Making the decision to pay off debt is one of the best things you can do for both yourself and your family. After all, once you eliminate the burden of owing your creditors, the possibilities of what you can do with your money are endless.
Before diving in to start your debt repayment journey, it’s crucial to avoid the common mistakes that can often stall your progress and derail your motivation. With a little time and preparation, you can feel confident that you will reach financial freedom. Below we share what the most common mistakes are when it comes to paying down debt and exactly what you need to do to avoid them.
Not Having a Strategy
You wouldn’t sign up to run a marathon without taking the necessary steps to properly train and prepare, because you probably wouldn’t make it to the finish line without them. That same concept applies to your financial goals as well. In order to achieve success and generate the results you want to see, you need to be prepared.
This means taking the time to develop a strategy before starting to repay your debt. Within your strategy, you should aim to identify both goals you want to accomplish and your plan for how to get there.
A few examples of what to consider when developing your strategy include:
Prioritizing your debts
Think about what you want to pay off first. Are you looking to start with the lowest balance, or would you rather tackle your highest-interest debt first? Knowing which of your debts you’re going to focus on first will allow you to better plan your overall strategy and adjust if needed.
Determining your financial contribution
Now that you’ve prioritized your debts, you will need to determine what your financial contribution will be towards paying them off. Maybe your vision is to add an extra $50-$100 towards your monthly payments, or maybe it’s to put a larger lump sum of money towards your debt. Either way, identifying early on what your financial contribution will be allows you to take charge, adapt where needed, and feel confident in your decisions.
Setting a timeline
Your final step is to determine your timeline for having those debts paid off. Whether it’s weeks, months, or even years, remember to set a timeline that is both manageable and realistic. Having that end date or milestone in mind will help keep you motivated as you work towards achieving your financial goals.
Not Asking for Help
Tackling debt can be a huge undertaking, especially when you consider that the average American is carrying around more than $90k in personal debt. While it’s already easy to feel overwhelmed with large amounts of debt, not asking for help can often cause the situation to escalate—and make you feel worse.
Reaching out to a debt relief company to discuss your potential options is one approach that can greatly help in getting a handle on your finances. Depending on your situation and the type of debt relief programs available, you may find that you’re able to accelerate your payoff timeline and ultimately save money. Remember—you won’t know what’s possible until you ask, so don’t be afraid to reach out!
Setting Unrealistic Expectations
Once you’ve made the decision to start paying off your debt, it’s only natural that you’ll want it paid off as quickly as possible. While it’s great to be optimistic about your financial goals, it’s also important to set realistic expectations. Your debt probably wasn’t accrued overnight, and it’s not going to disappear overnight. Remember—slow and steady wins the race when it comes to effectively managing your debt, so cut yourself some slack.
Having a Negative Mindset
Let’s be honest, for most of us the thought of managing debt is probably pretty low on our list of enjoyable activities. After all, it can often feel like one of life’s most challenging endeavors. But just because something may be challenging at times doesn’t mean it has to ruin our day-to-day mindset.
On days when you find yourself feeling down about your debt or like there’s no end in sight, try this activity: pull out a notepad and write down all the reasons why you want to be debt-free. Taking the time to reflect on what’s important to you will not only help put things into perspective, but it will reinforce the reasons why you’re making sacrifices.
If you’re currently in the process of paying off debt and find yourself relating to any of the challenges we listed today, let us help! At ACCS, our debt specialists take the time to listen to your needs and can help effectively guide you in your journey to financial freedom. Request a Custom Debt Relief Plan to speak with a debt specialist at no cost or obligation!