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Beware of these financial pitfalls and get out of debt
1. BAILING ON YOUR NEW BUDGET
You’ve listed all your income, knocked off expenses (including your debt payment), and allocated yourself an entertainment allowance. You’re also going to push any disposable income you have left every month into your loan to offset the interest. Stick to the plan. Or all your hard work will be for nothing.
2. LIVING (AND SPENDING) IN THE MOMENT
Don’t buy it on credit and don’t buy it if you don’t have the cash.
3. USING YOUR CREDIT CARD AS A DEBT CONSOLIDATION TOOL
Credit card charges are high and the interest on outstanding balances crazy. Using one credit card to pay off another may leave you owing even more.
4. TAKING THE FIRST DEAL
Consolidating your debt is going to cost you, so shop around for the best deal with the lowest fees.
5. PAYING LESS
If you move short-term debt into a consolidation product you’re extending your repayment term. Don’t fall for it. Keep making the same payments as before. You’ll pay back the loan faster and at a cheaper rate.
6. SKIPPING PAYMENTS
The loans used to consolidate debts are secured by personal assets, including your property. This means that defaulting on your payments could result in you losing your house.
7. ABUSING THE DEBT-CONSOLIDATION PRODUCT
Debt-consolidation products can be a great tool to get your credit rating and cash flow back on track. Don’t abuse the facility by dipping into it whenever you like because you may just end up owing the money forever.