You're on the right track. You've decided to tackle your debt once and for all. What should you avoid? Whether it's being late on payments or continuing to use credit cards, there are mistakes you don't want to make when paying off debt. Let's take a closer look.
Being Late on Payments
One of the worst things you can do is to be late when making payments. Late charges can be $30 or more each time that you're late. This can really add up. You want to make sure that you're paying your bills on time each and every month. This will not only prevent late fees, but help your credit score.
Paying More Interest Than You Have To
You want to call your creditors and ask if they will lower your interest rate. If you've made your payments on time and been a customer for a while, they will usually work with you. You may need to speak with a manager to get your rates lower than what the initial representative you speak to offers.
Focusing on Low Interest Debt First
Your low interest credit cards may have a smaller balance, but you'll pay less in the end if you focus on paying off your high interest cards first. The faster you get these debts paid off, the less interest you'll pay. Put all your extra money towards the highest interest card until it's paid off.
However, if you feel like the momentum from paying off a small debt will help keep you motivated until the end, you can start with your smallest debt first and work smallest to largest.
Only Paying the Minimum
Another mistake you want to avoid is only paying the minimum amount due on all your debt. If you only pay the minimum each month, it will take forever to get out of debt. In some cases, the minimum payment doesn't even cover the interest rate being charged each month. Always pay more than the minimum on the debt that you're trying to pay off (and pay the minimum on the rest until it's time to attack that debt also).
Continuing to Use Credit
Last, but not least, STOP USING CREDIT! You will never get out of debt if you continue to use credit cards. With that said, once a card is paid off, you will need to charge something every once in a while to keep the card active, but only charge what you can immediately pay off. This will keep you out of debt, but do wonders for your credit score.
Paying off debt is one of the hardest things many people face. However, once it's done, you have a sense of freedom that can't be beat. Do everything you can to avoid these mistakes so that you can get out of debt faster and never deal with debt again.
Jen Ward
I always am so surprised by how many folks don't mind or worry about paying late fees! Some of the fees could amount to an additional payment! Great list!!