28 Jun
2010

If you are trying to pay down your credit cards, personal loans, payday cash advances, and other debts to get out of debt entirely, beware of these mistakes that could keep you in debt longer.

1) Overpaying for debt help. Debt settlement companies and debt relief companies charge varying amounts for their services. Some even have hidden charges. The more you pay to a company, the less is going towards your actual debts, so shop around to find and affordable solution. If you can afford to at least keep all your bills current, you might even be able to pay down your debt yourself – without paying for help.

2) Taking on new debt. While you are trying to get out of debt, it is very important to avoid new debts. Cut up your credit cards if you have to, but avoid new debts at all costs. If you do not, your debt will just keep growing.

3) Not being aggressive enough. You need to budget and carefully put as much as you can towards your debts. Just paying the minimum on your loans will keep you in debt for years – and will cost you more in interest.

4) Putting all your cash towards debts and not saving anything. Even if you are trying to get out of debt, you still need to be putting something towards your emergency account – even if it is just a little bit every month. This way, you will have emergency cash in case you do face a crisis. Your savings account will keep you away from expensive emergency loans and cash advances.

5) Not giving some bills priority. It is important to pay off your highest-interest loans first, because that way what you save on interest can be used towards your lower-interest loans. Keep all your loans current, but put extra cash towards your highest-interest loan and focus on paying off one loan at a time.