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Feb. 22, 2018

23. How Many Vacation Days is Credit Card Debt Costing You?

When you pay your credit card bill… are you paying interest? If so, have you ever considered how many days of work it would take you to pay for that interest? What about any other high-interest or unnecessary debt? We often see the financial cost, but miss the time we lose. Learn how to calculate your lost vacation time, and more importantly, what you can do about it.

When you pay your credit card bill… are you paying interest? If so, have you ever considered how many days of work it would take you to pay for that interest? What about any other high-interest or unnecessary debt? We often see the financial cost, but miss the time we lose. Learn how to calculate your lost vacation time, and more importantly, what you can do about it.









Today, I want to help you learn something that I knew, or at least I thought I knew. But then because I was a little too clever with things, it ended up kicking me in the butt and took me a while to figure it out. Maybe you're in the same situation. Now, if you look at statistics on credit card debt for Americans, you'll see numbers anywhere from 4,000 to 6,000 per individual, or 10,000 to 16,000 per household. It'll all depend on whether you look at households that are carrying balances or not carrying balances. There's a lot of data that you can read either way. Rather than try to prove anything, I want to just show you a mathematical example of what it can be costing you in vacation time for you to be carrying credit card debt. What I'm going to do, like I usually do, is use an example that's somewhat easy on the math as far as using some round numbers here. Whether you're listening to this or watching this, hopefully this will be easy to digest. Imagine you have $12,000 of credit card debt and you're paying 25 % on that. 25 % of that would be $3,000.


In other words, a quarter of $12,000 would be $3,000. If you divided that, that would be $250 per month that you're paying in credit card interest. You're paying that with after tax dollars, so there's no tax breaks on that. It's not like a mortgage that could get a tax break or student loan interest. That's what you're paying just, let's say, to carry a balance. Let's assume for a moment, again, round pretty simple numbers, that you're earning $10 an hour. You're taking home a little bit less than that because you're working, let's say, eight hours a day, so $80 a day, eight times 10. A gain, just to keep things simple, let's say that your taxes in total brackets everything, cost you 25 % of your paycheck. So you're taking home $60. Well, $60 times 4 would be $240 per month, right around the same number we just looked t, so it would be costing you four days per month to carry this balance. Nobody's giving you anything extra for that. You're not getting any benefits for that. You're just working four extra days just to tread water with your credit card interest. Now you might say, Wait, I make more than $10 an hour.


Okay, what if you make $20 an hour? Well, similar concept. You're making more, you're taking home $120 per day, let's say, and it's still costing you two days per month, that's two Fridays per month, you could be taking off if you were able to get on top of your credit card interest. And if you're making $40 per hour, same concept, just slightly different math, you're taking home about $240 per day. So it's still costing you one day per month. That's one vacation day per month. That's 12 days per year for you simply to carry credit card interest. You're getting nothing additional in benefits for that. So I want you to think about this from a standpoint of what it means to be carrying interest that's just really high interest. It's not getting you anything. It's not backed up or guaranteed by a home or a car. This is just money that was spent that there was nothing else to cover it. So whether your numbers are exactly like this or slightly different numbers, this is the basic concept. So what do you do about it? How can you reduce your credit card debt? I come from the generation where we were first introduced to credit cards when we were 18 and 19, and they had these mass mailers that would come out.


My parents' generation didn't experience this. The most I ever had was a checking account that was signed on with my parents. So credit card debt for a lot of people got them in trouble very quickly. Now, today, student loan debt might be doing the same for some people. That's a little bit of a different conversation. But the concept of having a lot of debt impacting your situation, especially when it's not guaranteed by anything, is really brutal on you. So first thing you can do is get clear about what is it that's more important to you than either over spending on your current lifestyle or that's important enough that you want to take time off where you say, Gosh, I got to get a handle of this credit card debt so I can start taking Fridays off or one Friday a month or two days Fridays a month or whatever it might be. You have to have a goal that's more exciting than what you're currently doing with your money. Otherwise, you'll say, Wait, I'll just keep paying for my premium cable channels, my latte, frappuccinos, whatever they are. I'll pay for all these premium priced things that maybe I don't need, but I haven't thought of something better.


The second thing, which ties along with this is to reduce your current lifestyle spending. This is not about trying to make your life horrible. This is about saying, Okay, what could I cut away that I'm really not even using? Very often gym memberships are not being used. Maybe it's you. I've done that sometimes. Who knows? Maybe you're not using the premium cable channels or you're recording DVRs, but you're recording it here. You've got an HD recorder over here and another feature over here and another cable channels over here, see what you could be saving money on. Very often you can renegotiate your credit card rates. You can just call the bank and say, Hey, can I get a break on my credit card interest? T hey might not say forever, but they might say, Okay, for six months, we'll get you to 20 % or 15 %. Remember, banks are not necessarily evil, but they're not your friends. I'm sure some of the people who work at banks might be your friends, but the banks just want to make money. They love credit card customers. Credit card customers pay the highest interest rates, they want to keep you.


Know that. If not, we'll find a way to go somewhere else. You can always look at credit counseling as well if you're ready to cut up your credit cards. But let's say you're not at that stage yet, although that can be very important and very helpful if necessary. S ometimes you can get a 0 % balance transfer credit card with another company, and this is a catch 22. If your credit's really not good and your credit score is bad, that might be tougher. The other thing is you got to be careful that you don't go and spend that money as well. It's one of the traps I got into when I was younger and thought I knew a lot more than I did today. Throw away all the other new credit card offers. If they're not good, if it's something that's just going to get you further in your credit card debt, just throw them away. Unless it's going to be a lower % interest rate and you're going to cut up another card or in some way, again, reduce the total amount of either interest and or total debt you have, stay away from it.


Pay off your highest balanced credit cards first. This is really one of the core strategies of doing credit counseling. But again, a lot of these things like doing that and renegotiating your credit card rates are things you can do without having used a credit card counseling company. Again, they can be awesome, but sometimes it doesn't necessarily work out for you. Temporarily, this is a huge one, the temporarily part, reduce investments in your savings if necessary. Again, this is another tough one because if you do this and get in the habit of doing this, then you might just adjust your lifestyle and just start spending more and now you're not saving. But in the short run, if you say, Wade, you know what? I've just got, let's say, this $12,000 credit card debt, I've been saving 500 a month into my savings. I could knock out that 25 % interest quickly and get back to my savings. My savings aren't making me 25 %, Wade. Again, mathematically, that can make sense. But since we're humans and sometimes do foolish things, that can hurt you if you don't execute properly. Track your credit score and work to improve it.


This can be done very often with your bank on the online website you have for your bank. They might say, Hey, you can get your credit score. If you can't do that, I've used at times creditcarma. Com to look at my score and again, track things. Overall, looking for habits that help you reduce your credit score. Excuse me, help you increase your credit score so that you can reduce your credit card interest as a result of that. Number nine, create a budget. It sounds old fashioned, it sounds boring, but at the end of the day, a lot of this is just math. Then finally, track your finances monthly. I've used Quicken for years. The times when I've not done well with my finances, I've ignored it and put it to the side and said, You know what? I'm too smart for this stuff. I'm just going to go do other stuff. As an entrepreneur, sometimes I'd say, Well, I'm going to out earn this. I'm going to make so much money that the fact I'm paying high interest rates, whether it be on credit cards because of personal lifestyle spending or in my small business, taking risks that were maybe a bigger risks that I should be taking, I'd convince myself, Well, I'll out earn this.


And sometimes you don't. So track your finances monthly. If it's small business, it might be QuickBooks or one of the other tools that does that. So if you want further help with this, you can go to 4 day tools. Com and you can get an Excel based tool that's the vacation debt calculator to help you free up more time and see what it's costing you to not be making the most of how you're managing your money. If you want to get the show slides and the notes from this one, you can go to 4day entrepreneur. Com. Then if you want to start creating your 4 day work week game plan, go to 4day gameplan. Com. This really integrates the concept of the budgeting, your income, and how you start reating the plan that gets you to four days. As I've told you before, if you've watched any of my videos or listened to any of this, it took me 22 years to lock in a four day work week where I was working a four day work week, at least 90 % to 95 % of the time. Many years to do that. It doesn't need to take that long.


It's a lot easier today than it used to be. So if you have any questions in this, put it in the comments section below or shoot me an email. As always, I look forward to helping you create the lifestyle you most desire and helping you make more money in less time doing what you do best. Thanks for listening.

Wade GaltProfile Photo

Wade Galt

Author, Podcast Host & 3-Day Weekend Coach for Entrepreneurs & Employees


With over 30 years of experience working with entrepreneurs, I teach fundamentally sound strategies to help people Make More Money… In Less Time… Doing What They Do Best.
• I help Employees, Entrepreneurs & Business Owners create a sustainable 3-Day Weekend lifestyle.
• Insurance Agency Owners follow my strategies for sales process implementation plus recruiting & accountability enforcement.
• I've been a successful software company founder and owner for over 20 years.

I help people connect with the divinity within, so they can
1. Receive Guidance and Support from the Divine to Create the Life They Most Desire
2. Love Themselves the Way the Divine Loves Us
3. Love Others the Way the Divine Loves Us

I've led retreats and personal growth workshops, authored numerous books on spirituality, personal growth, finance, parenting, business growth & more.

Pulling from 15 years' experience as a productive employee and over 15 years as a software company founder & owner, corporate consultant, sales process implementation coach, accountability expert, recruiter of superstar talent, provider of mental health counseling (psychology) services, life coach and 3-day weekend entrepreneur - I teach others to create the life they most desire personally & professionally.

As a former Fortune 50 corporation software project leader and sales & management trainer, I've been a lifestyle solopreneur since the year 2000.

I have a Bachelor's Degree in Marketing from Auburn University, a Master's Degree in Mental Health Counseling Psychology from Nova Southeastern University, and have earned the CLU & CPCU professional insurance industry designations. I also successfully qualified to be a Certified Integrative (Life) Coach with the Ford Institute.


I enjoy 3-day weekends, Friday's at the beach playing volleyball with friends, + weekends with my family.

My family and I have enjoyed living ocean-side in North America and South America while creating books, software and coaching programs to help fellow entrepreneurs.

I live happily with my wife, children & dog.