5 Things You’re Doing That Stop You From Getting Out of Debt

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Updated on Wednesday, February 17, 2016

Very Upset Woman Holding Her Many Credit Cards.

When you’re on a path to lower the amount of debt you owe, it might seem like every step you make is geared solely towards that goal. While that’s probably true, there may be some things you’re doing inadvertently that could be hindering you from reaching that goal even faster. Here are a couple common ones that might have slid right by you.

1. You haven’t mapped out a plan

Deciding to tackle your debt head-on is the first important step, but you can’t just start throwing money blindly wherever you think is best. The only way to truly figure out the best way to pay down your debt is by developing a plan. This will require taking some time to sit down and map out where all your debts are, what’s owed for each and how much interest is on them. From there you can determine which ones need to be paid down faster (those with the highest rates), and about how long it will take you overall to get everything paid off. This is also a good time to make note of the monthly due dates for all your bills to help avoid those pesky late fees that can crop up when things go unpaid.

2.You pay too much in rent, have a house that’s too big or a car that’s too flashy

Often it’s hard for us to reconcile the life that we want to be living with the one we can afford, but doing so is an important step to both getting out of debt and staying out. If your rent or mortgage is a significant amount of your net monthly income and you find that it’s a struggle to pay the bills each month, it may be time to make some hard decisions. Before deciding to move or sell your home, though, consider taking on a roommate, if that’s an option. When it comes to your car, while a shiny set of new wheels is nice, it’s not always necessary. If you require a car to get your around and you don’t live in an area where public transportation is a valid option, consider these four ways to make owning a car more affordable.

3. You sign up for 0% interest credit cards and keep using them after you make a balance transfer

If you’re lucky enough to qualify for a balance transfer credit card (here are some of the best options available to date), then signing up for one and moving all the interest that currently lives on a high-interest card over to your new, 0% interest card is a smart, financially savvy move. The trick, however, is that once you make that transfer, you should put the card away. If you’ve read the fine print on your dandy new card, you’ll likely find that the 0% offer is good for only a certain amount of time (generally about 12 to 24 months), and, in some cases, that offer isn’t valid on purchases made on your credit card aside from the balance transfer itself. That simply means that the smartest thing to do is sign up for the new card and make the transfer (after making sure that any fees associated with the transfer don’t cost more than the interest you’re currently paying on your card), then divide your payments by however many months the card gives you 0% interest to pay it off, and then cut that card up. Its purpose was to help you get out of your current debt, not to rack up new debt, so once you’ve put the debt repayment plan in place on the new card, it’s time to move on. (Not sure how a balance transfer could help you out, exactly? Check out this piece for more info.)

4. You increase your lifestyle to match every raise you get

You worked hard for that raise, no doubt, so of course it only makes sense that you want to celebrate a little. The smart thing to do, though, if you’re really trying to pay down debt, is to allow yourself for a slight increase in living expenses (perhaps 10% of the overall raise), and then immediately put the rest towards paying down your debt. Once those debts are paid off, your emergency savings is fully funded and your retirement accounts are taken care of, then you can figure out how to best put to use any additional funds you have coming in. It might not seem like the most fun right now, but whatever trepidation you may have right now should be quelled once you start watching your overall net worth go up and those debt numbers go down.

5. You haven’t spoken to your bank in years

If you’ve held the same credit cards for years at the same bank, and have been paying the same high interest rates on them for that same amount of time, it’s time to up your haggling game. Don’t ever assume that your bank will come to you with offers to lower your interest rate — it’s up to you to take matters into your own hands. If you’re not a negotiator at heart, fear not — we’ve got the exact script you can use to help haggle down those fees. If you still aren’t sure whether or not it’s worth the effort, check out this piece for three reasons why your credit card probably isn’t working for you to get motivated to make the call.

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