3 Big Mistakes Keeping You in Debt
From credit cards to student loans, there are tons of different ways to get wrapped up in debt. Getting out of it can seem intimidating, but avoiding these common debt mistakes will help you do so as quickly and smoothly as possible.
1. Spending beyond your means and using credit cards.
Sometimes we fall into the trap of spending more than we make. We buy more of what we want instead of what we need. It’s easy to use a credit card and think that you are going to pay it off and before you realize it the amount has risen to more than you can pay off by the end of the month.
2. Paying Only the Minimum
If you can’t make your payment in full on any type of debt, pay as much as you can.
That smaller payment (whether for credit cards, student loans or any other kind of debt) can be tempting. But in the long run, it will cost you a lot of money.
Try to pay your credit card in full every month. If you need to carry a balance, keep it as low as possible. For non-credit card debt, such as student loans, pay as much as you can over the minimum to shorten the lifetime of your payments (and reduce the interest you pay.
3. Trying to Get Out of Debt Without a Clear Plan
With a clear plan, you can create a timeline showing when each of your debts will be paid off. If you can’t come up with that timeline, your plan isn’t quite clear yet.
Debt is not easy to get rid of. Set up a plan to pay off what you owe. Many people have used the Debt Roll Up Strategy. For example; putting your highest interest-rate credit card debt first. Pay as much as you can toward it every month, while paying the minimum on all the other debt. After you’ve paid off your top debt, prioritize paying your card with the second-highest interest rate. The same amount you were sending every month toward the first debt will now go toward the second-highest interest rate debt, and you’ll continue to pay the minimum on all the others. Continue this method until all your debts are paid off.
Getting out of debt can seem intimidating. Sometimes you need help.
Call for a FREE Financial Analysis and let me help you create a plan to eliminate your debt and move you to DEBT FREEDOM!
Independent Insurance Agent