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Do you ever feel overwhelmed by your debt?

Maybe you’ve bought a financial book to help get you started. And you’ve subscribed to the most popular blogs on finance. 

But somehow, it’s not working.
So you ask yourself:
Will I be stuck with my debt for 10, 20, or even 30 years? Should I just accept the fact that this is my “new normal”?
Thoughts like that can paralyze even the best of us. But you should know that you’re not alone.

One of the most often asked questions in my inbox is:
What do I do when it seems like I’m not making progress on my debt?
So let’s talk about the most common debt mistakes people make.
And word to the wise:
If you’re making 4 of these or more, then it’s holding you back from becoming debt-free. Ready to find out?

Mistake 1: Failing to Budget

Imagine with me if you will…
You’re going on vacation to the beach.
You’re excited to feel the warm sand between your toes. You can already picture the waves coming in and the smell of the fresh saltwater. You’ve got your suitcase packed and ready to go. 
But there’s one problem.
You have no directions. How will you make it there?
Think about it like this:

Your budget is your road map, and becoming debt-free is your destination.
If you don’t give yourself a roadmap, then you risk staying stuck like a hamster in a wheel. So get clear on your numbers.

You need to know how much is coming in each month and how much absolutely needs to go out. 
Are you ready?

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Mistake 2: No Emergency Fund

dollar bills

Let’s face it.

Sh-t happens.
In the same year, I have two major expenses pop up that cost me thousands of dollars. That’s what my emergency fund was for.
Except, I didn’t have one.
Here’s the thing:
Nothing will sabotage your financial plan faster than an unexpected expense.

Car break down? Put it on the credit card.
Medical expense pop up? Put it on the credit card.
Water heater goes out? Put it on the credit card.
That’s your reality when you don’t have an emergency fund.
Think about it:
Your emergency fund is your barrier against new debt. It can mean the difference between a small sting in your financial life or a total train wreck.

So do something now that you will thank yourself for later. Save up $1,000 for your emergency fund. Next, you can work on tackling your debt.

Related: Get a Financial Life: Personal Finance in Your Twenties and Thirties

Mistake 3: Not Saving While You Spend

pink piggy bank

Do you like saving time and money?
But maybe you don’t always have time to clip coupons. Or search for the best deals. My recommendation?

Use a cash back app like Rakuten instead.

What is Rakuten?
Rakuten is a rewards program that helps you save money on everything you buy. It’s an effortless way to get great deals.
Like last year when I replaced my oven, I got $63 from that purchase alone.
The best part?
Rakuten works with over 2,500 stores – including big names like Amazon and Walmart.
So here’s how it works:
You sign up for a free account and use the search bar to find the retailer you want to shop at.

For my visual readers, here’s how that looks:

rakuten homepage

As you make purchases, you’ll earn cash back. It’s important that you save as much money as possible when you’re paying off debt.

Note: The Rakuten link gives you a $10 bonus for signing up and shopping.

Related: How to Manage Your Money When You Don’t Have Any

Mistake 4: Not Using a Debt Payoff Method

calculator and bills

Do you ever feel like you’re not making progress on your debt?
There’s no doubt about it.
Paying off debt can be a long process. But it’s even longer when you don’t have a debt payoff method. My advice?
Create a plan and work your plan.

Pick between these two popular debt payoff methods:
1. The Debt Snowball
2. The Debt Avalanche
Both of them work beautifully, so it doesn’t matter which one you choose. Just as long as you stick with it.

Because you don’t want to stay stuck with your debt any longer than you have to, right?
If you need help deciding which one to pick, then read our guide:
Debt Snowball vs. Debt Avalanche – What’s the best way to pay off debt?
You’ll be glad you did.

Related: The Total Money Makeover: A Proven Plan for Financial Fitness

Mistake 5: Keeping High-Interest Rates

man holding credit card

Have you ever realized that most of your payment goes towards interest instead of principal?
Not a fun feeling, is it?
Here’s the deal:

Lenders make a ton of money off of interest.
But just because you can’t afford to pay off the balance right away, it doesn’t mean you should settle for a high-interest rate. Locking in a better interest rate can save you thousands of dollars.
And more importantly:
A lower interest rate comes with a lower monthly payment.

So I recommend transferring your balances to a lower rate card or using a company like Credible to help you lock in a better rate.
Credible offers two free services:
1. Student Loan Refinancing
2. Personal Loans
What is student loan refinancing?
When they refinance your loans, they match you with a better loan with a lower interest rate. A lower interest rate will save you hundreds – if not thousands – in interest fees. And according to their research, Credible users save an average of $18,886 over the life of their loan.
If you have multiple loans, this means they’ll combine everything into a new, single loan. This makes keeping track of your bills simple.
(You can also refinance if you have just one loan)
What are personal loans?
Personal loans are ideal for credit cards and other types of debt. If you carry a high-interest rate on your credit cards, for example, then you can move that balance over to a personal loan.
Bottom line?
Know your options. Don’t feel stuck with a high-interest rate. Do what you can to lower it.

Related: Why Didn’t They Teach Me This in School?: 99 Money Management Principles to Live By

Mistake 6: Budgeting…but on an irregular basis

man budgeting

Yo-yo budgeting is like yo-yo dieting. Sometimes you’re full swing with it; other times you’ve completely fallen off the wagon.
Don’t fall into that trap.
Budgeting is a skill like any other. It takes time and practice.
View your budget as an investment into your financial future. Take a few minutes each week to check in with your spending.
See it as “mini-meetings” with yourself. Stay on track with your budget, and watch as you slowly take back control of your financial life.

Related: Get a Financial Life: Personal Finance in Your Twenties and Thirties

Mistake 7: Keeping the Never Ending Payments

pile of credit cards

Has this ever happened to you?
You’ve worked hard. You’re focused. You’re full-speed ahead in your debt-free journey.
But a shiny object catches your attention. Maybe it’s the newest iPhone. Or a shopping spree with your friends.
Or worse:
You need a new car, so instead of getting a modest vehicle, you drop $25,000.
Next thing you know, you’re stuck with the payments.  It’s an easy trap to fall into, but let me ask you:
What could you do with your life if you didn’t have a single debt payment in the world? Think about that before you spend money on low-value purchases.

Related: Retire Before Mom and Dad: The Simple Numbers Behind A Lifetime of Financial Freedom

Mistake 8: Not Putting Extra Money Towards Debt

woman budgeting

Let’s face it.
Extra money is tempting. I’ve worked so hard for this, so I should reward myself, right?
If you aren’t careful, that mindset can lead you to lifestyle inflation. This means when your income goes up, your expenses rise to match it.
So do this instead:
Whether you get a raise, bonus, or tax refund – pick a small amount to treat yourself with and throw the rest at your debt.
It’s hard to scale your lifestyle back, so try not to increase it in the first place.

Related: The Simple Path to Wealth: Your road map to financial independence and a rich, free life

Mistake 9: Refusing to Talk About Money With Your Partner

man and woman using laptop

Do you know one of the main issues couples fight about?
You’re right – it’s money.
It’s also the second cause of divorce in America.

I know. I know. Talking to your partner about money isn’t always easy, but it’s worth it.
Think about it like this:
When you share the money decisions, you’ll have a support system. What does that mean for you?

It means you’re much more likely to stay on track.
What’s more:
Research shows that couples who talk about their finances are 50% more likely to say they’re “extremely happy” in their relationship.
They’re also 14% less likely to argue about finances and 37% more likely to say they have “great” sex.
Who knew that talking about money could improve your sex life?

Related: I Will Teach You to Be Rich

Mistake 10: Thinking You’re Not in Debt Because it’s 0% Interest

piggy bank in water

Debt is debt. No matter the interest rate. Try missing a payment and see what happens.

It’s not yours until you’ve paid for it completely. It’s still debt, so treat it that way.

Mistake 11: Borrowing From Your 401(k)

work desk

Admit it.
You’ve thought about digging into your 401(k). But listen, don’t rob from your future self to make current ends meet.
Borrowing from your 401(k) goes against the very reason you started contributing to it in the first place.
“Pay yourself first” is the golden rule of personal finance, so don’t break it.
And get this:
If you take money from your 401(k) before you’re 59 1/2, then you’ll have to pay a 10% early withdrawal penalty AND income tax.
Promise me you won’t do that.

Mistake 12: Not Having a Side Hustle

man typing on a laptop

Two things are true when it comes to getting out of debt:
Earn more or spend less.
And ideally, you’d do both.
Whether it’s selling on eBay or cleaning someone’s house – try to figure out how you can bring home more money.
Even if you talk to your boss about getting overtime, increasing your hours could be just the boost you need. Plus, there are plenty of ways to make money from home these days.
Staying up late, waking up early. You’re motivated.
Are you ready to do this?

Mistake 13: Lacking Financial Goals

goals on napkin

Can we be honest?
Saving money for the sake of saving money doesn’t usually work for most of us. You have to have a strong why.
So get specific about what goals you want to achieve.
Do you want to go back to college? Pay off your mortgage? Be debt free?
Think about these things. Get absolutely clear on them.  Once you do, saving money will become something you can actually work towards.

Mistake 14: Failing to Say “No”

two men hanging out

You know those friends that can only have fun by doing things that cost money?
You know how it is.
But here’s the deal:
Add “fun” money into your budget, but make sure you actually stick to it. When it runs out, then it’s time to say “no.”

Mistake 15: Feeling Guilty About Giving Yourself an Allowance

woman budgeting

Do you ever feel like you need a bare bones budget to make this work? And when you give yourself “fun money”, you feel bad about it?
Look at it this way:
You’re in this for the long haul, so it’s important that you cut yourself some slack.
So budget yourself a small and guilt-free allowance of 5-10% each month. Since you’ve already budgeted for it, you should allow yourself to spend it freely.
Don’t feel guilty.
You’re motivated. You’re dedicated. And you’ll do whatever it takes to get there. Commit yourself to your journey.
To changing your spending habits. To tracking your expenses. To proving to yourself that you can do this.

That’s how change begins.

Are you ready?

Recapping these 15 Debt Mistakes

  1. Failing to budget
  2. Not having an emergency fund
  3. Not saving while you spend
  4. Not using a debt payoff plan
  5. Keeping high-interest rates
  6. Budgeting…but on an irregular basis
  7. Keeping the never-ending payments
  8. Not putting extra money towards debt
  9. Avoiding money talks with your partner
  10. Thinking you’re not in debt because it’s 0% interest
  11. Borrowing from your 401(k)
  12. Not having a side hustle
  13. Lacking financial goals
  14. Not saying “no”
  15. Feeling guilty about giving yourself fun money

3 Resources for Getting Out of Debt:


Debt Breakdown

Ready to become debt free?
Join our newsletter & get your free debt breakdown worksheet:



Let's face it, getting out of debt is tough. What debt payoff method do you choose? Debt snowball or debt avalanche? When you're paying off debt, use these 15 money tips to make sure you don't make financial mistakes. #debt #debtpayoff #debtsnowball #moneytips #daveramsey #financialtips


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