Paying off your debts is one of the best options you can make to improve your financial situation. However, it is also one of the biggest financial issues most people struggle with. Paying your debts sometimes may not be easy – especially if you make mistakes along the way. Below are the top 3 mistakes that you should make sure to avoid:
1. Not having a pay off plan and a debt free date.
When you start paying off your debts it is important to have a clear strategy in mind. Setting clear goals and having a specific plan can help you stay motivated and track progress.
It is important to firstly assess your current financial situation, your current needs and wants. Based on this you should ask yourself these questions:
- Which debts do you want to pay off first?
- Which debts do you want to pay off earlier?
- How much money did you want to allocate to paying off your debts?
- What is the total amount of money you owe?
2. Not having an emergency fund.
When you are faced with debt, you may feel inclined to forgo having an emergency fund. Whilst this can be very tempting, it is important to always have an emergency fund in case unexpected expenses arise. Emergency funds should only be used for true emergencies such as an unexpected medical expense or car repair.
3. Missing payments.
Making your debt repayments should be one of your top priorities. It is important to make your debts repayments as early as possible each month, even if it isn’t due until the end of the month. This can prevent you from forgetting to make your payment or if unexpected expenses pop up. Missed payments might not only result in penalty fees but also lower your credit score which can make it harder to secure loans in the future.
If you are looking for advice personally tailored to your situation about any debt relief solutions, then please contact Debt Free Australia. DFA are passionate about helping Australians get out of debt and prepare for a better financial future. Please contact us on our 24/7 toll-free hotline on 1800 676 598 to speak to one of our friendly and professional debt relief consultants.