Saturday, 18 July 2020

10 Mistakes To Avoid While Paying Off Debt


In this article, I wanted to talk about mistakes that you don't want to make when you are trying to pay off debt. We've all made really bad mistakes, all of us, right? I know that I have made so many terrible, terrible mistakes when it comes to money, but I always tell people that mistakes are important to learn from, grow from, as long as you're learning and growing from them and trying not to make the same mistake twice. So if you are trying to pay off debt, then these are some mistakes that maybe you can avoid, and hopefully, you can.


1. Not Have An Emergency Fund

Emergencies are going to happen. It's not a matter of if, it's a matter of when. When is it going to happen? So at least $1,000 in a savings account sitting there before you start, taking a lot of extra money, and throwing it towards your debt. So if you can squeeze out any extra money in your budget the first thing you want to do is to build up a little bit of an emergency fund so that way you can cover the cost if anything were to happen like an ER visit or something. you want to be able to have that money sitting there 'cause otherwise you're just going to use your credit card again. 


2. Still Using Credit Cards

Speaking of credit cards, a mistake is to continue using your credit cards. I always say that it's as if I've had a real addiction that I had to break and that means that I can't go back to using credit cards. Debit cards are different. But it's like if you're trying to get out of debt and you have a problem with it then you don't want to continue using while you're trying to sort of break the habit, and also, if you're using your credit cards then you're just going further into debt and that's making it even harder. You're not going to get out. You can't get out of debt if you continue to borrow. So you have to stop using your credit cards.


3. Keeping Your Secret

Not having an accountability partner. None of this can be done alone. Just like with alcoholism, drug addictions, you need some help, you need somebody there to keep you accountable and to motivate, encourage you. So you have to have somebody who knows what you're doing and who can support you. Even if that's somebody in some online group, if that's all you've got, and you can get into some kinda group and they can hopefully help keep you accountable, help motivate you, but you need somebody. Hopefully, your partner, if you're married, is one of your accountability partners. So also maybe there are some groups nearby, there are some church groups maybe or somebody.


4. Not Focusing On Your Debt

Do not keep the debt front and center, forefront in your mind, to not focus on it. I mean not to dwell on it every day and then feel depressed about it, not like that,. Not an unhealthy way of dwelling on it but you want to make sure that you're keeping your eye on the ball so to speak. You have to be focused on this goal if you want it to happen. If you don't focus on it, it's not, it's never going to happen. You have to make it a goal and really try to post something in your house or put a card in your wallet if you read The Strangest Secret, it says on that to write what your goal is on a card and put it in your wallet and look at it every day, just some kind of way to help you stay focused on what it is you're trying to do so you don't veer off course and forget and start doing something else.


5. Keeping Your Lifestyle The Same

Even if you think that you can pay off your debt by just continuing the way you've been going, I really think it's a good exercise to cut something that hurts. And when I started paying off my debt, it hurt really bad to cut certain things that I had. It was very almost physically painful to have to make that phone call and cancel what I was paying for. So I think you need to come up with something, whether it's restaurants, if stopping going out to eat is painful to you then good. You want it to hurt, you want to feel it a little bit and it'll help you to break your bad spending habits and really make you angry so that way you're really ready to pay off your debt and get it out of your life. 'Cause if it doesn't hurt a little bit, most likely you're just going to go right back into it when you're done paying off your debt. 


6. Not Increasing Your Income (Side Job)

It's a mistake to not have a side hustle at all. You want to increase your earnings that way you can hit your debt even harder, pay it off even faster, and again it's that sacrifice. It's just going to really mark this time period in your life and when you get done you're going to feel so happy that you canceled your gym membership and you were workin' five jobs. It's going to be something you're gonna wanna brag about, really and then you're going to get out of it so much faster and then you can get back to the gym and you can quit those side jobs. But really try to do something to help make it go faster, earn more money, and like I said, to mark this period. I feel like it's important to mark this period in your life again so that you won't go back into debt. You're going to really remember. It's like putting a highlighter on this period of time in your life and sometimes painful things are important 'cause it helps us to behave and to grow and learn and be better people. 


7. Not Submitting To A Plan

Not working the plan is a mistake. Whatever plan that is that you choose, there are so many different ones out there. The debt snowball is what I like. There's also the debt avalanche where you pay off the highest interest rate first, 

Read  3 Debt Payoff Strategies - Avalanche, Snowball, Snowflake

But whatever that plan is, try to find a plan and stick to it, really work the plan. If you don't work the plan, again you're really lowering your chances of success. I mean there are these plans out there, they've been proven to work. Millions of people have used them and obviously what you've been doing is not or has not worked, so really do the plan. Do it, it's for you. It's not just for everybody else. You really need to submit to the plan. It's not for everybody else, it's for you if you've got debt. 


8. Not Doing A Unique Budget Every Month

A long time ago, years ago, I had a budget, or I thought I had a budget but it was just a spreadsheet that I never updated, ever. It was just like these are my bills and this is what I make and then that was it. It was just like I thought that would be good for life, this one budget, but that didn't work. It doesn't work, you have to do a different one every single month, a new one and you can use the template of your prior month because somethings obviously stay the same but other things fluctuate. It might be a month where you have an extra paycheck like happens twice a year if you get paid biweekly or it might be your bills are a little bit lower or you've really used a lot more water so it's a lot higher. I mean there are certain things, there's Christmas time, so your electric bill's a lot higher. 

There are just different things that come into play. You might have gotten a bonus this month and so you need a unique, different budget every single month so that you can make sure that every single dollar coming in has an assignment, you're putting as much as you can on your debt but not more than you should 'cause it's going to leave you hangin' high and dry as far as paying off some of your other bills like your water, electric, things that are important to keep your household running, so you have to do a unique one in the beginning of every single month, a new one. And it doesn't take too long once you get into the habit of doing it, it's going to be fine. You have to just commit to doing it, take the time, and make it, make it work, make it happen. 


9. Not Getting Emotional

Getting out of debt, it really is not a passive thing, it's a very emotional, aggressive, angry, emotionally charged activity. So it's not like you're just gonna be like, oh I think I'll get outta debt and it's just gonna happen. It doesn't work that way. It's like when you gain weight and you're just sort of eating one extra dessert a day and then before you know it you've gained 20 pounds, well that weight gain doesn't just melt away rapidly, you have to really do something about it. You have to run hard at the gym or lift weights, you have to sweat, you have to really work at it to get it off and debt is the same thing. It really is, it's like oh, $5 extra every day on our credit card or oh we can just do this or that, it does just accumulate, just like weight and then before you know it you look over and you have $20,000 on your credit card, right? Well if you want to get out of it, it's the same thing as trying to lose weight, you have to sweat. 

You have to work at it. You have to get really mad that you have all this debt and you don't want it anymore, you want it out of your life 'cause that's going to make you work harder and be more committed to the plan and maybe throw more money at it, make you skip going out to eat, skip going to buy lunch at work, it's gonna really help you to get out of it faster then if you're just like, you know maybe we'll get outta debt, 'Cause then it's again, it's gonna just drag on for 10 years. How many people have student loans that are just been there for 10 plus years 'cause you're paying the minimum, paying the minimum and it never goes away. It's not going to go away that way. You have to get angry and really kick and punch and scream at it. 


10. Woking The Plan Alone

You can't get outta debt without your spouse, without your partner. So if you're trying to get out of debt and your partner doesn't care and your husband or wife is still doing the same things, going out to eat, using their credit card, it's going to be so hard to do. It's like someone who is trying to quit smoking. If you and your spouse are both smokers and one of you decides to stop smoking but the other one is still smoking, it's going to be so hard because you're inhaling that secondhand smoke, your chances of success just go way down that you're going to be able to quit smoking if your partner does not also quit because you're gonna be right there. So the same thing with your partner with debt. If they're swiping their credit card and going shoppin' and doing whatever, it's gonna be really hard for you to stick to the plan of paying off your debt when you have to constantly watch them living the normal life of walking around, spending money and borrowing, taking out car payments, going to get a car loan. 

Like how're you going to watch that, it's not going to work unless you're on the same exact page. You can't do it independently, you can't say I'm getting out of debt, this is my debt, this is my husband's debt or that's my wife's debt. You have to, it's our debt and our money 'cause you're a family, you live together, you share a bed, you share everything and so it's really not going to work to get out of debt independently. You have to be a team. You have to both be on that same page and both be wanting and willing to work at it, to get it out of your life, and to never borrow money again. 





Conclusion

This whole article is about making mistakes. So hopefully you don't make any of those mistakes that I talked about and if you did, it's okay. It's just like when you're riding a bike and you fall off and you fall off, or you're learning to ride a bike, and you get back on, right? You got to keep getting back on the bike. So I feel exactly the same way with getting out of debt. It's like you're gonna mess up, you're gonna make some kinda mistake probably along the way. Especially when you first start budgeting, you're probably gonna screw up your budget. 

You might even overdraft your account, it might seem like you can pay a lot of extra on your debt, I just can't say enough how important I think it is to just continue to work at it. Keep going, stay on the path, don't give up and it's okay if you mess it up once in a while, as long as you don't stop. 'Cause if you quit, if you just say forget it, it's not working, I'm not doing this anymore, it sucks, I don't wanna do this, it's too hard, then you're never ever going to get there. Keep working at it because eventually, you will get there if you just keep working at it and don't quit the plan. Keep working the plan even if it's taking a lot longer, like I said, just don't quit. 

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