It’s no secret that living in debt is a huge burden. And it is a burden shared by more than 340 million Americans according to Experian. But, while numerous Americans are in debt, countless others have found a way to pull themselves out. If they’ve done it, why not join them?

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The truth is it’s not easy. Getting out of debt and staying out means more than making your monthly payments. You have to change your spending habits, learn how to budget, create an emergency fund, and know where to go for help.

Paying off debt is a lot of work, and it’s easy to get tripped up along the way. That’s why we’ve compiled a list of 8 common mistakes to avoid while paying off your debts.

1. Not Changing Your Spending Habits

One of the biggest mistakes people make when trying to pay off debt is failing to address the root cause of their financial troubles – overspending. It’s common to eat out, get the latest iPhone, or treat yourself to coffee. This mindless spending has to stop.

To get out of debt, it’s essential to know where your money is going. So create a budget and be sure to track all your income and expenses. This way you can identify any areas you can cut back on and allocate more money to paying off your debt.

2. Going It Alone

While it’s admirable to take control of your financial situation, doing everything by yourself isn’t always the best strategy. Debt is a large burden and debt relief companies are there to offer you assistance. These organizations can negotiate with creditors on your behalf, potentially lowering interest rates and monthly payments. They can also help you create debt management plans that give you actionable steps to take and get out of debt fast.


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3. Not Sticking to Your Plan

It’s essential to create a debt repayment plan and stick to it. Choose either the snowball or avalanche methods. The snowball method prioritizes paying off your smaller debts first to give you quick wins and lots of motivation. The avalanche method will save you money in the long run since you pay off high-interest rate debts first.

Either way, it’s important to stick to your plan, stay within budget, and make your debt payments on time each month. And be sure to track your progress. This will help you to stay on track and remain motivated.

4. Closing Credit Accounts Once They’re Paid Off

Tempting as it may be, do not close old accounts once you’ve paid them off. The length of your credit history is a significant factor in calculating your credit score. So when you close an old account you are actually shortening your credit history, lowering your credit limit, and causing your credit score to drop.

Instead, keep them open but with a zero balance. This way you maintain a longer credit history and a higher credit limit which will improve your credit utilization ratio and score.


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5. Stop Contributing to Your Retirement Account and Emergency Fund

Yes, you want to get out of debt fast so it seems obvious to redirect all available funds toward debt repayment. The problem is neglecting your retirement savings and emergency fund can be detrimental in the long run. These financial safety nets will help you stay out of debt in the future. Continue making modest contributions to both while aggressively tackling your debt.

6. Not Checking Your Credit Report for Errors

Negative marks on your credit report can lower your credit score making it harder for you to secure a loan, be approved for a credit card, or rent an apartment. Review your credit report for any inaccuracies and discrepancies. Dispute any errors you find with the credit bureaus to ensure your credit report accurately reflects your financial history.

7. Not Consolidating Your Debt

If you have multiple high-interest debts, consolidating them into a single, low-interest loan can save you money on interest payments and get you out of debt faster.

Consider a balance transfer credit card with a 0% introductory interest rate, a low-interest personal loan, or debt consolidation programs that are designed to streamline your debt and reduce the overall interest you pay.

8. Not Making Extra Payments

If you want to get out of debt fast you have to pay more than the minimum amount per month. Make your budget and then throw any extra cash you find at your debt with the highest interest rate. Even small, regular extra payments can substantially speed up your journey to becoming debt-free. Then, automate your payments.

This way you don’t have to worry. You know that you will make payments on time, avoid late fees, and not accrue additional interest charges.

Final Thoughts

Paying off debt can be challenging, but not impossible. With a little bit of effort and discipline you too can get rid of your burden. Create a plan, avoid these mistakes, and you’ll be on your way to a debt-free life.

Now that you know what to avoid when getting out of debt, learn what steps you can take to get out of debt fast! Check out How to Get Out of Debt: 7 Tips That Work.

About the author

Rachel Alulis

Rachel Alulis has been the lead editor for Moneyfor’s credit cards team since 2015 and for the financial rewards team since 2023. Before joining Moneyfor, Rachel worked at USA Today and the Des Moines Register. She then established a successful freelance writing and editing business specializing in personal finance. Rachel holds a bachelor’s degree in journalism and an MBA.