Personal Finance » Debt

Get irritated about debt

“Success means having the courage, the determination and the will to become the person you believe you were meant to be.” – George Sheehan

A few weeks ago I wrote a post about finding your pain point. It explored the idea that often the comfort of staying in a familiar but less than ideal situation is preferable to the discomfort of leaping into the uncertainty of a situation that has to the potential to be much better. For some of us, the motivation to make the leap comes when we finally hit a point where it becomes very obvious that we can’t continue and we have to change. For others, the motivation lies in the desire to create something better for someone else, for example, a new parent’s desire to provide for their child overrides their own desires. Sometimes, the most powerful motivator for change can be uncovering a piece of information that irritates you so much you have to make a change.

Irritation is my motivation

For me, irritation has always been a great motivator. My house is never cleaner than when I’m ticked off and need something to throw my energy in to (my ex-husband learned to exploit this to great effect!). I enjoy reading, audiobooks and seminars and this education is often the source of my irritations as it forces me to become aware of things I was previously blissfully unaware of. Too often these things that I was unaware of were credit-related and as I share what I’ve learned with others I’ve realized that I am definitely not alone. 59% of retirees are carrying debt into retirement and it can be hard to pay off consumer debt when you’re living on a fixed income. This makes it really easy to fall into the trap of just making the minimum payment. If you’re carrying consumer debt and you need an extra-strong motivator to inspire you to focus more on getting it paid off why not do some research into how much you’re actually paying and how much money your financial institution is making from you and other customers who regularly carry a balance. It really worked for me!

It only costs me $37 per month

Take credit cards for example. When I got my first credit card it was a spontaneous decision at the checkout in order to save 10% on a retail store purchase. When the car arrived it had a $1000 limit and the minimum payment required that month for the clothes that I’d purchased was only $10. At 19 years old this seemed like a gift from heaven; I could buy $1000 worth of clothes and only have to pay $37 a month. It was too good to be true. Literally! Blissfully unaware of how much interest I was paying and the fact that a few late payments had given the store the opportunity to increase my rate I continued to pay the minimum each month, occasionally managing to knock it down a little only to run it right back up again when there was a sale. Conveniently the store increased my credit limit every few months and I happily increased my spending, even though as a student my income was limited to whatever I earned at my part-time jobs and over the summer. Then one day I was listening to a show on the radio where they were talking about credit and I learned the following:

  1. Credit card companies charge higher rates of interest for cash advances and the interest is calculated from the day you get the advance.
  2. Interest is compounded daily, meaning that you’re charged interest on Monday and on Tuesday you’re charged interest on the interest that was charged the day before. This makes a big difference over time and costs the consumer a lot more.
  3. If you have a $4000 balance on your card and you pay $3999.99 you will be charged interest on the full $4000 and not the penny that’s remaining. Ouch.

Slightly stunned I took a look at my credit card statement. I was paying 27.9% interest, the minimum payment on my $5000 card was $154 and $130 of that was interest. If I continued to only make minimum payments it would literally take me the rest of my life (and thousands of dollars in interest) to pay back the $5000. In contrast, if I took out a $5000 bank loan I could make the same payment and have it paid off in less than five years. Suddenly the clothes I’d bought on sale five years earlier didn’t seem like such a great deal.

Related article: 5 ways to pay off your credit cards

For me, the irritation came from two angles. One, I was paying a ridiculous amount each month towards debt and two, if I’d been able to channel that money into growth vehicles such as investments or passive income opportunities I’d be significantly better off. The gap between my current debt and potential prosperity was mind-blowing. Suddenly spending money on “stuff” seemed ridiculous and just like that my focus shifted. It takes an awful lot longer to get out of a debt hole than it does to leap in but eliminating debt is a crucial component in building financial freedom, retiring happy and reducing financial stress.

Related article: 7 causes of financial stress

If you’re carrying consumer debt but you never seem to be able to conquer it, take some time to think about what’s really keeping you from making the change. Get inspired by thinking about what that money could be doing if it was working for you. Find your motivator and take action. It’s worth it.


  1. Marie at FamilyMoneyValues

    My ex-neighbor made that discovery when she realized that she was still paying off the clothes she bought for her ex’spouses children 8 years ago!

  2. Joe Blow

    Good article Sarah! Between debt payments and taxes on income, is it any wonder that the deck is stacked against anyone trying to get ahead. Puny interest returns on savings, devalued dollars, a tax system that punishes savers, and a volatile stock market being manipulated for personal gain leave the average person few options. In our present economy, savers are losers. Far better to rack up loans and buy appreciating assets rather than squirrel away meager after tax savings. Notice I said appreciating assets; rental real estate, dividend ETFs, gold, silver, bonds, and so on. Remember those loans are in dollars that are DEpreciating on assets that are Apreciating,and if you do it through your own corporate structure, you will only pay 17% on PROFITS, not EARNINGS. Of course the assets have to be considered part of your business operations, there has to be a reasonable assumption of profit, and a few other restrictions apply, but it warrants further investigation.

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