[Image via Pixabay]

When it comes to paying off debt, you need to make a commitment to doing what is necessary.  This involves not just paying off some of your credit cards, but changing your spending habits, creating a personal budget, prioritizing your debt and more.  In order for your debt repayment efforts to be fruitful, it is essential you stay on track and avoid the many pitfalls of money management.

Below are 10 mistakes to avoid when paying off debt

1. Paying off your debt but keeping the same spending habits

[Image by Borko Manigoda from Pixabay ]

As humans, we are creatures of habit.  From what we eat to how we spend our free time.  There is comfort in doing the same thing but when it comes to paying down debt, status quo is not the key.  Take a hard look at your daily routine and see where you can make some impactful changes when it comes to your finances.  According to the Bureau of Labor Statistics, the average American household spends about $3,000 a year dining out.  This means you need to skip the latte and get that coffee pot out.  For lunch, bring your food.  For the evenings, eating in is a given.

If you enjoy the social aspect, have a potluck dinner and invite friends over.  By doing all this, you will no doubt see a big savings when you implement these changes to your daily habits.  In no time you will see that you can be happy while saving money and paying off debt.

2. Seek help from the experts

When people are in debt, they can feel embarrassed and do not seek the help of others.  The people you do want to seek help from are the credit experts. You can get in touch with a nonprofit credit counseling agency  for free help.  They can help you with information on debt management programs, credit repair companies as well as any other debt related services including bankruptcy.   This is a great free service to take advantage of.

3. Not researching debt relief programs before choosing one

There are no quick solutions to getting out of debt.  If a debt relief company makes it seem that way, I would consider going with someone else.  What you should know that if you decide to go with a program like this, it will take anywhere from 3-5 years to handle your debt issues.  Before going with a company, check them out with the BBB or  your local state attorney’s office. Whatever company you do decide to go with, make sure they are licensed and do not have a negative history of consumer complaints.

4.  Paying off debt without starting a personal budget

[Image by Steve Buissinne from Pixabay ]

Without have a budget in place, it will be nearly impossible to have good control over your finances.  Come up with a workable personal budget  that addresses all your financial needs but also takes into account any payments toward debt.  Cut the cable, cancel your gym membership, cancel subscription services, unsubscribe from sale emails and more.  You will quickly see the difference in available money you could be using towards paying your debt.

5. Trying to pay off multiple debts at the same time

If you have debt coming at you from all areas (credit cards, student loans etc) you may think it is a good idea to tackle all of them each month.  Not really.  See which debt has the highest interest rate and tackle that one first.  Try and cut back on as much as you can to free up money.  As you pay off one debt, move onto the next one.

6. Closing accounts that you have paid off

Once you have paid off the debt on an account, leave it open.  When it comes to your credit score, the bureaus are not only looking at how much money you owe but your available credit as well.  When you have credit that is not being used, it shows financial stability and can improve your score.  

7. Cancelling your retirement contributions while paying off debt

[Image by mohamed Hassan from Pixabay ]

You may think it makes sense to throw every dollar at your debt, but this is not a good idea if it means you are foregoing contributions to your retirement accounts.  You should always be contributing between 5%-10% of your income regardless of any debt you have.  When it comes to your retirement savings, starting early and continuing your contributions is key.  You are better off looking at other ways to trim your budget before you cut into your retirement fund.

8. You don’t have an emergency fund

Here is a sobering statistic, more than half of Americans do not have enough money saved to cover an unexpected expense of  $500 or more. You never know what unforeseen expenses are lurking around the corner, so it is essential that you have an emergency fund.   You should strive to have anywhere from 3-6 months of expenses put aside.  This should be an automatic savings in your monthly budget.  Figure at least 5% of your income should go here until you have at least reached the three month mark.

9. Not checking the accuracy of your credit report

Checking your credit report  is something you should be doing at least once a year regardless of any debt.  Everybody is entitled to a free credit report from the three major bureaus (Equifax, Experian and TransUnion). It is a good idea to not get them all at once as it is recommended to access one from each every few months.  By doing this, you will have an ongoing idea of where your score is at. Go through the reports with a fine tooth comb and see if there are any inaccuracies.  If you find any, seeking out a reputable credit repair company may be needed to get your credit back on track.

10. You are not prioritizing your debt

It can be hard to zero in on debt with everyday life and non-stop bills, but if you are going to attempt to tackle your debt, it must be a priority.  In some cases, debt consolidation can be a good option since it is just one payment made each month.  Another way to get focused is to list your debts on a small piece of paper that you carry around with you.  You can put it in your wallet where you credit cards are.  Each time you are about to reach for one, you will be reminded of the outstanding debt you have.  You will no doubt take your hand off the trigger and save yourself that money.


Finding yourself drowning in debt is never an easy pill to swallow but you cannot just bury your head in the sand.  The best and only way to tackle paying off debt is to face it head on.  Before you get started, it is important to know what not to do so that you are not sabotaging your efforts.  The above tips will help you stay on the right track and get you on the road to being debt free.