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Avoid These Mistakes While Paying Off Debt

Many times, paying off debt is easier said than done.

It doesn't take much for debt to get out of hand, and when that happens, it might feel like you aren't in control of your financial situation. This is often a result of some common mistakes many people make when paying down their debt.

Recognizing and correcting these mistakes are the first steps in beginning to live a debt-free life.

Neglecting To Budget

One of the biggest mistakes a person can make when paying down debt is to not budget. When you create a budget, you know exactly how much money you have to allocate toward your debt.

Without a budget, many people fall into the trap of allocating more money toward their debt than they can afford.

Then, when it's time to go to the grocery store or pay the utility bill, there's only one method available to them: their credit card. They put the expenses on their credit card bill, only to see their debt increase more.

To avoid this, you need to create a budget.

Calculate how much you can expect to pay each month on groceries, housing, utilities and any other recurring and necessary expense. Then, subtract this amount from your monthly take-home pay. The difference is everything you can afford to put toward your debt.

Ignoring The Snowball/Avalanche Strategy

The snowball method of paying off your debt means to put all of your focus on paying off one specific area.

Put all extra funds toward this debt while only paying the minimum balance on the others.

Choose the smallest debt you have first and pay that off.

This is meant to create a sense of motivation. You'll feel accomplished when you tackle that debt completely and you'll be excited to take on the next one.

The alternative to this is called the avalanche method, in which you pay off the debt with the highest interest rate first, according to The Billfold.

This is because you'll spend more money on that interest over time, so it's best to wipe it out sooner rather than later. While the motivation factor won't come as quickly as with the snowball method, you'll save money in the long run.

Either one of these strategies is better than focusing on all your debts at once.

While you might feel stressed about each debt equally, paying them off equally is not the best way to make them disappear. Even if you are paying $25 extra on 4 different debts, each one will last longer than it has to, so you'll end up paying more in interest. Plus, it will be very slow going, which doesn't help your motivation to pay.

Instead, put that extra $100 a month towards one debt and get it cleared out faster.

Not Correcting Your Bad Debt Habits

There is such a thing as good debt and bad debt.

Good debt happens when you invest in something for your future. These include mortgages, because a home is a positive investment, or student loans, because an education will likely improve your career path and future opportunities.

Bad debt is the result of bad habits, like overspending on your credit card. If you don't address what caused you to get into debt in the first place, paying down your credit cards and other loans may be closely followed by a slide back into debt.

Fox News Magazine advised those who have trouble staying out of debt to seek professional financial help. By attending a debt management program, you can learn the best tips to stay on top of your finances, pay down outstanding balances and avoid sinking into debt again.


Whether you are just starting to pay off your debt or you've already began to chip away, you can implement these strategies and you'll be on the fast track to having zero debt in no time. Debt is not a never-ending hill and with these tips you'll get your feet moving in the right direction!

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