Repaying your debt is an incredible challenge. Making mistakes will only make the process harder to get through and push the finish line further out of reach. See what the most common debt repayment mistakes are so that you can tackle the challenge as best as you can.
Getting the Wrong Kind of Help
You’ve recognized that you need professional help to reduce your outstanding debts. That’s great! It’s better to accept the fact that you need expert advice and assistance than to struggle blindly on your own. But that only works when you seek out the right helper.
There are for-profit companies that promise extreme debt relief, but don’t always deliver on their enticing promises. They often ask for payment upfront, making a profit before reducing their client’s debts. Sometimes, they hold onto your debt payments in hopes to spark a negotiation with creditors so that they will lower the total. The move is incredibly risky. If it backfires, you could be left with a lower credit score and more debt than when you started.
Where should you go to get government-regulated debt relief? A licensed insolvency trustee firm. Trustees are licensed and monitored by The Office of the Superintendent of Bankruptcy. So, their work is highly regulated and designed to help clients with services like credit counseling, consumer proposals, and bankruptcy. Click here to learn about the consumer proposal services at David Sklar & Associates to see how a licensed insolvency trustee can help you repay your debts.
Working without a Budget
A budget helps you organize your personal finances. Without it, you could undermine your debt repayment plans without even realizing it. A budget will ensure that your money is tracked and managed properly — which, in turn, helps you manage your debt repayment properly. So, download a budgeting app or open up an Excel spreadsheet and get started on a realistic budget as soon as possible.
Only Making Minimum Payments
Paying the minimum is a good way to avoid penalties for missing your bill, but it will barely make a dent in a large debt total. Plus, interest will make your balance grow every single month. That’s why making minimum credit card payments is one of the worst money mistakes that you can make when you’re heavily in debt. It will take you years to make any progress.
Giving Up on Your Goals
Finally, the debt repayment mistake that you don’t want to make: giving up. It’s true that repaying debt isn’t a pleasant activity, but it’s essential for your financial stability. One of the best ways to stick to your goals is to get someone that you trust involved — they will be your cheerleader when you need support and hold you accountable when you’re slacking off. Tell your partner, your close friend, or relative about your goal. They can make it easier to get to the finish line.
Getting rid of all your debt won’t be easy, but it doesn’t have to feel impossible. Choices like talking to a licensed insolvency trustee and building a budget will make your journey to a debt-free life much, much smoother.