What Not to Do If You’re in Debt

If you are in debt, you could be digging yourself in deeper with some bad habits. Make sure you avoid these no-nos if you’re in debt:

1) Paying small amounts or minimum payments on credit cards and personal loans. Paying just the minimum just extends the misery since it ensures that it will take you many months or years to get debt free. Pay more than the minimum to dig out faster and to pay less interest.

2) Taking out more loans, especially from family and friends. New loans are a problem, as they keep you perpetually in debt. Work with a budget to ensure that you pay for all necessities so that you don’t have to rely on payday cash advances or friends.

3) Looking for credit counseling and paying money for that. Many people who are in debt immediately seek out credit counseling and pay a hefty fee for some pretty obvious advice. Unless you are really drowning in personal loans, you can usually help yourself by budgeting and paying off your debts over time.

4) Continuing your usual spending habits. If you are in debt, that is a clear sign that you need to rein in what you spend. Cut back to the basics and find cheaper alternatives for your everyday expenses.

5) Taking out high interest loans to consolidate your debt. Consolidation loans can be handy, but bad credit loans or high interest loans for consolidation can still leave you paying a lot in interest.

6) Paying all your money towards loans. Even if you are eager to pay off your loans, you still need to set aside money for your emergency fund and retirement savings.

7) Putting off bankruptcy too long or taking this out too soon. Bankruptcy can be a useful tool, but it is meant as a last resort. Being too eager to file bankruptcy can mean that you ruin your credit rating needlessly. Waiting too late can mean that you face more serious financial consequences.

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