Let's say you use your credit card to buy a new TV.
You're responsible person. So you paid the minimum for your credit card every month.
You think you're doing a great job because... well you are.
But by the time you actually pay off your TV...
...you spend way more than what it says on your receipt.
That's because of interest.
High interest rates on credit cards mean the longer it takes you to pay off your debt...
...the more money you end up owing.
So the true cost of that TV might be a few hundred dollars more than the sticker price when all is said and done.
What would you say is is your relationship with money in two words?
O.K.
So what would you say is your relationship with money?
Well, I...
Like money and I like to spend money.
But I think that it's important to know your limit.
If you have one credit card and you build up debt on that but if you get another one
It doesn't necessarily mean that you can just leave all that behind.
Could you tell everyone at home what revolving credit card debt is?
Revolving credit card debt...
...my knowledge is limited.
Do you know what revolving credit card debt is?
Uh. I have no idea.
What is revolving credit card debt?
Revolving credit card debt... I think that's where you put in money?
Well you use the money from credit cards and then you keep trying to pay off your debt...
...but then you keep getting more debt from the interest that you acquire.
Do you prefer to avalanche or snowball?
Uh...
Avalanche.
Do you have any idea what avalanche means?
No!
So snowball method is when you start paying off the stuff with the least interest.
And then you start building up momentum as you start paying things off.
So it's kind of what works best emotionally for people.
Can you tell everyone what that avalanche method is?
I do not know what that is.
The avalanche one sounds kind of scary honestly.
Yeah, it's when you pay off the thing that's the highest interest so that I guess mathematically
At the end of the day you save the most money because you paid off the thing that was most expensive the quickest.
If you're struggling to pay off your balances, you're not alone.
90% of Americans are in revolving credit card debt.
It's a difficult trap to get out of but try to set aside an amount to pay off each month.
That's higher than your minimum.
It can save you a lot of money in the long run so you can binge your favorite TV shows worry free.
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