16 Common Mistakes You’re Making While Paying off Debt

Knocking out credit card debt

The decision to get out of debt is life changing. 

But it means more than just paying off some credit cards and cutting expenses.

It means changing your spending habits, learning to budget, and having strong financial goals in place.

People who are debt free will tell you it’s more of a mental change than anything else.

You can make all the money in the world, but if you’re not disciplined enough to spend it wisely – well then, you know what happens.

There’s a lot of choices you have to make when you’re paying off debt. And here are 16 things you’ll want to avoid:

(This post might contain affiliate links. Check out my full disclosure policy here!)

1. Not Having a Written Budget

Debt Payoff / Debt Snowball

Imagine you’re going on vacation. You get your suitcase ready and fill your car up with gas, but you have no directions.

How will you get there?

Chris Hogan said it best: your budget is the roadmap that’ll lead you in the right direction.

If you don’t have one – you’re going nowhere fast.

Once you have a budget, you’ll be able to track your progress, make adjustments, and find extra ways to cut expenses.


“A budget is telling your money where to go instead of wondering where it went.”

-John Maxwell


2. Not Saving While You Spend

Debt Payoff / Debt Snowball

You want to spend less, and ideally, you want to spend less on things you’d normally buy anyway.

For you, this might mean shopping around your grocery stores flyer.

Or buying a FoodSaver to preserve your food. 

For me, there are several things I always buy online because that’s how I get the best deal.

And when I combine that with a cash back program like Ebates, I know I’m getting the biggest bang for my buck.

I’m sure you’ve probably seen the commercials for Ebates, but in case you haven’t, here’s what you do:

You sign up for an Ebates account (it’s free) and use the search bar to find the retailer you want to shop with.

As you make purchases, you’ll get cash back.

Then, once you accumulate your earnings ($5.01 is the minimum payout) – Ebates will send you a check or deposit that money into your PayPal.

Note: the Ebates link above gives you a $10 bonus for signing up and shopping.


“If you think nobody cares if you’re alive, try missing a couple of car payments.”

-Earl Wilson


3. Not Locking in a Better Interest Rate

Debt Payoff / Debt Snowball

Interest rates are tricky.

And in the end, they’re what makes our debt add up to so much more.

So if you only make minimum payments on your credit cards, it can take years and years to pay them off.

Let’s say you only made the minimum payments on a $5,000 credit card.

The interest rate is 15%

Do you know how long it’d take to pay it off?

6.5 years with $2,892 worth of interest.

So what do I recommend?

First, don’t add anymore debt. Cut the credit cards up.

Secondly, transfer the balance to a lower-rate card or use a company like SoFi to give you a better interest rate.

Someone first told me about SoFi in college (when we were talking about student loan debt).

And they helped tremendously. 

Just by locking in a better APR, you’ll pay your loans off faster and save thousands of dollars. 

So don’t settle for a high interest rate just because you can’t pay off the balance right away.

(If you need more info on SoFi, click to read my Sofi review )

Note: The SoFi link above gives you a $100 welcome bonus

4. Budgeting…but on an irregular basis

Debt Payoff / Debt Snowball

Yo-yo budgeting is just like yo-yo dieting. Sometimes you’re full swing with it; other times you’ve completely fallen off the wagon.

It’s a bad cycle to fall into, and nothing ever comes from it.

Budgeting isn’t always fun.

Being broke isn’t fun.

Being in debt isn’t fun.

Having to make minimum payments on everything – because that’s all you can afford – isn’t fun.

So if something isn’t going to be fun, then wouldn’t you at least want to reap some sort of benefit from having to do it?

At least with budgeting, you’re moving in the right financial direction.

Admittedly, budgeting was hard for me in the beginning. But it’s not that I hated it or anything.

I just never took the time to sit down and try to get my financial sh-t together.

But then I found this, and it changed the way I handled my finances forever.

 Nowadays, budgeting is actually something I look forward to. I see it as an investment in myself and my future. 

Changing my mindset made all the difference.


“It is not the man who has too little, but the man who craves more, that is poor.”



5. Keeping the Never Ending Payments

Debt Payoff / Debt Snowball

A “bare bones” budget is a budget that covers your most basic living expenses, such as shelter, food, transportation, clothing, and healthcare.

Take a hard look at your expenses and ask yourself if you really need those things you’re paying for each month.

Little by little – small things add up.

We recently cut our cable bill from $170/month to $8.25/month (or $99 year) by switching to Amazon Instant Video.

What’s cluttering up your financial life? 

When money is tight and you’re trying to pay off debt – creating a leaner budget will help you speed up the process.

Start small by cutting unnecessary expenses:

Cable TV

Music services

Gym memberships

Monthly Subscription Services


“I love money. I love everything about it. I bought some pretty good stuff. Got me a $300 pair of socks. Got a fur sink. An electric dog polisher. A gasoline powered turtleneck sweater. And, of course, I bought some dumb stuff, too.”

-Steve Martin


6. Not Putting Extra Money Towards Debt

Debt Payoff / Debt Snowball

How many times have you gotten a tax refund check and thought, “I worked hard for this, I should treat myself.”

Haven’t we all?

Whether it’s a raise, bonus, or tax refund – pick a small amount to treat yourself with and throw the rest at your debt.

It can be really hard to scale your lifestyle back, so try not to increase it in the first place.


“I love money. I love everything about it. I bought some pretty good stuff. Got me a $300 pair of socks. Got a fur sink. An electric dog polisher. A gasoline powered turtleneck sweater. And, of course, I bought some dumb stuff, too.”

-Steve Martin


7. Not Having an Emergency Fund

Debt Payoff / Debt Snowball

Sh-t happens. That’s what an emergency fund is for.

Because it’s not a matter of IF emergencies happen but WHEN.

Having that safety net can be the difference between a small bump in your financial life or a complete disaster.

So, do something now that you’ll thank yourself for later.

Set aside $1,000 for your emergency fund, then build it up enough to cover three to six months of your household expenses.

Then next time a crisis strikes, you won’t have to rely on credit cards or loans to cover the costs.


“It’s not how much money you make, but how much money you keep”

-Robert Kiyosaki


8. Refusing to Talk About Money With Your Partner

Debt Payoff / Debt Snowball

The number one issue couples fight about is…

Yep, you guessed it – money.

It’s also the second cause of divorce in America. 

Talking to your partner about finances might not be easy, but it’s crucial to your financial success.

When you share the money decisions, you’ll have a support system.

And when you’re on the same page, you’re much more likely to stay on track.

A recent study found 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 a “great” sex life.

Who knew that talking about money could improve your sex life?

9. Keeping the Same Spending Habits

Debt Payoff / Debt Snowball

We’re creatures of habit.

We shop at the same places, eat at the same restaurants, and still swipe the same credit cards.

It’s easy in the moment.

Are your spending habits holding you back?

If you don’t change the way you manage your money, then you’ll never know what financial freedom feels like.

Save Starbucks for special occasions and invest in a good coffeemaker instead.

Go to lunch with a food container instead of a wallet.

Meal prep a week in advance and freeze the rest for leftovers.

Quit swiping your credit card.

You don’t have to do without – you just have to make smarter choices.


“People often say that motivation doesn’t last. Well, neither does bathing – that’s why we recommend it daily.”

-Zig Ziglar


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

Debt Payoff / Debt Snowball

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.


“Don’t tell me what you value, show me your budget, and I’ll tell you what you value.”

-Joe Biden


11. Borrowing From Your 401(k)

Debt Payoff / Debt Snowball

This is a tempting debt solution but it goes against the reason you started contributing to your 401(k) in the first place.

You started a retirement account to create a secure financial future for yourself. 

“Pay yourself first” is the golden rule of personal finance. Breaking that rule isn’t a good idea.

Plus, if you take out money from your 401(k) before you’re 59 1/2, you’ll have to pay a 10% early withdrawal penalty AND income tax. Not good!

Related: 20 Reasons You’re Still Broke

12. Not Having a Side Hustle

Debt Payoff / Debt Snowball

Two things are true when it comes to getting out of debt:

Make more money and spend less.

Since you guys really enjoyed my article, How I Side Hustled My Way To $5,500 Last Month, I have to include side hustling as an option.

Whether it’s selling on eBay or cleaning someone’s house – figure out something you can do to bring home more money. 

Even if you just talk to your boss about getting overtime, increasing your hours could be just the boost you need!


“Every time you borrow money, you’re robbing your future self.”

– Nathan W. Morris


13. Lacking Financial Goals

Debt Payoff / Debt Snowball

Saving money for the sake of saving doesn’t usually work for most of us.

You have to have a strong why.

You need to give your money a purpose or else you’ll just end up spending it.

Once you get specific about what goals you want to make happen, then saving money becomes something you can actually work towards (and want to do!)

14. Failing to Say “No”


Debt Payoff / Debt Snowball

If you cave every time someone asks you to go to dinner, then it’s a problem.

The more extroverted you are, the harder this is for you – but it’s not impossible.

You have to act according to your budget.

It doesn’t mean you ALWAYS have to say no, but at some point, you’ll have to make some sacrifices if you want to get serious about paying off debt.

When you do decide to say yes, make sure you’re getting a great deal (like happy hour or a movie matinee)


“You must gain control over your money or the lack of it will forever control you.”

– Dave Ramsey


15. Not Using a Debt Payoff Method

Debt Payoff / Debt Snowball

The two most popular debt payoff strategies are 1) Debt Snowball and 2) Debt Avalanche 

Both of these are great strategies for getting the job done.

So it doesn’t really matter which method you choose but jumping around from debt to debt without a method in place is not a good idea.

If you need some help deciding which debt payoff method is best for you, then read:

Debt Snowball vs. Debt Avalanche – What’s the best way to pay off debt?

16. Feeling Guilty About Giving Yourself an Allowance

Debt Payoff / Debt Snowball

Even when you’re taking all the right steps –  it can still take a while to pay off debt.

Don’t get bummed out.

It’s a marathon, not a race. The prize of financial freedom is so worth it.

So because you’re in it for the long haul – it’s super important that you cut yourself some slack.

Budget yourself a small and guilt-free allowance each month (usually between 5-10% of your take-home pay)

Since it’s an allowance you’ve already budgeted for, you should be able to freely spend it without feeling bad.

This is no different than athletes who are physically fit. They are more successful when they allow themselves to have a rest day and a cheat meal. 

That prevents them from feeling deprived and losing focus.

The same is true for your finances, so put a little fun money in your budget!

Thanks for reading.

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knocking out credit card debt

4 thoughts on “16 Common Mistakes You’re Making While Paying off Debt”

  1. Great article.
    Very motivational!
    Tip: my side gig is selling blood and bone marrow. ChaChing $$

    • Way to go Melanie! Great tip for the readers. Thanks for commenting.

  2. Awesome tips 👍

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