Avoid These 7 Common Mistakes When Getting Out of DebtAnna Newell Jones
I know what it feels like to think that you’ll never, ever be able to get out of debt. I’ve been there. As much as it can feel like it, being in debt is not a hopeless situation provided you handle it head-on and not let it linger over your head for years. You absolutely CAN find debt freedom and regain your financial independence. In order to eliminate your debt effectively, there are some mistakes you need to avoid making in the process.
Avoid These 7 Common Mistakes During Your Debt Elimination 1 of 8
Click through for 7 things you need to avoid during your debt elimination progress:
Image source: 401(K)2013
Proceeding Without a Plan 2 of 8
When you are starting your journey towards debt elimination, it is important to start with a plan. If you do not understand what your priorities and goals are, you aren't likely to be successful and your journey will be more complex than it needs to be. Sit down with a pen and paper and map out the milestones you need to achieve and what strategies you need to use to get there.
Image source: Orin Zebest
Taking Funds from Your Emergency Account 3 of 8
Debt relief is certainly a priority in your financial life but so is having the peace of mind that you have a savings account to fall back on during true emergencies. Don't use emergency funds for debt relief. Budget your debt pay down plan with savings in mind.
Image source: IvanWalsh.com
Using Available Credit for Debt Relief 4 of 8
You may have a decent amount of available credit on your credit cards, but it is strongly advisable that you do not take cash advances to access that money for the purpose of debt relief. You are just making your debts even worse by adding a larger amount of debt and having to face additional fees and finance charges.
Image source: Images_of_Money
Neglecting Regular Credit Reviews 5 of 8
Before you even start paying off your debts, you should have a copy of your consumer credit reports in hand. Review them first for accuracy and for the information it provides on the balances you owe on accounts. Regular review as you eliminate debts is also essential to ensure creditors are reporting the right information about your debt payoffs.
Image source: i am a real estate photographer
Reckless Spending 6 of 8
Part of your debt elimination plan should obviously include allocating money to an account that is used for debt payments. With an â€˜extra' amount of money on hand, you may be tempted to spend the funds on other things rather than focusing on your debts.
Image source: Steve Snodgrass
Ignoring Creditors 7 of 8
Creditors and collectors can be become frustrating when they start pursuing their money aggressively. Ignoring their calls can cause even more issues. When you have a solid plan for eliminating debts, contact each of your creditors and let them know what your intentions are. By opening the lines of communication, they are more likely to work with you. Just make sure whatever you tell them you are going to do about your debts you actually do.
Image source: Sean MacEntee
Using the Wrong Debt Elimination Method for You 8 of 8
There are several strategies one can use for eliminating debts but not all are created equally and not all may work for you. If you start working towards debt relief using one method that is just not working, learn to recognize it and find a different way to pay off debts. By staying proactive throughout the process, you are likely to remain committed until you achieve your end goal.
Image source: Brad_Chaffee