I have made my fair share of mistakes when paying off debt. While I start off with the best of intentions, it is not easy and I have found several times that my initial plans did not always work. According to CNBC, eight in ten Americans are in debt right now. Debt is weighing heavily on many people’s minds. This year we were not prepared finically for the holidays and have racked up a little consumer debt. While I work on putting us back on track, I also want to avoid my past mistakes when paying off debt. Want to avoid my mistakes too? Check out my financial missteps bellow.
5 Avoidable Mistakes When Paying Off Debt
I Did Not Have A Clear Plan
Have you ever planned a road trip or vacation without mapping out your route? Not many of us would take that trip. Think of debt repayment as a journey, and you need a map. While people may change their minds, numbers are pretty cut and dry. Need help to get started? Organize your payments with this Free Debt Payoff Planner Printable at A Mom’s Take.
I Did Not Put Windfalls Into My Plan
Your tax refund, that extra twenty bucks you found in your coat or that birthday gift from your aunt, where did they go? If you find you do not know, you may need to rethink. If you use small windfalls to boost your debt payments, you will be free and clear much quicker. I also found that if I save gift cards for a special splurge rather than spending them right away, I can treat myself when I really want it without making more mistakes while paying off debt.
I Lived The Same Lifestyle
Small purchases add up fast, but sometimes you need to rethink some of your daily purchases. One of my personal vices is the coffee shop line, which may not seem like much but $4 a day adds up to $112 a month just in coffee. Set yourself up for success and try to break some of your spending habits. Unsubscribe from that online store’s e-mails for a while, and turn off the app notifications for your favorite restaurant. Little lifestyle changes can help you reach your goals and also teach you How To Tame Household Debt.
I Did Not Have An Emergency Fund
Keeping a small emergency fund for unexpected expenses is so important, and I have found the magic number to be $1000. If I can build my emergency fund up to $1000, I have found I can then easily handle life’s unexpected emergency such as the car needing a repair or the cat needing an emergency trip to the vet. (Both of which happened to me in the past month!) When I tried to repay my debts without saving up a small emergency fund, I found I regularly was off track within several months.
I Bought Everything Cheap
Over the years, I have tried all sorts of tricks to spend less money. Where I run into trouble is when I purchase everything cheaply. Some items you simply need to purchase quality over cheapness. I purchase one pair of winter boots for my daughter per year. I look for sales on quality brands or purchase used from trusted friends rather than pick up a cheap pair at a discount store that may not make it through the season.
Readers, have you made mistakes when repaying debt? Tell me about your challenges in the comments!
Image Credit: Betsssssy