The Biggest Mistakes You’re Making When Paying Off Debt

It's easy to make mistakes when you start paying off debt, but these can stop you from achieving your financial goals. Stop making these big mistakes today.

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When you decide you want to start eliminating your debt (as in getting rid of it completely, not just paying it off), it is easy to become overwhelmed. Whether you’re in a little debt or a lot, it can be difficult to see how you’re going to get out. While you might think it’s simple, spend less money, pay more off debt, it’s rarely ever that easy.

Getting into debt is easy, getting out of it…? Not so much. We make mistakes along the way, and that’s only natural. After all, managing your money is a skill that takes a whole lot of learning and practice. 

These are some of the mistakes you’re making when paying off debt, maybe you’re only making one or two of them, maybe you’re making all of them. Either way, get these sorted and you’ll be well on your way to debt freedom. 

It's easy to make mistakes when you start paying off debt, but these can stop you from achieving your financial goals. Stop making these big mistakes today.

1 – Not Knowing How Much Debt You Are In

I’ll be completely honest… this is a mistake I made right at the start when my husband and I decided we were going to pay off our debt. I had no idea how much debt we were in… and I didn’t want to know. It scared me. So I hid from it. But that was a bad idea. 

Hiding from the debt didn’t make it go away, it just meant that I didn’t understand the gravity of the situation, and I didn’t have a good, thought out action plan for paying it off. It also meant I couldn’t measure how far we had come. 

The first step is getting clear on everything. Gather up all of your debts (you can use the debt tracker printable in our free Mini Finance Planner to do this) and work out where you owe money. Include everything, every Afterpay, store card, credit card, line of credit, overdraft, personal loan… every single thing. 

Then work out what’s costing you the most money and get rid of it first… 

We have the perfect debt tracker printable sheet to help you do just this:

It's easy to make mistakes when you start paying off debt, but these can stop you from achieving your financial goals. Stop making these big mistakes today.

2 – Not Negotiating A Better Interest Rate

Interest is unavoidable. It’s the price you pay for using someone else’s money to buy things for yourself. But, that doesn’t mean you can’t negotiate a better deal. 

If you have a personal loan and a mortgage, see if you have enough equity to roll it into one. Home loans are often significantly lower in interest than a personal loan. 

If you have a credit card, see if you can switch to an interest free card for a period of time while you pay it down. Keep in mind the cost of the credit card itself, as there are often yearly fees you need to take into account. 

But this doesn’t stop at interest payments. Check your insurances, phone bills, utilities and anywhere else you can save some money. Every little bit counts when you’re paying off debt.

It's easy to make mistakes when you start paying off debt, but these can stop you from achieving your financial goals. Stop making these big mistakes today.

3 – Not Having A Plan

While I kind of had a plan when I was starting to pay off my debt, I didn’t really have anything laid out which probably meant it actually took me longer to pay off my debt than it should have. 

‘Paying off debt’ is not a plan. It’s a goal. Your goal needs a plan to make it happen. 

So what makes a good action plan? 

You need to start with your financial goal, in this case – paying off debt, and then work out what steps to take from there. How are you going to pay off your debts? Which ones are you going to pay first? How are you going to manage your money from now? 

Because let’s face it, you’re here because what you’re doing hasn’t been working, so doing the same thing isn’t going to start working. You need to create a plan.

We talk a lot about plans to achieve your financial goals in the Smart Sexy Finance Bootcamp

It's easy to make mistakes when you start paying off debt, but these can stop you from achieving your financial goals. Stop making these big mistakes today.

4 – Not Creating A Budget

If you’re anything like me, you thought budgets were for those who couldn’t manage their money or who were on a low income… but that’s not the case at all. 

Budgets are for people who are smart and who are serious about managing their money and achieving their financial goals. Why do you think businesses have budgets? Because they want to run at a profit! And we should be aiming for the same with our personal finances (for the record, you cannot run at a profit if you are in debt…). 

You need to start a budget for yourself, but keep in mind budgets are designed to help us achieve our goals, not to deprive us of what we want in life. 

And, you need a budget for each paycheck. It will only take you 5 – 10 minutes and will help you actually stick with your budget. 

Need help with a budget planner template? Download this one for free:

It's easy to make mistakes when you start paying off debt, but these can stop you from achieving your financial goals. Stop making these big mistakes today.

5 – Still Spending On Your Credit Cards

Hold up!! You want to get out of debt and you’re still spending money on your credit cards?? 

And before you tell me that your credit card is your emergency fund, stop. No. A credit card is not for emergencies. At all. That’s what a separate emergency fund is for (not sure how to get one of those, check out how you can build your emergency fund up fast). 

You’re not going to get out of debt if you keep making purchases on your credit card. It’s just going to keep you in the same cycle you’ve been in. 

It's easy to make mistakes when you start paying off debt, but these can stop you from achieving your financial goals. Stop making these big mistakes today.

6 – Adding More Debt

This really should go without saying, but there are people who don’t realise that they cannot possibly get out of debt if they keep adding more debt. It seems obvious, but there are sneaky ways credit companies will try and get you into more debt. 

It may seem like a good idea to get another credit card for an emergency fund (NO!!), or a personal loan to pay out your credit card, or take the bank up on the offer when they want to extend your credit card (for some breathing room). But it’s just not going to help you get to where you want to be. 

Get yourself an emergency fund, create a plan, create a budget and start taking action. 

If there’s something you want to buy and you think you need a loan for it, it can wait until after you are debt free. It’s tough love but it’s what you need to hear if you’re wanting to get out of debt. 

Are you making these mistakes while trying to pay off debt? If you are, that’s okay! We all make mistakes. But now is the time to learn from them and start taking positive action towards your financial goals. You’ll be so grateful you did. 

It's easy to make mistakes when you start paying off debt, but these can stop you from achieving your financial goals. Stop making these big mistakes today.
Written by
Krystal Kleidon

Krystal is a Wife, Mama, Author, Paramedic, Coffee Lover and an all-round bunch of awkward. She can be found spending time with her super cute family or geeking out over the latest Marvel movie. Her goal in life is to empower women and she does so with her sites Hello Brazen, Project Hot Mess and The Empowered Mama Project.

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