We’ve all made mistakes when it comes to money. So long as you don’t repeat them, they’re considered “learning experiences”, right? Even so, it’s best to avoid these common money mistakes if you want to pay off debt. Here are ten mistakes, that you don’t want to make.
10 Mistakes to Avoid While Paying Off Debt
1. Not Having An Emergency Fund
Emergencies are going to happen. Without some kind of emergency fund, you’ll end up reaching for your credit card when they do. I suggest setting aside around $1,000 in a simple savings account, to catch all those pesky unexpected events like a visit to the Emergency Room, an unanticipated car repair, or roof leak. Once you’re out of debt, you can beef up your emergency fund to 3-6 months of household expenses.
2. Still Using Credit Cards
You’re trying to get OUT of debt, yo! So, STOP using the very thing that got you into trouble in the first place. If you can’t afford to pay cash for something, you can’t afford to buy it. Period. Save up the money you need, and then buy it.
Most importantly, cut up those credit cards, and never use them again – EVER. Most people have good intentions of paying the balances off in full each month, but many don’t. What happens if you’re a little short on cash one month? You’ll likely tell yourself you’ll just pay half the credit card bill now and half next month. Then ten to twelve months later you’ll look up and see you’ve accumulated thousands of dollars in DEBT.
That’s how it happens. Don’t let the cycle continue in your life. It’s going to take a lot of blood, sweat and tears to pay off your accumulated debt. Be careful that you don’t let more of it slip into your life. Just like with weight gain, it’s easy to pack on the pounds, but not so easy to take it off.
Amputate all credit cards from your life. You don’t need that toxicity. You need MONEY. In order to build wealth you have to eliminate debt, and borrowing, from your life permanently. It’s time to have a new mindset as it relates to credit cards. They suck!
3. Not Having An Accountability Partner
It may not be impossible to go it alone, but it’s not easy. If you don’t have someone to help keep you honest, and to encourage you during down days, it’s just too easy to slip back into old ways. Find someone who is strong enough to call you out when you start getting stupid, and who will help celebrate your wins.
4. Not Focusing on Your Goal
Getting into debt doesn’t take much thought, but to get OUT – you need to focus. Write your goal somewhere visible, so that you can be reminded often as to why you’re doing all this.
Don’t be stupid…. I don’t mean you should obsess over getting out of debt. Simply keep your goal a priority. This way each time you’re faced with a question, you’ll be able to answer it according to your goal.
When asked by a buddy, “can you go out to eat tonight?”, you can ask yourself “does this fit with my goal of getting out of debt?” If the answer is “no”, then you know the answer for your buddy. NO, you can’t go out to eat. You’ve got a goal that’s more important.
5. Keeping Your Old Lifestyle
It’s time for a change. In order to get out of debt, you need to change things up. You want it to hurt a little. Put a highlighter on this period of time in your life so that you NEVER go back into debt again. This means you’ve got to cancel some memberships, subscriptions or habits that you used to have during your “get INTO debt” period of life. Preferably something that stings a little.
This change in lifestyle isn’t FOREVER. You’ll be able to go back to you spinning classes after you’ve reached your goal. This is just for a temporary time period, so that you can reach your goal as fast possible.
6. Not Working EXTRA (get a side hustle)
Increasing your income will help you get out of debt faster. Take on extra jobs to be able to throw as much money as possible at your debt. You want those balances to drop so fast it makes your head spin. Bringing in more money will obviously make that possible.
7. Not Submitting to a Plan
Pick a plan and SUBMIT yourself to the process. Don’t nit-pick it all apart, just do it! There are several get-out-debt plans that I think work. They’ve helped millions of people. They can help you too, if you DO it. Trying to take bits and pieces of it and merge it into your own plan, isn’t likely to do much for you.
Handling your finances YOUR way hasn’t worked out so well for you (or you wouldn’t be reading this), so it’s time to try someone else’s. Stick to the plan!
8. Not Doing a Unique Budget (every month)
You gotta budget monthly. Not once a year or once in a lifetime… once a MONTH. Things in life aren’t static. Electric and water bills change from month to month, and income can often fluctuate. If you get a bonus one month, you’ll need to know where exactly to apply that money. That’s what a budget will do for you.
A budget is simply a PLAN for your money. Without a plan, your money will wander off into unknown galaxies, and you’ll wonder what happened to it all.
9. Not Getting EMOTIONAL
Get mad! Be disgusted with your financial situation. If you didn’t have all these payments you’d be free to choose to do _________! (Fill in the blank.) Just as in losing weight, you’ve got to sweat to lose that extra $50,000 chain around your neck (debt).
It’s going to take longer if you don’t get radical in your emotions so that you can push with all your might against the crushing weight of your debt. PUSH!!!!! Otherwise it’ll just push YOU right back to where you’ve always been — broke and in debt.
10. Working the Plan Without Your Spouse
If you’re married, it can often be hard to get your spouse to care as much as you do about money. In my relationship I’m obviously the “nerd”, and my husband is the “free spirit”. I’ve always paid our bills, did our taxes, and managed our overall finances. My husband’s eyes glass over the second I start talking money.
No matter which person in the relationship typically handles the administrative process of your finances, it’s important that your spouse be involved. Even if that means spending 15 minutes together looking at the beautiful budget spreadsheet you’ve created, so that you can BOTH agree to everything you’ve done, and to any changes that need to be made.
Marriage is a partnership. In order to change important habits, such as spending, you’ve got to be in agreement. Otherwise, you’ll be sabotaging each others efforts, even if unintentionally.
BONUS: Giving Up
Lastly, I feel that it’s critically important to tell you: DON’T GIVE UP. Many times in life when things feel hard, and we’re tired, we give up right before we would have found success. Even if it’s taking longer than you think it should, just don’t STOP. Keep going! One foot in front of the other. Eventually, the universe will see that you’re not a quitter, and you’ll find the finish line you’ve been searching for. I believe in you. You can do this.
