Getting out of debt can be quite tricky. While making some mistakes may not feel like a big deal, they can add up quickly. Knowing common mistakes and how to avoid them can help individuals successfully work their way out of debt and push toward financial stability. This task runs deeper than just managing one’s credit cards. This article lists ten common mistakes to avoid while paying off debt.

1. Sticking to the same spending habits
To manage debt effectively, the first step one needs to take is to improve their spending habits. While some expenses may make life convenient, such as buying an expensive cup of coffee from a specific brand every morning or picking up dinner on the way home, they can significantly dig into one’s finances. Begin by taking note of these expenses and cutting back where possible. Once spending has been limited, more money must be directed toward paying off high-interest debt, such as credit cards.

Some healthy habits to develop include:

• Using cash instead of credit cards to avoid impulse buying,
• Going shopping with a list in hand and sticking to it,
• Avoiding going grocery shopping on an empty stomach, and
• Sharing an apartment to split up rent, utilities, and food.

2. Closing credit cards after paying them off
It may feel like a good idea to close a credit card after paying it off to avoid the temptation. However, this can impact one’s credit score negatively. Scores are partially based on the longevity of one’s account, so it is advisable to keep long-standing accounts open. If the fear of temptation looms, tuck or hide away the credit card to avoid using it.

3. Ignoring the emergency fund
While debt payoff is essential, one must continue contributing toward an emergency fund. This can help avoid debt traps in the future.

4. Refusing to ask for help
When dealing with debt, asking for help may make one feel uncomfortable. If one cannot turn to friends and family, there are several free and confidential resources available to provide help at non-profit credit counseling centers and agencies. These spaces are staffed with trained counselors who guide one through relief solutions, help formulate a budget, and create a long-term debt avoidance plan.

5. Signing up for an illegitimate debt relief plan
Suppose a lender offers a plan that sounds too good to be true; it likely is! Do not get swayed by quick-fix debt relief plans or scams. They may end up charging high interest rates and fees, negating the plan’s effectiveness. Instead, look for a reliable debt-relief company. Details regarding a company’s credibility can be found through the Consumer Financial Protection Bureau, the Better Business Bureau, or the local state attorney’s office. Credit unions, universities, and registered military organizations may offer helpful insights.

6. Failing to work with a practical budget
Working with a realistic budget is vital to getting out of debt. Without one, individuals may end up racking up a bigger debt. Begin by accounting for necessities such as housing, food, transportation, healthcare, utilities, insurance, and education. Cut back on excess spending and stick to the basics while finding a way out of debt.

7. Borrowing from or ending contributions to a retirement plan
Avoid reaching for retirement funds such as 401(k)s to pay off debt. This can be detrimental for three reasons. Firstly, there are heavy penalties associated with early withdrawals on these accounts. Secondly, many companies partially match the contributions to these accounts, bringing in more money. Lastly, money in retirement accounts tends to appreciate quickly. The earlier one begins to deposit into these accounts, the more time it has to grow and create a sizeable nest to retire comfortably.

8. Forgetting to set aside emergency funds
According to a 2022 study, over half of the country’s population does not have at least $1,000 in savings to pay for an emergency. This can add to the debt cycle. Experts recommend spending at least 3–6 months in a separate emergency fund. While making it a part of one’s budget may take a while, putting away 5% of one’s monthly income is a good place to start.

9. Failing to verify credit reports
Many people have reported spotting errors on their credit reports. These could impact their scores and lead to higher interest rates. It is important to check one’s credit reports regularly to remedy this. The three main credit bureaus (Experian, Equifax, and TransUnion) allow users to generate one free annual report. Scatter access to these across the year, and look for and report any discrepancies that may negatively impact the credit score.

10. Putting debt on the backburner
Unfortunately, ignoring debt does not make it go away. Instead, it leads to a bigger financial drain in the future. Instead of ignoring debt, focus on the problem and find an amenable solution.

Here’s a simple exercise that might help: Write down five debts to get rid of on a small piece of paper and stick them on the credit card. That way, every card swipe will be a reminder of an addition to the debt. This may make one more careful about their expenses. Alternatively, create a realistic budget and stick to it.