When glancing at my credit card debt: I felt my heartbeat faster, my anxiety building, my blood pressure increasing. Have you ever felt that way? I don’t recommend it. The debt caused so much stress that my body was in survival mode (fight or flight). Money related stress is common. According to NEFE 2021, 85 percent of Americans stated that their personal finances caused them tension. It’s important to reduce our stress levels so we can make informed financial decisions.
Time spent thinking about financial issues
The average person spends seven hours per week worrying about money issues, according to a 2020 TIAA Institute-GFLEC survey. The survey focused on women’s financial well-being. Women with greater financial literacy knowledge stress less. I’ve been there too, staying wide awake at night, creating worst-case scenarios in my mind. Therefore, schedule time reviewing your finances, so that you may get a good night sleep.
Schedule Time with Your Money
Knowing how much you owe and how to repay debt is anxiety inducing. So, taking micro steps to tackle debt that can lead to long-term sustainable changes. For example, schedule 10-minute check-ins to review your finances once a week to:
- Organize financial documents in one place
- Check your credit report to get total amounts owed
- Create a spending plan to manage cash flow
Building a habit to sit down and go through your personal finances can help reduce the amount spent worrying. For me, every Sunday, I spend 20 minutes going over expenses, evaluating savings goals, and checking my cash flow. It is a way to assess progress in repaying debt and helps reduce my money anxieties.
How is it possible to save by reducing debt? 
Let’s start with a credit card scenario.
A $5,525 credit card balance, with 16% interest rate, and paying the monthly minimum of $129, if you had to guess, how many months will it take to pay off the debt?
- 24 months
- 36 months
- 64 months
Answer: 3. 64 months or 5 years and 4 months, interest paid $2,718.78, according to Power Pay | USU credit card pay off calculator. According to Experian, the average credit card balance in 2021 per household is $5,525. The average annual percentage rate was 16% in December 2021, as reported by the Federal Reserve.
In this credit card scenario, if you add additional payments of $50, you’ll be able to eliminate the debt in three years. Paying the minimum on a credit card creates the illusion that we are making progress. However, the interest adds up faster than we can pay off the accumulated interest from the previous month. Small dollar amounts, such as $5 or $10, make a big difference in saving money long-term.
Debt Repayment Calculator
Having multiple debts, it’s difficult to prioritize and decide which debt to add an extra payment to. That’s the same dilemma I faced with two credit cards and student loan debt. I used the Power Pay | USU, created by Utah State University Extension. The tool allows you to create different scenarios on which debt to prioritize or add additional payments. To use the free tool, create an account within minutes and you are ready to start on your debt repayment journey. The best feature is no advertisements from credit card companies tempting us to stay in the cycle of debt.
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