5 Mistakes You Need To Avoid When Paying Off Debt

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Since we’re not perfect, making mistakes is a large part of our existence as humans. But the good thing is that we can learn from our blunders and improve our lives through the flops and failures we make. One of my life goals is to avoid making the same mistake twice or learning from the mistakes of others so, I don’t have to make it in the first place.

When it comes to money matters, the most common mistake we commit is taking on too much debt. Having high-interest debts, such as credit cards, payday, or title loans, can make it extremely difficult to climb out from under. However, with the right plan in place, there are ways to stop making other people rich and to keep your hard-earned money in your pocket, where it belongs.

The first step is to pay your minimum debt payments on time to avoid taking on additional late fees. If you’re drowning in debt, do everything and anything you can to avoid piling on more debt.

Mistake #1: Not Having A Strategy

Trying to pay back your debt obligations without a clear strategy will inevitably cost you more money in the long run. It’s due to the adage that states, “failing to plan is planning to fail.” You probably realize that changing your financial habits and situation is not going to be an easy feat. However, a clear plan and strategy in place can reduce your stress and give you a path and a light at the end of the tunnel.

Developing a debt repayment plan to get rid of your debts faster and reduce your negative balance should be your first step. 

Creating a viable debt repayment strategy requires you to understand your financial situation and the different types of debt you have. Look back over your average monthly income and find out how much you make compared to the minimum amount you must pay for loans and debt repayment each month.

This will give you an idea of your current situation, and a starting point since your minimum debt payments are considered “needs.”

As you make a plan on which debt you want to eliminate first, refer to the debt avalanche method and the debt snowball method to determine which strategy is best for your personality.

The avalanche method focuses on paying back your high-interest loans or credit cards first while making minimum payments on other debts. 

On the other hand, the snowball method is paying off your smallest loans first, which gives you more motivation to make consistent payments in the process. 

Mistake #2: Failure To Understand The Underlying Causes Of The Problem

One of the underlying causes many people have is their desire to live beyond their means. This can be “looking rich” with a luxurious lifestyle while most expenses are charged on a credit card. The newest iPhone or Coach purse may be incorrectly identified as a “need.”

However, being a financially responsible adult is knowing how to live on less than you earn. If you’re living above your means, chances are you are spending money you don’t have.

Borrowing money you can’t afford to repay is another reason why many people have debt problems. Many adults only look at the monthly payments rather than the total debt owed. Many different places will give you quick and easy money, like planet-loans.com, but it’s incumbent you realize you must pay back the loan as soon as possible to avoid a debt snowball from ruining your life.

One of the first steps to get out of debt is to realize what got you there in the first place. Recognizing you have a problem will make you aware of the steps you need to change your habits, which will change your life.

Mistake #3: Taking Out New Loans For Debt Repayment

Many people struggling to pay back debt are tempted to take out other short term loans to help them get through the next month. Unfortunately, this strategy is destined to fail and usually increases debt owed and unmanageable monthly payments.

If you have many different loans, credit cards, and other financial obligations, a debt consolidation loan may help you get back on track. Debt consolidation doesn’t eliminate debt, but it can help lower your interest rate by combining your debts into one monthly payment. Another lender will pay off your debt, thereby leaving you only one lender to repay.

The catch is it may not be possible to secure a lower interest rate. The interest rate offered to you will be dependent on your credit score and your ability to repay the one debt consolidation loan. If you can’t secure a lower interest rate, it would make more sense to pay off one debt at a time, as quickly as you can.

Mistake #4: Using Credit Cards To Pay Back Debt

Using your credit cards to pay back your debts defeats the purpose of getting rid of your debts. This is because you’re just incurring more debts when you make this approach. I have seen several people move their debt around to different 0% interest credit cards like a shell game. When the 0% is about to run out, they move the debt over to another card.

This approach can keep you afloat for a while, but inevitably your debt will catch up with you, and the collectors will start calling for their money. There will be a time when you cannot secure another 0% interest card, which will result in a high-interest rate on your credit card debt.

Mistake #5: Failing To Automate Debt Repayments

To ensure you pay your debts on time and don’t forget a payment, use an automatic payment system such as bill pay to guarantee the minimum balances are paid on time. Failing to pay your loans or credit card balances on time will result in penalties and fees, causing your debt obligations to balloon even higher.

Use technology to your advantage and set up automation to save you time and guarantee on-time payments.


Avoid the common mistakes people often commit when attempting to pay off debt. If you’re on the right track with a plan in place, you can repay your debts faster and reduce the total amount of what you need to pay.

If you need more help creating your debt payoff plan, check out my related post: A Simple Plan To Pay Off Debt.

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