12 Mistakes You’re Making While Paying Off Debt That Are Costing You A Fortune

Mistakes While Paying Off Debt

Written by Agatha

April 29, 2021

This post may contain affiliate links.Please read our disclosure for more info.

Share with your tribe!

Being stuck in debt can often feel like you’re a hamster on a wheel. You keep making payments every month but you don’t seem to be making any progress towards attaining debt freedom. This then becomes a lifestyle where the debt burden becomes a constant source of frustration month after month. 

The most disheartening part about the debt cycle is that ‘debt begets more debt.’ Eventually, your lifestyle ends up being funded through debt. You get stuck in what is commonly referred to as debt dependency.

Mistakes While Paying Off Debt

Economists have a term for this dependency: debt spiral. “It is a situation where an individual, or a business, or a country sees ever-increasing levels of debt. These increasing levels of debt and debt interest become unsustainable, eventually leading to debt default.”

People, who are stuck in debt will often take more debt as they entertain self-defeating thoughts such as ‘I’m already in debt so why not take more?’ Or  ‘Everybody is in debt anyway.’

Keep in mind that in this case, addition is multiplication. The more debt you take up, the more you multiply your interest rates and stress.

I know how that lack of progress feels like. That was my life a few years ago when I was stuck in both student loans and mobile money loans. Having recently achieved the debt-free status, I compiled this list of common mistakes people make while paying off debt from my personal experience and my financial coaching experience.


Mistakes people make while paying off debt


1. Not working towards earning more money


In my article on how I became debt-free on a low income, I shared that I managed to attain debt-freedom 10 months ahead of my planned date by earning more money through placing ads on this blog, affiliate marketing and financial coaching.

If you’re stuck in loads of debt, you need to come up with more ways to make money. Ideally, look for ways to make money while you sleep (passive income) through investing and starting side hustles that don’t need your physical presence to generate income. I earn money while I sleep from income generated through ads on this blog and affiliate marketing links. 

I learnt how to do this by investing in the Launch Your Blog Biz online course by professional bloggers Lauren & Alex from Create & Go who make over $10,000 per month from their two blogs.

Mistakes While Paying Off Debt

If you have always wanted to learn how to create and grow a successful blog without being a tech guru or a pro writer that makes over $1,000 per month, sign up for their course.


2. Not having an accountability partner or system


People who are stuck in debt often need an accountability partner to get their debt ball rolling. 

The world is wired to tell you that debt is normal. Look around you. Your family members, colleagues and friends are likely struggling with debt. If we’re exposed to such environments for long, we associate living in debt as the norm. As JL Collins says “debt doesn’t have to be for you, you weren’t born to be a slave.”

Getting yourself out of debt is hard. Sometimes we imagine that we can do it ourselves without help. Some people do, but for the majority of us, we need to be reminded to make a payment. We need a support system that reminds us why being debt-free matters. We need someone knowledgeable to help us choose the best debt payment plan

There’s no shame in asking for help, both paid from an advisor and free from a partner, family member or friend. 

If you’re in debt, get yourself an accountability partner. Find a financial advisor or a friend who will make sure you act on your plans to get out of debt. 

A good accountability partner will help you break down the process into small manageable steps to avoid feeling overwhelmed. Not having an accountability partner could mean giving up or being stuck in debt for too long which eventually costs you loads of money in interest payments.


3. Not automating the debt payment process


Every time I talk to people about getting out of debt, I always get the ‘I hope I’ll be motivated enough to get out of debt this year’ response.

And I always tell them that it won’t work. You can’t depend on sparks of motivation to get out of mountains of debt. You need a lot more than that.

At the Wealth Tribe, we left the hustle of depending on our willpower and motivation to save, invest and pay off the debt in 2020. This is the year that we create an environment that allows us to succeed. One of the ways to do this is by automating your debt repayment process. 

If you’re serious about becoming debt-free, call your banker and set up a standing order. A standing order is an instruction that you give your banker to pay a certain amount to another account. 

Automating your debt payment, saving and investing decisions is one of the habits that will make you wealthy this year.


4. Not collaborating with your significant other


Imagine a situation where you’re working hard to row a boat in one direction while your partner on the other end is putting the same effort towards rowing it in the opposite direction? 

That’s what happens when couples don’t talk about money, when they don’t come up with a joint plan to get out of debt. 

If you’re married, or in a relationship where you have joint finances, you need to collaborate with your partner in your debt-free journey. You want your partner to share in your passion, hard work and dedication towards achieving a debt-free lifestyle. 

Your partner could also play the role of an accountability partner.


5. Not negotiating lower interest rates


Some lenders can allow you to renegotiate for lower interest rates especially if you have a good credit score. 

This could save you a lot of money that you could use in more productive ways than enriching financial institutions. It could also mean getting out of debt faster which is awesome for your overall financial freedom journey.

Check this article for tips on how to negotiate for a lower interest rate.


6. Waiting to make more money to start paying off debt


This is a classic one where people assume that having access to more money will automatically translate to having better money management skills which will translate to getting out of debt faster.

Well, earning more money means that you will have more money to put towards crashing your debt. But for many people, that’s not what they do. As soon as they receive a raise, lifestyle inflation and lifestyle hyperinflation kicks in. They move to a posher neighbourhood, they buy bigger cars, more expensive phones…

Don’t procrastinate on your debt freedom journey. The magic of compounding also applies to debt. The longer you hide from your debt, the bigger and scarier it gets. 

I became debt-free on a low income, I have proven that it’s possible to include your debt in your budget even on a low income.

Start today, start now. 


7. Not having a plan or using the wrong debt pay off the plan


You know the classic advice, ‘if you don’t know where you’re going, any road will lead you there.’ When it comes to debt, picking the wrong road will lead you to hell. This doesn’t have to be you for one more day! 

You need a structured, detailed, practical plan which includes your debt-free day! As always, I’ve got you covered! Here are the 3 proven ways to get out of debt faster.


8. Getting out of debt is not a priority to you


If getting out of debt is not top of your priority list, you won’t make progress. You won’t see results.

Start by asking yourself ‘why is getting out of debt important to me? How different would my life be if part of my paycheck didn’t go towards the institutions and people I owe?’


9. You don’t have f*ck you money


…but here you are, paying off debt! What will happen if you’re hit by a major financial emergency? If you live on planet earth, emergencies will ALWAYS occur! You’re likely to get into more debt to settle the emergency.

So before you keep going down that path, stop and start by saving your f*ck you money! (also referred to as an emergency fund)

Note: You can pay off debt and save an emergency fund simultaneously. But it’s dangerous to pay off debt with 0 emergency savings. 


10. You’re living in financial denial


Debt denial is a common negative money emotion.

Apart from not talking about money, the other big mistake you make is debt avoidance. Not facing the skeletons in your account. Or lack thereof…

Did you go through your last bank statement? Do you know if you’re living above your means? How much debt are you carrying? 

I do understand the negative emotions that come with this responsibility. I remember how shocked I was when I created a spreadsheet with a list of all people and organizations I owed money to. I felt like I had failed like I couldn’t redeem myself from the situation. 

Avoidance is a coping mechanism. However, it’s a temporary solution that comes with big risks such as burying yourself in deeper debt, ruining your relationships, ruining your credit score, being auctioned, extreme stress and anxiety, higher credit card interest rates…the list goes on. 

It’s hard to come up with a payment plan (I know that you plan to pay back) without coming to terms with the full picture of your debt situation.

If you need help, I help people who are struggling with debt. I can help you achieve debt freedom. Halla: agatha@thewealthtribe.com


11. Not making lifestyle changes


If you decide to pay off your debt, but don’t change the lifestyle (bad money habits) that got you into debt in the first place, you won’t win the debt war.

Here are the 14 habits that you need to adapt to stay out of debt and achieve debt freedom.


12. Getting a new loan to pay off debt


One of my blog readers recently asked me if it’s okay for him to take up a new loan and use the money to clear his student loan. His student loan has a 4% interest rate per annum. 

Where would he get cheaper than a 4% p.a loan? Unless he gets an interest-free loan from a friend or family member, this move is literally shooting himself in the foot. 

I explained that it wasn’t a viable option. Remember that taking out a loan to repay your debt doesn’t actually reduce the overall amount that you owe, you still have to pay the full amount. The best option is always to come up with a debt payoff plan that works for you




I know that you have a gallery full of screenshots of the lifestyle you want but can’t afford. Being stuck in debt for longer than you need to is costing you that lifestyle. It’s high time that you decided that you’ve had enough of fantasizing about it, that you’ve had enough of being neck-deep in debt.

Have you had enough? 

Click here to download an easy to use debt payoff planner and debt payment calculator.

Share with your tribe!

You May Also Like…


Submit a Comment

Your email address will not be published. Required fields are marked *

Verified by MonsterInsights