Tackling debt can feel like being stuck in quicksand, every time you think you’re making progress, something pulls you back in. If you’ve ever been in debt (or still are), you know it’s not just about paying bills. It’s about breaking habits, creating new ones, and trying not to lose your mind when unexpected expenses pop up. No one teaches you how to deal with this in school, right?
But paying off debt isn’t just about throwing every penny at the problem and hoping for the best. In fact, there are plenty of mistakes that can slow you down or even sabotage your progress. Some are common financial missteps, while others might surprise you, things you thought were helping, but are actually holding you back.
Before you start scolding yourself for past mistakes or feel tempted to cut corners in the future, let’s get into some of the things you really shouldn’t do when you’re trying to pay off debt quickly.
1. Don’t Ignore the Interest Rates
When you’re paying off debt, especially credit cards or loans, interest rates can feel like that little monster hiding under your bed. If you’re focusing on paying off debt randomly, you’re probably losing more money than you realize. High-interest debt is where things get tricky. The average credit card interest rate hovers around 28%.
So, if you’re not paying attention to your rates, you’re letting money slip through your fingers. Instead, prioritize those high-interest balances first. It’s called the avalanche method, wipe out the most expensive debt first and save yourself from the interest trap.
2. Don’t Make Only the Minimum Payments
It’s easy to think, “Hey, if I’m making the minimum payment, I’m good, right?” Nope. Minimum payments might keep creditors at bay, but they’ll also keep you in debt for much longer than necessary. Making just the minimum payments can stretch out your repayment timeline significantly, especially with high-interest credit cards.
If you really want to pay off debt quickly, bump up those payments. Even a small increase can help you pay off your balance faster and save on interest. It’s all about momentum; once you start knocking out chunks of debt, you’ll feel motivated to keep going.
3. Don’t Overlook a Budget
Not having a budget is like going on a road trip without a map. You’ll probably end up somewhere, but it might not be where you want to go. Budgets might sound boring, but they’re key to understanding where your money is going and how much you can throw at your debt each month. According to Dave Ramsey, a budget isn’t about restriction; it’s about control.
Set realistic spending limits and ensure you’re leaving enough room for unexpected expenses. Even if you can only budget a little extra for debt payments, it all adds up over time. Without a plan, you’ll likely fall back into old habits, making it much harder to stay on track.
4. Don’t Take on New Debt
This one seems like a no-brainer, but you’d be surprised how many people try to pay off debt while also racking up new balances. Maybe it’s a new credit card for emergencies or a personal loan for something that feels necessary. Taking on new debt while paying off existing balances is like trying to fill a bucket with a hole in the bottom.
If you’re serious about getting out of debt, hit the pause button on borrowing more. Focus on tackling what you owe first. Once you’re debt-free, you’ll have more freedom to make financial decisions without the weight of looming payments.
5. Don’t Forget About Emergency Funds
I know what you’re thinking: if you’re trying to pay off debt, how are you supposed to save at the same time? It sounds counterproductive, but an emergency fund can actually protect your debt repayment plan. Without a financial cushion, one unexpected expense can send you right back into debt.
Set aside even a small amount each month for emergencies. You don’t need a massive fund right away; $500 to $1,000 is a great start. This will help you avoid using credit cards when life inevitably throws a curveball your way.
6. Don’t Close Old Credit Cards
When you’ve finally paid off a credit card, your first instinct might be to close the account for good. But that can hurt your credit score in unexpected ways. Closing old accounts shortens your credit history and increases your credit utilization ratio, both of which can negatively impact your score.
Keep those cards open, but tuck them away. You can keep your available credit without the temptation to spend, and your credit score will thank you for it.
7. Don’t Keep Your Debt a Secret
Dealing with debt can be overwhelming, and many people feel ashamed about their financial situation. This often leads them to keep their struggles private. But keeping debt a secret can add more stress to an already difficult situation. Hiding debt from family members or partners can strain relationships and prevent you from getting the support you need.
Open up about your debt to those close to you. It doesn’t mean asking for financial help; sometimes, just having someone to talk to can relieve some of the emotional burden. Plus, sharing your progress can keep you accountable and motivated to stick to your plan.
8. Don’t Forget to Negotiate with Creditors
Most people don’t realize they can actually negotiate with their creditors. When you’re in debt, it might seem like you have no options, but reaching out to your lenders could lead to better repayment terms, reduced interest rates, or even a lower payoff amount. Creditors would rather work with you than risk you defaulting on your loans.
It may feel intimidating, but pick up the phone and ask about your options. The worst they can say is no, and even then, you’ll still be right where you are. In the best-case scenario, you could end up saving a significant amount of money in the long run.
9. Don’t Fall for Debt Relief Scams
When you’re desperate to get out of debt, it’s easy to fall for scams promising quick fixes. Debt settlement companies often market themselves as the solution, but they can do more harm than good. The Federal Trade Commission has flagged many of these operations for charging high fees without delivering results.
If something sounds too good to be true, it probably is. Always research any company offering debt relief services, and be wary of anyone promising to eliminate your debt overnight. Instead, consider working with a certified credit counselor or a nonprofit debt management program for legitimate help.
10. Don’t Forget to Celebrate Small Wins
Paying off debt is a long, often grueling process. If you’re only focused on the end goal, you might feel discouraged along the way. Celebrating small victories can keep you motivated. It could be paying off a credit card or sticking to your budget for the month, take time to acknowledge your progress.
Celebrating doesn’t mean going on a shopping spree, but you can treat yourself in ways that don’t involve spending. It could be as simple as taking a day off or indulging in a favorite hobby. Recognizing your achievements, no matter how small, keeps you energized for the journey ahead.
11. Don’t Ignore Professional Help
When you’re drowning in debt, it might feel like something you have to deal with on your own. But seeking professional help doesn’t mean you’ve failed. Financial advisors or credit counselors can give you a clear picture of your options and help you craft a realistic repayment plan.
There’s no shame in asking for help. A professional can provide valuable advice, negotiate with creditors, and give you the tools you need to stay on track. It’s about using every available resource to get out of debt faster and smarter.
12. Don’t Pay Off Debt Without Adjusting Your Spending
If you’re focused on paying off debt but haven’t changed your spending habits, you’re setting yourself up for failure. Overspending is one of the main reasons people end up in debt in the first place. If you continue with the same spending habits, you’ll eventually end up right back where you started.
Take a hard look at where your money is going each month. Are there areas you can cut back on? Little things like dining out less or skipping that daily coffee can add up over time. Reining in your spending is crucial to ensuring you don’t fall back into the debt cycle once you’ve paid it off.
13. Don’t Assume Debt Consolidation is the Only Option
Debt consolidation can be a useful tool, but it’s not always the best solution. While consolidating your debts into one payment can simplify things, it doesn’t necessarily reduce what you owe. In some cases, you could end up paying more in interest or extending the life of your debt.
Before jumping into debt consolidation, explore all your options. For some, focusing on high-interest debts or negotiating with creditors might be a better choice. Understand the terms and fees associated with consolidation before making any decisions.
14. Don’t Forget to Track Your Progress
It’s easy to lose sight of how far you’ve come, especially when debt feels like a mountain you’re climbing. Tracking your progress can also be a way to stay motivated. Seeing your balances decrease, even slowly, can give you the push you need to keep going.
Using an app or a simple spreadsheet, keep track of each payment, balance, and milestone. Knowing how much you’ve paid off will give you a sense of accomplishment and show you that you’re moving in the right direction.
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With an honors degree in financial engineering, Omega Ukama deeply understands finance. Before pursuing journalism, he honed his skills at a private equity firm, giving him invaluable real-world experience. This combination of financial literacy and journalistic flair allows him to translate complex financial matters into clear and concise insights for his readers.
With an honors degree in financial engineering, Omega Ukama deeply understands finance. Before pursuing journalism, he honed his skills at a private equity firm, giving him invaluable real-world experience. This combination of financial literacy and journalistic flair allows him to translate complex financial matters into clear and concise insights for his readers.
