When you’re in debt, you will do anything to get out of it and back into the black as soon as possible. But in your rush to do so, there are a few common debt mistakes you should never make.
Not curbing your spending
If you are in debt, you have been spending above your means. So, the first thing you need to do is tighten your belts and change your spending habits. If you cannot do that, then anything else you try to do will surely fail. Drawing up a budget is usually an excellent place to start as it will show you all of your incomings and outgoings and help you identify areas where you could save money and start paying down debt instead.
Not weighing up all your options
You might think that to get out of debt you need to start a debt management program or file for bankruptcy, but what about IVA’s? What about coming to an agreement with your creditors? If you do not explore all of your options thoroughly, you may end up paying more money back than you need to, and you may do something permanent that does not need to be done. So take your time and consider every option open to you before you act.
Trying to do it all alone
Similarly, one of the biggest mistakes you can make is trying to dig yourself out of debt without help. Being in debt is stressful and often complicated, so talking to a good debt counselor who can talk you through your options, point you to the right help and offer you the support you need to get through it is vital.
Not focusing on one debt at a time
If you can, you should make your minimum payments on each debt you have, but once that is done, you should focus on paying off one debt at a time as aggressively as you can. Some people find paying off their smallest debt first is the motivation they need to keep going, while others focus on their highest interest debt so they can pay less interest overall. It doesn’t matter what you do as long as you focus all your energies on clearing your debts one at a time.
Borrowing more money
It can be tempting to borrow more money to pay off your debt, but this is something that rarely works out. After all, if you’re struggling to pay off your debts now, how will you pay off the new one? Instead, it’s a far better idea to talk to your creditors, devise a fair plan for you both and start paying off your debts at a rate you can afford.
If you can avoid making these very common mistakes in a bid to pay off your debts, you will save money, save your stress levels, and have a much easier time of it overall!
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