The Mathematics of Paying The Minimum

Most of us don't make Donald Trump money. Heck, most of us don't even make Real Housewives of Insert-State-Here money (though the legitimacy most of their funds are certainly questionable). We don't have a great deal of disposable income so we work hard to manage what we have.

I have two credit cards and a personal loan. Rather than deal with the headache of remembering to manually pay them, I set up an autopay so that these bills will be payed on time, every single month. Great, huh?

The problem came when I ran into a bit of a rough month - I was moving to a new apartment, had to pay movers, security deposit for the new place, things like that. Since money was tight that month, I set my payments for the minimum, fully intending to raise them back up to the triple that I had been paying previously.

That was a year ago. Fast forward to last month, when I'm attempting to regain control of my finances (2012, Ringing My Financial Bell!) and I realize that I've been paying the minimum on two credit cards and a loan for almost a year. Le gasp.

In that time, the interest on one of the cards was mostly eclipsing the payments. I delved deeper into the mathematics of paying the minimum, and the results weren't pretty. If I continued paying the minimum, which was the equivalent of 3 or 4 meals a month, it would take me 4 years to pay of the card. If I jumped back up to paying triple that, which I had been doing previous, it would take less than a year. A YEAR!

I'd set out with one goal in mind, but had been derailed, and never got back on track!

The moral of the story - keep a close, close eye on your finances, and always pay more than the minimum. Its ok to make changes to your financial plan for emergencies and such, but make sure you get back in your lane after!

DeAndre