(ThySistas.com) Getting out of debt is so difficult and it requires a lot of sacrifices and patience. However, so many people find themselves trapped in a cycle of debt for years because they don’t take the right approach when trying to clear their debts. A few simple mistakes could set you back a long way and even make your debt issues a lot worse. If you are trying to pay off your debts, make sure that you avoid these common mistakes.
Paying Debts Without Challenging Them
So many people are paying debts that they do not legally owe. In many cases, your creditors may have made a mistake with interest rates, for example, so your monthly payments are higher than they need to be. There may also be debts that you are not obliged to pay at all, but if you don’t challenge your debts, you will never know. Organizations like the Debt to Success System use their legal knowledge and expertise to help you determine whether you can write off your debts without paying a penny. While this doesn’t always work and there are some debts that you are obliged to pay, you may be able to save a lot of money by challenging your debts. Should this be the case, you may wish to get in touch with a law firm like Stoneroselaw.com, as they will be able to help guide you through the process and be able to aid you in restructuring your payments so that you are able to pay off your debt in a way that is better suited to your situation.
Not Saving Any Money
When people are trying to get out of debt quickly, they often decide to stop putting money into their savings account and put all of that money towards debt payments instead. While that might seem like a sensible thing to do, it can actually make things worse in the future. Having a healthy savings account protects you when you get hit with a big expense, like car or home repairs. If you don’t have any savings, you will be forced to borrow the money to cover those costs, so you get into even more debt. It’s important that you pay down debt while also saving an emergency fund so you can prevent more borrowing in the future.
Trying To Pay Multiple Debts At Once
Splitting your money over a lot of different debts is not the most effective way to pay down debts. It will take a lot longer, and that means you are spending more money on interest payments. It is far more effective to use the debt snowball method. Keep paying the minimum payment on all debts apart from the smallest, which you can overpay. Once you have cleared that debt, you have more money to put towards the next smallest. Keep repeating this process and you will be able to clear debts a lot faster.
Getting Back Into Debt
Once you have finally managed to clear your debts, it is so important that you change your habits. A lot of people end up going back to their old ways and they don’t change their spending habits, so they end up in debt again. Make sure that you write a new budget and start living within your means so you can avoid getting into the same situation again.
If you are making these mistakes, it will take you a lot longer to pay off your debts and find financial freedom again.
Staff Writer; Latasha Curry