4 Common Mistakes to Avoid When Paying Off Debt

When you’re paying down your student loans or credit cards, you likely want to pay off your balances as quickly as possible. You may have picked up a second job or limited your expenses to reduce what you owe. Unfortunately, you can make a few common mistakes that can derail your progress and extend the time necessary to become debt-free.

Failing to Create a Plan

Many people assume they can pay off debt with extra money each month and throw money at various balances they owe, making it challenging to stay organized and focused. Creating a plan is necessary to tackle everything quicker without losing your focus. Hiring a 4 Pillars debt consultant in Victoria makes it easier to develop a plan of action.

You also need to decide which balances you want to pay off first. Tackling smaller debts can improve the motivation to pay off the more significant debts, creating a snowball effect. A 4 Pillars debt consultant in Victoria can help you review all your accounts and decide which ones to pay off first.

Forgetting About Your Emergency Fund

Debt consultants in Victoria recommend having an emergency fund in place for unexpected expenses as you follow your debt pay-off plan. Saving at least $1,000 gives you the necessary funds for unexpected car repairs or medical expenses to avoid using your credit cards.

Spreading Your Money Around

When working with 4 Pillars, you’ll learn spreading your money around can make it challenging to make progress. Pay the minimum amount on each debt and make a more significant payment toward one account at a time. Consultants from 4 Pillars in Victoria will also suggest tracking your progress to help you stay motivated.

If you want to learn more about mistakes to avoid while paying off debt, speak to a 4 Pillars debt consultant today.