Many people are desperate to get out of debt and they are buried so deep in it. In reality, many financially successful individuals had been in the same situation and they were finally able to get out. Often, all we need is a proper plan. However, there are things that slow down or prevent the progress of our recovery process. Here are things that can cause debt elimination fail:
- We get more credit: Many of us get into debt and this can be caused by overspending and lack of discipline. Unfortunately, people who plan to eliminate debt could still be using credit cards. We can’t get rid of debt if we still have the so called credit addiction. In essence, our situation will get worse if we obtain more credit. Whatever we do, we should take out additional debts, such as home equity line of credit. Taking a loan out on our 401k is also a risky proposition. If we lose our job due to specific reasons, we will only have 90 days to repay the loan of facing taxes and penalties associated with early withdrawal.
- We deprive ourselves of all extras: It is true that we should get used of living without some of the usual extras. However, it doesn’t mean that we should deprive ourselves of everything. It can actually break us down if we cut out everything that isn’t necessary in life. One of the key aspects in debt elimination program is that we should feel that the whole process is sustainable financially and mentally. If we are feeling distressed, it will be very difficult to feel motivated. For many people who want to eliminate debt, depression is a real danger. In fact, some people could quit the program and start binge shopping to alleviate their deep depression.
- We are late with payment: If we want to eliminate debts, it is important to make a list of debt repayments that we need to make each month. We need to make sure that we pay at least minimum payment, if the other alternative us to fall behind on the bills. Late fees, penalties and hidden charges will slow down our process towards eliminating debt. Missing and late payments will have domino effects on our overall credit health. We should always find ways to bring a little extra money, instead of losing a little extra money.
- We still buy new things: There are used things that can still work well. As an example, it is acceptable for use to purchase used cars. We should be aware that a car loses 20 percent of its original value one year after it is purchased, but only up to 5 percent after two years. So, it is financially a good idea to purchase cars that are older than 3 years, if they are still in decent conditions. This also applies to other items and we should avoid buying new things that have cheaper, second-hand alternatives.