5 Mistakes You Should NEVER Make with Debt


Okay, so you have debt. It’s frustrating sure, but it’s not the end of the world. Millions of people are in the same boat right now, and many of them are steadily working their way toward being debt free. You can do it too. No matter how you got into debt, you can make it out. Maybe you bought a car on credit, maybe you paid for your education with student loans, maybe you used credit cards at the mall one too many times. Whatever the cause, that’s all in the past. Now it’s time to move forward.

But how?

As it turns out, the key to reaching debt freedom is to avoid making these 5 common mistakes that some people make with their debt. We learned these mistakes while building ReadyForZero, a free online tool for helping you pay off all your debt:

1. They Don’t Negotiate

It’s surprising how many people don’t think to negotiate the terms of their debt repayment. If you have credit card debt, it’s one of the first things you should try. Here’s how: you start by calling up your credit card company and asking for a lower interest rate. It sounds simple, but lots of people never do this – and it can save you hundreds or thousands of dollars in some cases. You can use our handy guide to lower interest rates to prepare before you make this call.

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Here are some other instances when it helps to negotiate: if you have medical costs and can pay a fraction of the amount up front (in cash), try negotiating for a lower payment. Certain health providers will agree charge you a lower amount if you can pay with cash right at the beginning. Read our complete guide to negotiating medical debt to learn more.

You should also know that if you’re struggling to make payments, there may be help available if you ask for it. For example, federal student loans are eligible for the Income-Based Repayment plan, which can drastically lower your monthly payments. And you can always ask for forbearance on student loans, car loans, or even credit cards.

2. They Think “Everyone Is Doing It”

One of the ways people get into trouble with debt is by assuming that “everyone is doing it.” This can come from seeing your friends and family getting themselves in debt or from going to the mall and seeing everyone buying expensive clothes and gadgets with a swipe of the ol’ credit card. It can be tempting to think “I guess everyone else is in debt, so it’s okay if I am too.” But that’s an impediment to becoming debt free. Instead, you should take on the belief that you will not be satisfied until you have paid off every cent of your debt — no matter what anyone else is doing.

3. They Assume They Can Pay Off Debt Without Having a Plan

Too many people think they can pay off debt without having a plan. But usually, you can’t! That’s why we recommend using ReadyForZero to make a personalized plan for paying off your debt and building wealth. The reason this is so powerful is that you actually create a plan to show you how much money to pay toward each of your loans and credit cards every month. You also get email reminders sent to you from ReadyForZero that ensure you will not forget any payments. Don’t make the mistake of failing to pay off debt because you never made a plan!

4. They Forget to Change Their Attitude

This can be one of the hardest mistakes to make and one of the hardest to learn from. The reason is that humans don’t like change. For the most part, we’re comfortable with where we are right now. But for those of us in debt, usually we have to change our attitude to change our outcome. We have to start thinking in a new way and change how we look at money. The best way to accomplish this is to proactively decide how you’ll incorporate new beliefs about your finances into your daily life.

5. They Juggle Other Priorities

When your goal is to get out of debt, it’s usually necessary to make it your #1 priority. Too often, other things — like convenience, new toys, travel, etc. — can get in the way of your debt payoff. As fun as it is to take a vacation or buy the latest tech gadget, these things slow down your debt repayment and may keep you in debt indefinitely. You’ll need to do without these things and focus 100% on your debt if you want to pay it off as fast as possible. To help you keep your priorities straight, it’s always a good idea to rely on a budget. If you don’t have one yet, use our guide to creating a budget. And remember, your budget should empower you to spend on the things that are important to you. If becoming debt free is important, then you can make it a priority.

No matter where you are in your debt repayment (or how you got here), you can get out of debt! Just be sure to avoid the 5 common mistakes discussed above, and you’ll be on the fast track to getting out of debt. And if you’ve already made one (or a few) of these mistakes, not to worry — you can still get started today on your new path to financial freedom.

As always, let us know in the comments if you have any questions.

Image credit: Creative Ignition

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  • All of these apply to budgeting and saving as well as debt. People don’t think to negotiate all kinds of prices. People feel pressure to spend rather than save just because everyone else is doing it. People assume they’ll have money leftover to save even without a budget. They approach budgeting with an attitude of restriction rather than seeing it will give them financial freedom. And lastly, they’re terrible at prioritizing temporary fun over long term goals.

    • That’s a great point, Stefanie. There are a lot of parallels there, and it certainly is not a coincidence. Maybe we should write a follow up post on how these also apply to budgeting!

    • Bob R

      we buy things we dont need, with money we dont have, dor people we dont like.

  • J Sims

    Well said, Stefanie, especially your last line! I find that people don’t want to be in debt but more so they don’t want to change their lifestyle and live in a way that they will be able to pay off their debt. I have talked to multiple people who are sick of being in debt but refuse to work a second job, give up eating at restaurants or still purchase a $4 latte every day. I feel like it is worth giving up some things now to be debt free in the future. Plus, I find things are more meaningful to me. It is a bigger deal to get a drink at Starbucks or go out to eat now with friends because I only go out once every two or three weeks. Before it was 2-3 times a week. Shopping at regular stores instead of thrift and consignment shops is also a treat. People can change the way they live but first they have to change the way they think and realize (to quote Dave Ramsey) “debt is dumb.”

    • Great comment, J! Glad you’re shifting your behaviors to accomplish your financial goals! Keep us updated on your progress.

  • Solace

    The priorities thing is really difficult for me. I was raised to save money. I remember getting a dollar for allowance, given to me in quarters and dimes so I could put 20 cents in the kitty bank. It’s completely wired.

    So then, when I see something telling me that paying off my debt (student loans, in my case) should be my priority, not just *a* priority, I feel like maybe I’m not supposed to be focusing on saving. I have a halfway decent emergency fund already. Put that money into the debt instead. But I just can’t bring myself to do that. I do still pay considerably over the minimum every month (almost double), but I get stuck when I try to make myself do more—I feel like a month has gone by wasted if I haven’t put any money into savings.

    Is it so bad to have two priorities like that?

    • That’s cool your parents helped teach you financial lessons by giving you an allowance. I think you’re doing great. You are paying more than the minimums on your debt, which means you’ll expedite your progress, and you’re also maintaining a significant emergency fund. I don’t think there is anything wrong with having two priorities like that. Keep up the good work!

  • I think the attitude change is a BIG one! Even when you get out of debt it’s hard to change your mindset about your spending habits, and working with debt products. It seems like a lot of financial wins and losses are fought in the mind.

    • Yes, completely agree! It can be the hardest part, but also the most important part to change long-term.