Biggest Mistakes You Can Make With Your Debt

U.S. citizens currently have more than $2.4 trillion dollars in debt. If you’re in that number, you have to tread carefully if you want to be sure you’re making the moves that decrease your debt instead of making it go up. Here are some debt mistakes you should be sure to avoid.

Making minimum payments or take your time paying it off. There’s one universal truth about debt and that’s that minimum payment are very expensive and time-consuming. Sticking to the minimum means you’ll pay a tremendous amount of interest and pay your debt off over the longest period of time.

Add to it before you pay it off. Perhaps what’s worse than paying the minimum on your debt is increasing it faster than you’re paying it off, even if you are paying extra on all your accounts. Avoid adding more debt on top of what you’re already dealing with. Pay off some of your existing debt before you take on any additional large expenses.

Being in denial about how much debt you have. A head-in-the-sand approach to your debt doesn’t mean your debt doesn’t exist and your debt won’t go away just because you ignore it. Ignoring your debt will never end well. It’s better to know what you’re dealing with no matter how much you may end up disliking the truth.

Taking too long to figure out a solution. It may not be obvious, but there’s a clock ticking on your debt. If you take too long to decide how you want to deal with your debt, you may run out of better options, leaving you only with bankruptcy.

Missing payments on any of your accounts. Whether it’s intentional or a genuine mistake, missing a payment on your debt can set you back several months. Not only will you have to pay the late fee, you’ll also have to make up two payments instead of one. Unfortunately, if you can’t afford to catch up, you could end up too far behind to catch up.

Borrowing from one creditor to pay off another. Robbing Peter to pay Paul won’t reduce your debt, especially if you don’t have a good plan for paying off either. The exception is when you seek an affordable debt consolidation plan to conquer your debt. Even then, you still have to be careful to avoid all the other debt mistakes on this list.

Trying to pay off your debt without changing your lifestyle. Perhaps one of the biggest things keeping you from paying off your debt is the lack of money to fund your debt plan. If you never scale back your lifestyle and reduce your living expenses, you may never come up with the extra money necessary to get out of debt faster.

In life, some mistakes are to be expected. However, when it comes to your debt, it literally pays to avoid making big mistakes. Making the right debt decisions is crucial to making your get out of debt plan work.

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This guest post was written by Eliza Collins, a personal finance writer specializing in saving strategies, alternative income and debt relief options. You can read more of her articles at the debt settlement blog.

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3 comments to Biggest Mistakes You Can Make With Your Debt

  • Yes, we have all been through most of these situations above.. I cut up my credit card for two years after leaving uni as I couldnt cope with the repayments. After that I got used to buying only what I could afford. Now I have a credit card, I hardly use it as I got out of that habit.
    libby

  • […] Missing payments on any of your accounts. Whether its intentional or a genuine mistake, missing a payment on your debt can set you back several months. Not only will you have to pay the late fee, youll also have to make up two payments instead of one. Unfortunately, if you cant afford to catch up, you could end up too far behind to catch up.Source: thehowtogetoutofdebtplan.com […]

  • […] Missing payments on any of your accounts. Whether its intentional or a genuine mistake, missing a payment on your debt can set you back several months. Not only will you have to pay the late fee, youll also have to make up two payments instead of one. Unfortunately, if you cant afford to catch up, you could end up too far behind to catch up.Source: thehowtogetoutofdebtplan.com […]

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