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If you’re in debt, you will understand the stress it can cause. You will have less money for your other expenses and you will struggle to put away savings for a rainy day.
There are lots of helpful articles on our website, including this one on eliminating debt, so benefit from the useful advice we can give to you.
But when you are trying to tackle your debt, be mindful of the following mistakes.
Mistake #1: Not talking to your creditors
You shouldn’t be afraid to talk to your creditors as they should be willing to help you if you’re in a difficult financial situation.
If you can explain the financial struggles you are having, your creditor may put you on a repayment plan that suits your current budget.
If you don’t contact your creditors and if you fail to pay what is owed, you will be charged late fees and other financial penalties, and that will make your situation worse. Your creditor might also take court action against you and send bailiffs to your door. It may still be possible to get help at this stage but if your creditor refuses to listen, you should contact a debt management company or insolvency practitioner (follow the previous link) for advice.
Mistake #2: Taking on more debt
If your debts are mounting up, you should think twice before taking out another loan to pay for your expenses or to pay off your existing debt.
By adding to your debt burden, you will struggle to escape the trap you are in, so you should find other ways to manage your situation before considering another loan.
Check out the linked article at Which for some helpful advice.
Mistake #3: Making minimum payments
Making the minimum payments on your debts is better than paying nothing. However, you will end up paying more in the long term because when you pay the minimum, you are mainly paying interest and not the loan capital.
As such, you should pay off as much as you can each month. If you’re struggling to pay more than the minimum, find ways to cut your expenses at home so you have more money to put towards your debt payments each month.
Mistake #4: Not asking for help
You don’t need to tackle your debt alone. If you are struggling, reach out to friends and family. In some circumstances, they may be willing to offer you financial help. But if they can’t help you in this way, they might still be able to give you advice that could improve your financial situation.
Contact a local debt charity too. They will give you impartial advice on how to manage your existing debts and offer you support during your journey towards a debt-free life
Finally
The sooner you’re out of debt the better as you will have more money to spend on your home, family, and other expenses.
So, do what you can to free yourself of debt but be mindful of the mistakes we have mentioned as you may get into further financial difficulty otherwise.
