. the most dramatic change happens early between 5 - 10 dollars after that you have to start paying off in big chunks again. But if you are only going to make small payments then make them only a bit above the minimum, it won't hurt as much and you'll see a huge difference.

That's all I got for today. I just told Twitter that I hate financial managment, maybe that is not entirely true.