DEBT everyone hates it but somehow we always manage to find ourselves there.
The truth of the matter is that most of the time we have gotten ourselves into debt through simply silly mistakes.
Because you are not alone in this and I myself have gotten into debt many times in the past unnecessarily it’s a good idea to not only look over the best ways to pay off debt fast but also how to avoid paying off debt mistakes.
When you are trying the pay off debt the last thing you need is mistakes that will not only make you feel demotivated about paying it off but also make your process slower as well.
Let’s take a look at 7 common mistakes people make when paying off debt.
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7 Paying Off Debt Mistakes
1. Not Having An Emergency Fund In The First Place
An emergency fund is not an option it should be a necessity to you and this is even truer if you have debt.
An emergency fund is there to back you up in case a financial emergency was to pop up.
Let’s face it life happens and sometimes out of our control financial situations pop up. There is not a whole lot that we can do about it but one thing we can do is to make sure that we are prepared.
It’s not really a case of “if” an emergency situation could pop up or not but rather “when”.
Looking at things this way will help you to have some discipline in making sure your emergency fund is intact and available for when you really need it. Not for going on holiday with but real emergencies like having to go to the hospital or your roof collapsing.
If you are not sure about the in’s and outs of an emergency fund then you can read lots more about it here including how much you should put away.
Having an emergency fund might seem like a task but the day that you need it you will be SO happy that you have it.
This is a giant mistake that I made in not having one when I was paying off my own debt.
2. Not Using The Debt Snowball Or Avalanche Method
Personally, for me, it doesn’t really matter which one you choose as long as you go for one.
Using one of the methods will help you to get that debt paid off even faster because no one wants to feel like they are paying off debt forever.
Have you noticed how good it feels when you get a debt paid off? It’s like you have the ability to breathe again.
Well, using one of the above methods is a surefire way to get you there faster.
3. Not Looking For Extra Income Ideas
If you are in debt and you don’t already have a side hustle you are making things much harder for yourself.
Side hustles don’t have to be laborious they can actually be things that you enjoy like selling knitted scarves. It really doesn’t matter what it is as long as it helps you get that debt paid off as quickly as possible.
You should be consistently looking for extra ways to make a little extra cash here and there even if that means cutting your neighbour’s grass or taking someone’s dog for a walk which you can get paid to do with Rover.
If you have never heard of Rover before be sure to check them out here. It’s a great way to make a little extra cash and you can do it when you are available which is great for flexibility.
4. Not Having A Watertight Budget To Begin With
Not having a watertight budget is the biggest downfall for many people.
When you first sit down to create your budget it can be very easy to miss things off by accident. When that happens it throws your whole budget off for the month and quite frankly makes you feel like packing the whole thing in.
It’s really important that when you create your budget that you make sure you do it alongside your bank statements so you can see exactly what you need to include in your budget.
It’s also a very good idea to have a sinking fund to go with it to make sure you are putting away money for larger expenses on a month to month basis.
5. Still Going Into Debt
You will never be able to get out of debt if you keep going into it every month.
I know that sounds quite basic but people do it. They put together a plan of action get rid of debt but then end up going into more debt so rather than trying to get out so they are either stuck in the same hole or digging themselves further in.
If you have an overdraft facility with your bank the chances are that that overdraft will be more costly in interest than having a loan. You may want to look at the numbers and replace it with a loan if you need too.
Most banks will be happy enough to convert an overdraft facility into a loan for you. This will give you better control over your money and in paying it back each month.
Make as many cutbacks as you can within your budget to make sure you are saving money there too. Paying off debt is not just about trying to make extra money to pay it off its also about cutting back on spending too.
6. Not Being Fully Committed To Paying Off The Debt
Commitment is key. I can’t stress that enough here.
If you are not 100% committed to paying off that debt there will always be a reason as you why you should start again next month. Basically it will never happen.
You have to get mad about your debt. Just think about how much extra money you are wasting just by having it each month and what you could be using it for instead.
If your debt makes you mad enough you will start to come up with all kinds of creative ways to save money and get that debt paid off quickly.
Make sure that your partner is on board as well because everyone has to play a role and it won’t work if you don’t both have the same level of commitment.
7. Not Understanding How You Got Into Debt In The First Place
This right here is the golden key.
If you do not understand why and how you got into debt in the first place you will go into debt again.
That might mean that you need to understand finance more and how it really works. I know that might sound patronising but it really is not.
I thought I knew so much about handling money even though I was in debt EVERY SINGLE MONTH.
I highly recommend both of these books if you have not read them yet. If you are pushed for time you can also get them on audible too.
Once you understand why you are going into debt you can stop yourself from doing it, it’s as simple as that.
Take a look at my FREE Savvy money Bootcamp to help you get a better hold on your finances
Final Thoughts On Paying Off Debt Mistakes
When it comes to debt there is no point in beating yourself up about what has already happened. If you having been trying to pay off debt and have found that you have been making a ton of mistakes along the way, it doesn’t matter.
What matters is what you do from today going forwards.
Get yourself a plan of action in place and start working on paying off that debt as quickly as possible.
You got this!