No one likes the idea of being in debt. Debt usually creates emotional stress, relationship strains and a general feeling of disappointment or failure. Sadly many people who may be struggling with debt make the same errors that can be avoided. By carefully reading this article you can avoid the common debt mistakes and get the personal finance help you deserve.
Lack of a Financial Plan:
If you want to reduce your debt you need a plan. As I have previously mentioned on my blog it is a wise decision to eliminate the debt that has the lowest balance first. To begin with it will give you great satisfaction of reaching your goals and will help you move forward to your next outstanding balance. This method also lowers the number of different bills you have to pay, which will eliminate confusion. If you make a plan and follow it you have already prevented one of the most common debt mistakes.
Spending Too Much:
It sounds obvious but spending too much is the main cause for debt and more and more people spend more than they make. You must eliminate unnecessary costs and avoid purchasing those items you can't afford. If you discover that you are unable to stay on top of your spending it may be time to seek a financial adviser. They can help you avoid those common debt mistakes and provide the personal finance help you might need.
Hiring the Wrong Debt Consolidation Agency:
Everyday we are bombarded with television and radio advertisements that offer debt consolidation services. Some are legitimate and others aren't. The only way to know if a particular agency is right for you is to investigate the company thoroughly. I have heard some company's state that they can lower monthly payments by more than 50% or eliminate debt in under five years. If it sounds too good to be true it probably is. Do a lot of research before you entertain the idea of hiring a debt consolidation agency. Personally I would not recommend seeking this service at all but if you choose to go this route, choose wisely.
Not Understanding Why You Are In Debt:
Certainly this is the most common debt mistake when seeking personal finance help. If you aren't sure why you are struggling with debt or don't know how you got into debt to begin with then how can you solve the problem? If you borrow money for non-essential spending and keep spending money you don't have you must rectify that problem immediately. It is okay to have a home mortgage or college loan but you must prevent unnecessary purchases. The sooner you figure out why you're in debt, the sooner you will begin to eliminate it.
Making The Same Mistakes:
I learned an amazing fact that 80% of individuals who win the lottery are in a worse financial situation two years later. Why? Because they repeat the mistakes they've always made. If you begin to solve your financial difficulties and then fall back into previous spending habits you'll be right back at square one. Understanding your debt, putting those solutions into place and sticking to your plans will help you stay out of debt. Don't repeat what got you into trouble in the first place.
Debt is easy to fall into and hard to get out of. If you avoid these common debt mistakes and seek proper personal finance help you will become debt free quicker than you ever thought possible. Thousands of people are able to work their way out of debt and you can too! Stick to your goals.
Happy Thanksgiving to our Canadian friends!