Savvy Money Management: The Minimum Payment Trap

Credit cards are simple, right? You charge stuff and pay it off – what’s so complicated about that?  Besides the fact that you can quickly charge more than you could easily repay, credit card companies also charge interest and fees (the average late fee is now $34).

Here’s a good example of how interest works. Suppose you’ve charged a total of $2,000 and then stop making new charges.  If your card has a typical interest of 19% and a typical minimum repayment policy of 2% of your balance per month, it will take you more than 22 years to pay off the card and the total cost will be $7,000 – if you make just the minimum payment.

How is that possible?  Even though you pay off 2% per month, the amount you owe grows every day because of interest – your 2% mainly pays the interest and a fraction of the original $2,000.

If it’s not possible to pay off your entire balance each month, pay as much as you can.  Most debt counselors recommend paying at least twice the minimum payment.  That way you will pay off part of the debt, not just the interest.

10 Tips to Make Some Math Magic

1. Get attitude – an I can rock this math attitude.  Studies have shown that we are not born with fixed IQs.  Some people are not simply “good at reading and bad at math,” as so many students believe.  Study after study has shown that our attitudes toward learning and good ol’ fashioned hard work are the most predictive indicators of success.  So adopt a “I will rock with this math course” mantra. 
2. Do every single homework problem.  A soccer player improves his game by playing soccer.  A guitar player sweetens his tune by strumming the strings.  A math student masters math….drum roll please…..by doing math.  Yes – DO math.  Your instructor assigns problems so you can practice and learn the concepts.
3. Think like a general. Generals are strategic in their problem solving.  Consider what type of math problem you are solving and think about the different strategies you can use to solve the problem.  MathTV shows how different students approach and solve the same problems differently.  Check out the site to learn different solving strategies. 
4. Be a neat-nick.  If you read a number incorrectly because you wrote in a hurry, your problem solving mojo will be thrown off.
5. Do all of the steps.  Yup.  All of them.  If you aren’t able to solve the problem correctly, it is easier to find the error when your thought process is on paper in black and white, or red and white, or blue and white – you get the point.
6. Know thyself.  If you struggle solving certain types of problems, determine where in the problem-solving process you are getting stuck. You are more likely to get the helpful stick you need to pull you out of the mud if you know what’s making you stuck. If you’re at home and you need some additional explanation to help you master a concept, check out Khan Academy.  This revolutionary website is approaching cult-like status among educators, techies, students and math lovers worldwide.  If there is a concept that needs explaining, Khan Academy has a short video that does the talking.
7. Test thyself.  You’ve heard the adage “practice makes perfect.”  Well it’s true.  Complete as many practice problems as you can.  Test yourself; this is the best way to study for a math test.
8. Seek reinforcements.  Every good soldier knows that if help is needed, reinforcements must be called in.  You can get additional support in the Learning Center or through eTutoring.
9. Strength in Numbers.  Consider forming a study group with some students in your class.  The benefits are many.  You can learn from others, get support from classmates, master concepts as you explain them to your study groupies – and you are even likely to make a new friend or two.
10. Seal the Deal.  When you have successfully rocked your math course, celebrate.  Then contact your academic advisor and make arrangements to take the quantitative reasoning assessment immediately.  I don’t know about you, but I often must re-learn math concepts that I have not practiced in some time.  If you want to avoid re-learning all the concepts you just worked so hard to master, then take the required quantitative reasoning assessment pronto. 

 Source: Jacobs, Lynn F., and Jeremy S. Hyman. The Secrets of College Success. San Francisco: Jossey-Bass, 2010. Print.