Paying off debt can be very difficult. As a result, it can be easy for people to develop tunnel vision while they attempt to pay off their debts. In such cases, people can focus so intently on paying off their debt that they fail to recognize pitfalls associated with the process.
What Should I Not Do When Paying Off Debt?
The Daily Herald recently featured an article on about how people can pay off their debt without making unnecessary sacrifices that lower their quality of life.
- Don’t Go Overboard with Saving Money – Understand the difference between good debt and bad debt. For instance, certain types of student loan debts are considered good debt, meaning it does not need to be paid off quickly. Therefore, in some cases, you can pay off debt in moderation, and as a result, not miss out on things that could help you in the present because you are so focused on paying off debt. If you are so concerned with paying down your debts that you refuse to even splurge on a movie rental or fancy cup of coffee every once in a while, you may need to reevaluate your debt repayment plan.
- Don’t Limit Your Options – Make sure you understand about how you can negotiate with your creditors to lower your debts. In addition, know the statute of limitations on your debts, so that you do not pay off an old debt unnecessarily.
- Don’t Use Your Retirement Savings to Pay Off Debt – When debt becomes overwhelming, people will often take from their home equity or retirement funds. In addition to sacrificing their futures for a short-term fix, taking from a retirement savings account can expose people to penalties and income tax. Similarly, taking from their home equity can put them in a position to lose their house as a result of foreclosure.
How Can a Lawyer Help Me Pay Off My Debt?
As New Jersey bankruptcy attorney Gary Mason discusses in the following video, meeting with a lawyer is often the biggest step that people can take towards solving their debt problems as quickly and efficiently as possible.