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The Wrong Ways to Handle Debt
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The Wrong Ways to Handle Debt 

Sometimes, we make it harder on ourselves to get out of debt, by the things we do and don’t do. Becoming debt-free gets more difficult as these actions and inactions add up over time.

I want to use this article to state some of the wrong ways we handle our debts, all from personal experience, both as a debtor and a creditor. Here are some of those incorrect ways, and what to do about them:

1. You ignore the debt

This is the most common one in my book. It’s like running away from the problem. Ignoring that you’re in debt doesn’t make it go away. You need to face-up to them. I’m not implying it would be easy to do, but, eventually, it gives us the REAL state of affairs.

By facing up to our debts, we get to know in actual figures how much in total we owe, compare with how much is coming in, and thereby work out how the debt can be paid off over time.

2. Making only minimum repayments on Credit Cards / Interest Loans

This was a hard lesson I learnt while I was in the UK. I was making only the minimum repayments on one of my credit cards and it felt like it would never end. Paying back three hundred Pounds felt like I only scratched the surface after one year. Doing this just about keeps your head above water.

If you have credit card or interest loans as debt, planning towards a debt-free life requires that you ensure you exceed those minimum payment figures. This means you must structure your income to enable you save enough to pay off above the minimum.

The trick is also that the quicker you’re able to pay off the debts, the less the interests, taxes and charges are accrued, and therefore the less you will pay on the long run.

3. Addressing the debt, but not the reason you got there in the first place

Facing up to your debt is good, but it also doesn’t solve what led to the debt. It’s similar to having a leaking roof; you can mop up the water on the floor, but you still have to fix the roof.

In similar fashion, paying off your debts won’t be sufficient to become debt-free. Discover the reason you ended up in debt in the first place, so it doesn’t repeat itself and you end up in a cycle.

You may need to learn to develop a healthy relationship with money and cut out any bad habits or behaviour that led to the debts. Address the issues to ensure that when you get out of debt, you stay out of debt.

4. Not prioritizing our Debts

As a creditor, I have experienced this a lot – debtors not prioritizing the loans you give them. And I’m sure some of us have been culprits of same. We make up all kinds of excuses for the way we treat money. We place conditions to when we can start saving or when we can start paying off our debts. Trust me, I’ve been there, and I’m sure you can relate.

None of the excuses we create or give helps us address our debt issues, and our goal of living debt-free will never eventually be achieved in that way. We have to be honest with ourselves, tell ourselves the stark truth, else our spending habits could spiral us into even more debt.

5. Not making it a Specific Goal

How do you approach losing weight? That’s probably the same way you approach your debt issues. Our weight-loss goals are usually vague and open-ended. They have to be specific and realistic, so we don’t end up backing out. Same as our goals for getting out of debt.

Your financial goals must give you daily motivation. They can be long or short term, small or large, but they must be achievable and have the capacity to drive us. This makes the journey less difficult.

6. Not running a weekly budget

You may be running in circles if you’re paying off your debts and at the same time not controlling your spendings. You need to work with a budget and ensure your incoming is more than your outgoing each week.

A budget helps identify what you may need to cut down on and what you can save. You’d be surprised what you can do without or cut down in order to free up some more money towards debt repayments. Look for tools online and apps on your mobile store that can help you with your budgeting.

7. Not asking for help

Get advice from experts. Negotiate with your creditors. Ask family or friends for help. You never know till you ask.

Be bold enough to ask, else you don’t get. Life doesn’t give you what you deserve, it gives you what you negotiate.

To your debt-free life,


Debt-Free Man

Source: Getty images

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