You’ve made a conscious decision that you’re going to break free from the chains of debt. When you accumulate so much of it that you’re unable to get what you need or afford what you want, it can become emotionally and physically draining. The only way to make it right is to correct your past behaviors, starting with paying the debt off. Though with good intentions, many consumers make some mistakes that end up making things worse. On your quest for financial freedom be sure you’re not making these common debt repayment mistakes.
Not Being Responsible with Lifelines
Trying to get enough money to pay down high debts is hard – especially when you still have other obligations. If you’ve ruined your credit along the way, you don’t have many resources to turn to. So when you do find a lifeline like bad credit installment loans that you can use to pay down collection accounts or catch up on a few past due balances, it is important to do so responsibly. Borrowing more than you can afford to repay, or borrowing and neglecting to repay the lender who helped you when others wouldn’t, will reduce the lifelines you have and ruin your credit further.
Creating Arrangements You Can’t Afford
When you’re falling behind on bills one of the first bits of advice experts have is to let your creditors know. This can be the most effective way to reduce your out of pocket expenses and keep your account from going further into collections. Some consumers make the mistake of biting off more than they can chew. They agree to repayment terms that give them a significant discount but are still too much for them to afford. The idea here is to rebuild your trust with the creditor and get the balance down if you agree to something you can’t afford, this will result in you breaking the agreement and the consequences could be fast-tracked.
Not Realizing When You Need Help
Paying off a low-limit credit card in a few months might be a breeze with a bit of discipline, but when you’ve got a variety of debts with high balances, doing it on your own may not be as easy. It is imperative that you recognize the red flags that you need help. If you’re paying the minimum and getting nowhere, dealing with wage garnishments and revoked income tax refunds, and lawsuits, it is to your advantage to look at other sources for help including debt consolidation, debt counseling, government programs (for housing and student loans), and even bankruptcy.
Failing to Save
The reason you fell into debt was because you didn’t have enough cash of your own to afford the things you wanted or needed in life. So, it would be pretty crazy to put all your income towards paying off the debts without considering the need to save. Even if it’s a few bucks a month, you need to set something aside so you don’t have to fall back into debt when you need to make a purchase or get out of a jam.
When you’ve accumulated a lot of debt you can imagine it’s going to take some time to get out of. Jumping into this process without a plan, will only result in a bigger problem for you in the end. Take the time to set yourself up for a better financial future. Use lifelines responsibly, maintain a savings, get help when you need it, and as you negotiate with creditors, stick to the agreement. It may take a few years and a bit of assistance, but eventually you’ll feel exactly what it means to be financially free.