The mountain of debt clearance is a hard one to climb but if you don’t get rid of those debts soon, you’ll struggle to save enough money for the future and you’ll spend the rest of your life trapped in a cycle of interest payments and empty bank accounts. The most common debt that the majority of people are struggling with is credit card debt. There are a lot of things you should be doing when you’re trying to pay all that money back, and there are also a lot of things you definitely shouldn’t be doing. These are some of the top mistakes that people make when they’re trying to pay off debt.
Going It Alone
Paying off credit card debts is so much harder if you try to do it all by yourself, and there’s no reason that you need to. There are all sorts of organizations out there that can help you to clear your debt quickly. The best option for most people is a debt consolidation agency. They will merge all of your debts into one single repayment which is easier to manage and far less daunting to pay off. Use a debt consolidation calculator to see what kind of interest rates you might get and see a rough figure for monthly repayments so you can work out whether it’s a viable option for you. As well as debt consolidation companies, there are a lot of state and federal programs to help you come to some kind of arrangement with creditors when you simply can’t pay.
Not Addressing The Cause
Most people get into debt for a reason. Unless you just decided to go on a spending spree and max out a couple of credit cards, the likelihood is that you got into debt because of unexpected expenses, too much general expenditure, or a job loss. If you don’t address the root cause of the debt first, you’ll just end up back where you started once you’ve paid it off. The first thing to look at is your spending. If you’ve got more going out than coming in, you need to make some cutbacks. If it was because of a job loss, consider putting money aside in an emergency account so you don’t have to rely on credit cards if it happens again. Fixing these financial leaks before you pay off the debts will help you to ensure that it doesn’t happen again.
Using Balance Transfers Wrong
A good way of reducing your interest payments is to get a new credit card with an introductory period of 0 percent interest and using a balance transfer to pay off the old cards. It helps you to avoid interest payments for a year while you clear the debt. However, too many people start using this technique in the wrong way. If you just keep repeating the process, you’re just prolonging the amount of time you spend in debt and never actually clearing the debt. Only use 0 percent balance transfers if you’re sure you can clear the debt before the interest payments kick in again.
Avoid these mistakes and you should be able to clear those credit card debts in no time.
