People With Debt Make These Mistakes Way More Often
Want to know why people stay in debt? These are life-changing money tips that you can’t forget, especially if you’re trying to get out of debt for good.
Debt is so common today that you probably don’t realize how much is weighing you down emotionally. So, deciding to get out of debt is extremely exciting! You’ll be sleeping better because you won’t be as stressed out with so many bills.
And, if you are anything like me, you are probably doing all the research you can to make sure you are very prepared to attack your debt. As someone who’s been trying to get out of debt, I’m giving you the top debt free tips that my family and I swear by.
You are going to learn all about why people stay in debt and what you can do about it.
After learning all about these mistakes you need to avoid, you are going to be SO pumped up. And, want to jump in and get rid of ALL your debt.
This post is all about the best debt mistakes you should know about.
Best Debt Payoff Tips:
Not realizing how much debt you have
Not knowing how much you owe can feel super scary. If you are anything like me, you are probably hiding behind all your debts. You rather agonize over it than deal with it.
But, the truth is, not knowing is scarier than knowing. Let’s face it, once you realize how much you owe, then you can create a game plan. Which can be SO empowering.
Once you know your numbers cold, it’s like a light switch goes off. And, you become aware and lit to attack your debts.
Don’t spend the next few years like most people agonizing over and ignoring their debt. Take ownership and start plowing, so you can be debt free.
Not doing the debt snowball method
As a Dave Ramsey fan, I swear by this. Because it simply works. There is a method to his madness.
By listing all your debts from smallest to largest and doing the snowball method, you can get quick wins. And, those quick wins is what will keep you motivated thru your debt free journey.
Here’s exactly how to the debt snowball method.
First, list out all your debts from smallest to largest.
Second, start working on paying off the smallest debt first, (regardless of the interest rate).
After that, you should have your first quick win. So, once you pay off a debt, use that payment towards the next debt until you pay it off.
Repeat the process and watch your debts disappear.
So, organize ALL your debts by writing everything down. And focus on paying one debt at a time.
Not knowing their Debt payoff date
You don’t want to make this mistake. Because it will make you feel like paying off debt is a never ending journey.
Mind you, paying down debt will take longer than you want to. But, for some reason, knowing your debt payoff date will keep you focused on your end goal.
Knowing your debt payoff date will accelerate and fuel your journey. Because it makes you accountable to work as hard as you can to meet that deadline.
Not living on a budget
Most people want to cringe when they heard the word budget. But, not having a budget is what’s keeping them broke.
Budgeting is the key to achieving your money goals. It’s where you tell your money where to go. (It’s just a like a spending plan).
{READ: A Step-by-step guide on how to set up a budget}
Remember, a budget gives you the freedom to be in total control of your money and future. And, not having a budget is the worst mistake you can make.
Also, the key to destroying your debt is to actually stick to your budget. And, here’s exactly how to stick to a budget in 3 easy steps.
I personally used the Budget By Paycheck method from The Budget Mom. I like it because it’s so easy to use. I’m a paper and pen kind of girl and love to create my budget using her method. It got me in the rhythm of paying a ton of debt while at the same time saving TONS of money.
Not spending less than you make
If you ever want to become debt free, you have to spend less than you make. (Aka. live below your means).
This is the most common money mistake people do! They spend WAY more than they make.
Spending less than you make gives you the freedom to use the leftover money towards extra debt payments or savings.
Not having debt payoff motivation
According to Ramit Sethi not actively working on your money psychology it’s a common mistake people in debt make.
He believes you should continue educating yourself (aka read more personal finance books).
And, it’s SO true! Reading personal finance books will totally BOOST your debt payoff motivation.
I am the first to admit that I hated reading. I would always come up with some sort of excuse. Like I have ADHD, it’s boring, I’d rather watch Netflix, etc.
But, then I was introduced to audio books and I was hooked! I listened to the Dave Ramsey book The Total Money Makeover.
And, I quickly realized I knew NOTHING about money. Like seriously nothing.
I was desperate to get out of debt and was looking for help. Since then, I’ve been down the personal finance rabbit hole.
And, it’s helped me stay the course.
I will be the first to admit that since I’m on a tight budget now, I don’t actually purchase all these personal finance books.
I usually go to my public library and check out the personal finance books and rent them out for FREE.
And you should too! Educating yourself is the most important investment you could ever make.
Not tracking their spending
Not knowing where all your money went at the end of the month can be really frustrating. And it’s a very common mistake people who are in debt often do.
You can’t change anything about your money, if you don’t know what you are currently doing.
Most people don’t actually track every single transaction that comes out of their checking account. They just hope for the best.
But, tracking your expenses will give you a clear picture of your spending habits. Instead of thinking all your money is going into a black hole, you’ll know exactly where it was spent.
Oh, and FYI, tracking your spending doesn’t have to be complicated at all. Here’s an example.
Before I started tracking my spending, I had no idea most of my money was spent on eating out. It wasn’t until I wrote every single transaction that I realized this.
So, I challenge you to track EVERY SINGLE DOLLAR leaving your bank account. And you can download this expense tracker for free from bysophialee on this link for FREE.
It will help you feel more in control. And, see clearly how much you spent compared to the amount you had budgeted.
It’s genius! Why didn’t they teach us this in school?
Not having financial goals
Most people who are in debt, don’t want to face their finances. Thank God you are not like most people!
Having clear defined money goals will help you know exactly what you need to do in order to achieve them. It can also be rewarding. And, it will give you the momentum you need to achieve those long-term goals.
For example, you can set short term goals like this week I will throw $50 extra towards my #1 debt you’re trying to tackle.
You’ll feel like you’re making headway towards becoming debt free. Looking forward to crushing your financial goals will keep you accountable and motivated throughout your debt payoff journey.
Alright, that’s it for my debt payoff tips!
I am curious to know what are your tips for paying off debt? I’d love to hear your ideas. Let me know in the comment below.
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5 Personal Budgeting Tips For Anyone Who’s Ready to Be Debt Free
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