1. Ignoring your debt
Ignoring your debts is not going to make them disappear, it’ll only cause them to pile up, accumulating more interest and late fees. Ignoring your debts can even lead to court action from your creditors and the repossession of your key assets, such as your car or house.
Debt should be dealt with efficiently to reduce the negative repercussions.
2. Having no budget
Creating a budget is a crucial element in your journey to a debt free future. It allows you to control your disposable income after essential living expenses have been accounted for, so you can ensure that any excess is allocated towards dealing with your debts.
3. Not having a debt management plan
Having a plan to manage your debts can help you pay them off faster as you remain focused and motivated to reach your end goal.
4. Not having emergency savings
You never know what might be around the corner, therefore having an emergency savings fund can stop you from adding to your debts if any unexpected expenses occur.
5. Not changing spending habits
Many debts result from external circumstances beyond your control like losing a job or ill health. However, some can result from living beyond your means. If this applies to you, you will struggle to find a debt free future unless you address and change these spending habits.
Takeaways and lunchtime meal deals all add up and show that you are not fully committed to improving your financial situation. Focus on only purchasing the essentials and use any disposable income on paying off your debts.
6. Dealing with debt alone
Dealing with debt alone can cause a huge amount of stress, and may have a damaging effect on your mental health and wellbeing. Seeking advice and support from family, friends and most importantly, debt experts, can help relieve the immense pressure and set you on a path towards being debt free.
7. Being inconsistent
Undoubtedly, the journey to being debt free will not be easy, however inconsistency will only slow the process. No matter how detailed your plan is, it will not be effective unless you are committed and consistent.
8. Not prioritising your debts
You should categorise your debts into priority and non-priority to ensure you are paying off the most important debts first. Priority debts may include debts such as mortgage or rent, gas and electricity bills, court fines or child maintenance, while non-priority debts may include overdrafts, payday loans or money borrowed from friends.
Do not be pressured to pay your most aggressive creditors first as they may not always be of the greatest importance. This is where the Debt Arrangement Scheme (DAS) in Scotland can really help. The scheme assists people to pay off their debts but the interest and charges on what they owe are frozen making repayment easier to manage.
9. Continuing to use your credit cards
If you’re struggling with debt, avoid using your credit cards so that you are not continuing to accumulate more debt. In fact, as a sign to yourself that you intend to commit to sorting out your debts, you may choose to destroy all of your credit cards, or just keep one for emergencies.
10. Making promises you cannot keep
Do not agree to make payments that you are not able to afford. Make agreements based on your budget and payment plans. Be honest with creditors and don’t tell them what you think they want to hear.
Don't make the same mistakes.
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