In this day and age, debts are inevitable for most people. Taking out a loan can be of tremendous help, especially when you are in a financial emergency, be it for business or personal reasons. However, there are many mistakes that people make, leading to a stressful life of debt. To help you avoid becoming a victim, here are some common debt mistakes to keep in mind:

1. Same Old Spending Habits

We are creatures of habit and spending money is no exception to that rule. That’s because driving the same car, eating in the same restaurants, and buying at the same store proves to be comfortable. However, it could be costing you more than you can handle financial wise. It’s pretty simple- if you do not change your spending habits, then you will never get out of debt. Consider beginning with your morning habits and take breakfast at home. Next, carry lunch from home, rather than eating at a restaurant. In the evening, watch movies or games at your house while enjoying a homemade meal. These simple changes will have an immediate significant effect on how much you spend on a daily basis. You do not have to do what you like or prefer, you just have to make better choices when it comes to it.

2. Attempting to Get Out of Debt Alone

Almost everyone doesn’t like to ask their friends and relatives for support when it comes to handling debt. A wise remedy is to contact a non-profit credit counseling agency and seek help from the experts. These counselors are well-trained and certified by national organizations such as the National Foundation for Credit Counseling and will recommend debt-relief solutions including credit consolidation, debt management programs, debt settlement, and even bankruptcy if things are really bad. They will show you how to create an ideal budget and suggest a solution that will match your needs. The best thing about this is that the advice is free. Ask, am I eligible for a debt management plan?

3. Failure to Create a Practical Budget

It is virtually impossible to gain control of your money if you do not have a practical budget. Many individuals think it is too much work until they reach into $10K or $20K credit card debt and wonder how they got there.

A great solution is to create a realistic budget that addresses common financial needs such as health care, food, housing, education, and insurance, while also creating room for paying your loans. Do away with the credit cards and only work with cash. Yes, this will mean cutting back on things like dining out, hitting the movies, buying new electronics or clothes, but if you really want to get out of debt, having a practical budget and using cash is a solid start.

4. Getting into a Debt-Relief Program but Not Understanding What it Entails

There is rarely a quick-fix solution for debt issues. If you come across this claim, then immediately look elsewhere. One of the most important things to bear in mind is that debt-relief programs tend to take three to five years and so, you’ll need to be patient. Next, you need to assess the firm providing these solutions. A great place to start the check is the Better Business Bureau (BBB) or the local state attorney’s office. Military bases, universities, and credit unions should also be reliable sources for suggestions. Just ensure the organization you pick is licensed and does not have a record of client complaints.

5. Trying to Clear Multiple Debts at Once

Many people in debt usually have multiple sources including student loans, credit cards, car loans, mortgages, etc. Unfortunately, they try to handle them all at once. This is a move that will only see you give up and be unable to make progress in clearing debt. Instead, go back to your budget, trim everything to the essentials and create a surplus that goes to the credit card with the highest interest rate. Once that is cleared, go to the next credit card, and so on, until you clear all the debt.

6. Failure to Put Aside Savings for Emergencies

According to reports, over 55% of American consumers do not have adequate finances to cover emergency expenses of at least $500. You cannot predict car accidents, plumbing failure, unemployment, etc. That’s why every household requires an emergency fund account. Experts suggest putting three to six months of expenses aside to cover any emergency you might experience. It may take time to get there, but if you are determined to pay off your debt, it needs to be part of your monthly budget. So, consider putting aside at least 5% of your monthly income towards an emergency fund. This way, you won’t have to depend on loans to cover an unexpected expense.

7. Failure to Contribute to a Retirement Account

Yes, it seems good to devote your money to clear your loans today, but it is a costly mistake in the long haul. There will come a time where you need to retire and so, ensure you devote at least 5% of your monthly income towards a retirement savings account. The earlier you begin contributing to that 401(K), the better off you will be when you retire.

8. Failure to Prioritize Your Debt

We all have bills and many people want to get out of debt. However, many people fail to be focused, and doing so isn’t a priority. One of the best solutions is to consolidate your debts and only make a single payment per month. Another way to stay focused is by writing down the top 5 debts you want to clear. Put this note in a place you will see every day to remind you of your mission. Whenever you see that note, you will remember that you are getting rid of and not adding to the debt.

9. Closing Accounts When They’re Paid Off

The remedy for this is straightforward, pay off your account but do not close it. Keep in mind that credit score systems not only depend on how much you owe but how much credit you have available.