Many people are in over their heads with debt, and many more will make big mistakes when it comes to debt relief. While you may not have to file for bankruptcy or seek the help of a professional to get out of your debts, there are a few things to avoid in your quest for financial freedom.
Balance Transfers — you may have received an offer in the mail to transfer your balances to a particular card for 0% interest for x number of months. While this sounds good, the problem is that people all too often don’t take advantage of the zero percent interest range. Transferring your debts to one card can be viewed as essentially borrowing from one creditor to pay another, or consolidating your debts into one account. If you are going to transfer your debts to one card, you must make it your priority to pay down the balance as much as possible before the zero interest expires. Otherwise, you will be left with a large balance on a moderate to high interest rate account, costing you hundreds in interest fees each month.
Unguided efforts — you may have decided to get out of debt on your own, that is great! However, the biggest mistake people make is not developing a plan. Paying minimum payments on multiple accounts is not likely to get you very far in your debt relief mission. Instead, pay minimums on all accounts but one; focusing all your extra disposable income to paying down that account. Once you have paid off that account, focus on a different account and continue to pay extra on it until lowered or carrying a zero balance. This method is very effective when you are consistent with your payments. It is also a good idea to seek help from a credit counseling agency prior to starting any debt relief plan on your own. They have valuable information that can help you develop a debt relief plan that you can stick to and successfully complete.