Mistakes to Avoid When Trying to Get Out of Debt

Mistakes to avoid when trying to get out of debt

Being in debt can feel suffocating; it can affect your physical and your mental well being both because of stress and the financial strain it brings into your life. Most people try to pay off their debts as quickly as possible, but they’re not always aware of the most efficient (and easiest) ways to pay off large sums of money alone. Here are five crucial mistakes that people often make when trying to pay off large debts without advice.

Keeping the same old spending habits

There’s no point paying off debts without taking a look at your own spending habits first – because it’s likely those spending habits which triggered your debt in the first place. Cutting down spending and ensuring you are only spending within your means should be the number one priority on every debtor’s list.

Not making a payment plan

Paying off any debt is a good step, but it’s important to draw up a plan to set clear goals of which debts you want to pay off and when. This will help you to stay motivated and on target, and it means you can keep track your progress throughout.

Not setting aside an emergency fund

It might seem counter intuitive to set money aside when it could go towards paying off debts, but if you have no emergency fund then the likelihood is that you will end up in more debt further down the line when something breaks unexpectedly. Make space to save for emergencies alongside paying off your debts to prevent the need for further loans in the future.

Paying off everything at the same time

A lot of debtors begin by paying off small amounts to each creditor every month. This method can work, but it’s usually a long time before results are visible and this can make it harder to stay motivated. Instead, it’s often better to choose one debt – either the loan with the highest interest rate or a small one that can be paid off quickly – to pay off first, while meeting your minimum repayments for others.

Not making paying off debts your highest priority

Debt puts your financial life at a standstill. Paying off debt should be your number one priority, so that you can work towards building a more prosperous and less stressful future for yourself and your family. If you’re in debt and struggling to pay off your loans, debt consolidation loans can help you. For information and advice about debt consolidation loans and paying off your debts, please don’t hesitate to get in touch with us.

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If you are struggling with debt, please visit Money Advice Service for help and advice.

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