Getting out of debt takes hard work, and it’s about more than just paying off your credit cards. You’ll also need to create a budget and change the way you look at money if you want to stay out of debt. The process has a lot of details, and it is easy to make mistakes along the way. Understanding these mistakes can help you avoid them.
Ignoring Your Student Loans
If you have debt from a variety of sources, you may be tempted to focus on those with the highest interest and ignore the rest. Student loans may fall to the bottom of the list, but it’s important to prioritize them along with the rest of your loans. Falling behind on any payments can negatively impact your credit score. One way of making your student loan debt more manageable is to refinance it into a new one. By refinancing student loans with NaviRefi, it makes it easier to meet the minimum payments while you focus on digging yourself out of debt.
Dipping into Retirement Savings
You may already have a bit of money that could be used for your loans in the form of your retirement savings. However, as you plan your retirement you should think beyond the short-term and consider whether you still want to be working full-time when you are a grandparent. It’s a good idea to avoid dipping into your 401(k) or other accounts, especially because there are usually penalties for early withdrawals. You may receive matches on your retirement contributions, so stopping contributions means you aren’t getting your free money.
Trying to Do it Alone
While you can try to get out of debt on your own, it’s easier if you have a support system in place. Don’t be afraid to ask for help, even if it means showing you have a problem. You can get assistance from credit counseling agencies. You can work with trained counselors who can suggest solutions like settlement or credit consolidation. They can also suggest ways of staying away from loans in the future.
Getting Scammed by Relief Programs
You can get help through debt relief programs but know it will still take a lot of work on your part. If a debt relief program sounds too good to be true, chances are that it is. Don’t believe the lie about relief magic. Scammers like to make promises that are too good to be true to get more people to sign up for their illegitimate programs. They then charge high fees, and the only ones benefiting are the scammers.
If you are considering a relief program, it’s a good idea to investigate them through the state attorney’s office, Consumer Financial Protection Bureau, or the Better Business Bureau. You can also get recommendations on legitimate programs through universities, credit unions, and other organizations in the area. But know that no matter the program you choose, there is no overnight fix. You will most likely be in a debt relief program for around three to five years, so know you will need patience.
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