You are in debt means you’re financially devastated. At this stage, you need to take extra care of your finances. Moreover, you must stop doing certain things that would worsen your financial health.
Check out few essential things that you must avoid doing when you’re in debt:
1. Neglecting financial issues
You’re in dire monetary condition because you’ve done certain things which are not good for your finances like late bill payments, not saving enough, not creating an emergency and retirement funds, not making a budget, and so on. If you want to get out of debt you should control these financial issues.
2. Spending uncontrollably
Overspending is like a slow poison which will kill your finances with time. Considering your present economic state you should definitely stop spending aimlessly.
Stop spending money on unnecessary and expensive items and create a realistic budget and stick to it. Also, carry a shopping list whenever you’re hitting the stores.
These would control your overspending nature to some extent.
3. Depleting emergency fund
Emergency funds are kept for emergencies only. Don’t consume the money to pay credit card bills or repay debts (these are not emergencies). Instead, find out other ways like ask for a raise to pay back your debts. Emptying the emergency fund for not so emergency purposes would create problems later on.
4. Delaying payments
If you don’t make timely payments on your bills and loans ,you’ll incur more charges such as interests, late payments, penalties and the like. These will balloon your debt faster.
So, never neglect your bills and bank statements. Talk with your creditors about how you can clear your dues without putting much pressure on your wallet.
5. Paying high interests on debts
Debts with high-interest rates will make your outstanding balance grow faster. It’s not a rock hard task to negotiate better interest rates on your dues.
Gather all your financial documents and speak to your creditors about lowering the rate of interest on your debts.
But, this time you must make the monthly payments in full and within the given time. This way, you can save a lot of money on interest payments.
6. Spending without keeping track of expenses
A surefire way to get into debt is to spend without keeping track of expenses. If you want that, go ahead. But, if you want a financial recovery, you must keep an eye on how much you’re spending.
Try to maintain a balance between your income and expenses, and think twice before paying out each penny.
7. Borrowing money
Don’t borrow money when you’re already in debt. By doing so, you can get out of debt faster. So, avoid taking out a loan or borrow from family or friends to repay your debts.
Instead, look for ways like a part-time job to earn more dollars to pay off your dues.
8. Repaying debt without a plan
You need to look at certain matters while paying off debts such as how many debts you have, how much you owe, the status of your accounts (whether current or past due), how much you can afford to pay toward your debts each month, and so on.
If you have a proper debt repayment plan such as snowball or avalanche, it’ll be easier for you to make the payments and stay current on your debts. However, the more pay, the faster you can get rid of your debts.
9. Skip saving
Never think that you cannot save money because you’re in debt. Saving is important as it’ll help you meet other expenses like repair works, medical bills, utility bills, etc. So, never skip saving and try to put the little money that you have in your savings or current accounts.
10. Continue using credit cards
If you’ve got into debt due to your credit cards, stop using them immediately. It won’t do any good, rather it would make the task of debt repayment complicated.
If possible, block the cards for the time being.
However, you can always unblock your cards when you’ve cleared all the dues.
Over to you – Do you know some other things that we shouldn’t do when we’re in debt? If so, then share your thoughts here.