5 Things Not to Do When Trying to Pay Down Your Debt


While we are visiting family in Ohio this summer, I am happy to share with you a guest post from personal finance writers, Rod Ebrahimi and Benjamin Feldman. Rod writes a regular column in Forbes magazine and is co-founder of ReadyForZero, where he and Benjamin help people manage and pay off debt.

Quite a few of us these days have debt. As life gets busier, incomes stagnate, college costs rise dramatically, and credit cards continue to be ever-present, we become more and more susceptible to falling into the debt trap. While the reasons for getting in debt are not hard to see, the insights for getting out of debt are not as easy to identify.

Below, we’ll look at some tips we’ve found that seem to help just about anyone tackle their debt problem and start progressing toward their goal of being debt free.

Are you in debt? If so, you may feel crushed by it. But don’t despair!  Many people, of all ages and income levels have gotten out of debt, and you can too. Start by following the tips below:

1. Don’t Succumb to Fear

This may be the hardest thing to do: confronting your debt problem head on, after you’ve been trying not to think about it for so long.

People often don’t know the total balance of all their debt combined and are afraid to find out. But that fear leads them to procrastinate or ignore their debt while letting it fester and grow bigger.

If you let the fear prevent you from taking action, you’re bound to be tied up — both emotionally and financially — by your debt for the foreseeable future. Instead, take a deep breath and push aside the fear.

Sit down and look at all your debt statements carefully. Get a sense of exactly how much you owe and what kind of interest rates you’re paying. And remember, you’ve taken the first step toward freedom by simply looking at your whole picture!

2. Don’t Ignore the Math

Speaking of interest rates, the next most important thing you can do is to examine your interest rates and see if there is a way to lower them. It may sound difficult, but it really isn’t — and it can save you a ton of money in the long run, while helping you pay off your debt faster.

Here’s how to do it. First, think about any credit card balances you have and ask yourself if you’ve been consistently paying the monthly payments on time. If you have, then call up the company and tell them you’ve been a loyal (and reliable) customer and you’re thinking of switching to another credit card unless they can lower your interest rate. Keep in mind, interest rates below 10% are very good; anything else has room for improvement.

While you may not get your rate lowered on the first call, it’s still worth trying. And if they don’t show any willingness to budge, then you can follow through on your threat to look at competing credit card companies to see if you might be able to find a lower rate elsewhere.

3. Don’t Get Overwhelmed

Now, if you’ve done the first two steps above, then believe it or not you’re already building momentum toward being debt free. But at this point you’re still in danger of losing momentum or getting frustrated. That’s why it is crucial that you develop a plan for how you will pay off all the debt.

To create an excellent plan, first find out if there are any programs that can simplify or speed up your debt repayment. For example, if you have student loans and are struggling with high monthly payments, the IBR or Pay As You Earn program can help you get a more manageable payment.

Or if you want to make payments easier, you can consolidate student loans or credit cards so that you don’t have to worry about countless bills each month. See our Debt Consolidation and Student Loan resource centers for more on how this works.

And once you’ve got that all set, it’s time to make a plan. Look at your monthly budget and decide how much you can pay each month toward all your debt. Then break down that total into chunks: you’ll need to pay the minimum on each balance, of course, and after that you should pay the rest towards the debt with the highest interest rate. And that’s your plan — now all you have to do is follow it!

4. Don’t Get Lured by Plastic

There is a reason that credit cards are so common and that so many people end up with credit card debt. The reason is that buying something with a plastic card does not feel as painful as paying for something with cash. No, it’s true! There have been studies showing that it is psychologically more difficult to see cold, hard cash leave your wallet than to slide that pretty little card through the card reader.

And let’s be honest, the credit card companies know this. They know that people are more likely to get caught up in purchases they can’t afford when using the credit cards. They also know that some people get addicted to spending when using credit cards. So don’t fall in the trap of overspending!

While you’re paying off your debt, it is usually better to use cash or a debit card to make your purchases. This way, you psychologically know that you have a limited amount of money to work with each week (or month) and once it runs out… that’s it. (For more tips, check out our Credit Card Debt resource center.)

5. Don’t Face it Alone

One of the hardest aspects of the debt-payoff journey is that it can feel so lonely (and so long). How do we remedy that? Our advice is: don’t go it alone. Share your debt free goal with people close to you — especially friends and family you can trust. Let them in on your secret, and they will be able to give you the encouragement you need during those moments when it seems impossible.

They will also be more likely to engage in budget-friendly behavior when they’re with you, once they know your goal. For example, they won’t tempt you with expensive outings and instead they will (hopefully) be open to finding low-cost ways to have fun. (If you need some ideas for sticking with your budget during your debt payoff, you can check out our Budgeting Tips resource center.)

No matter how much debt you have or what your income is, we’re hoping that these guidelines will help you tackle your debt and achieve that debt-free future that you’ve been dreaming of.

If you have specific questions, feel free to post a comment and we’ll do our best to respond.

BenjaminFeldmanRodEbrahimiRod Ebrahimi is the CEO and Co-Founder of ReadyForZero, a company that is building online tools to help people manage and pay off their debt. Benjamin Feldman is a personal finance writer for ReadyForZero. You can see more of their work at the ReadyForZero Blog or on Twitter @ReadyForZero.

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  • Brenda May 3, 2014, 11:47 am

    A great book and program that I am just embarking on is, How to Get Out of Debt, Stay Out of Debt & Live Prosperously, by Jerrold Mundis, Similar to what is outlined here, and a goes into detail about the various types of compulsive debtors. Also a great explanation of the difference between secured and unsecured debt. I have been through consumer credit counseling twice, and it is insanity that my mind will tell me again after a period of being debt free that I can handle a credit card again. Then the cycle starts again. I always want some BIG FIX (like last time I paid off $30,000 in student loans, credit card and Home Equity LOC when I sold my house in 2006). This time I am doing it the slow way, and adhering to the “just for today, I will not debt” guideline. Just now taking a look at what the authors of this article recommended, looking at how much I really owe, as it’s there whether I look at it or not. I found out I actually have a $200 credit on my city water bill! I just kept paying some amount each month through bill pay without even looking at the bill.

  • Debt Advice December 15, 2013, 12:49 am

    In relation to debt, Succumbing to fear should be the first you think you feel, I must address the cause, we don’t set out to get into debt, our surrounding push for us all to live above our means, or not taking out adequate insurance to protect your salary. Living within your means should be the first think we should address.

  • Michael September 24, 2013, 8:41 am

    This is a really helpful post to help people get out of debt. I like your take on the whole situation – things NOT to do when you’re paying down your debt. Many people know what they should do, but unfortunately do things they shouldn’t.

    • Amy September 24, 2013, 9:16 am

      Glad you like the post, Michael!


  • moneyadvisorybureau August 12, 2013, 8:04 am

    I do agree with the psychological aspect of plastic. I’ve found that friends and family have tended to get themselves into some credit card debt purely because spending on plastic doesn’t give them the financial discipline they need.

  • Kate Gales July 25, 2013, 11:13 am

    Hi! Great tips for getting debt paid down. We have followed similar steps and are close to zero! Now we’re wondering about teaching our daughter about financial planning with goals, saving, etc so she can be smarter than we are. Do you have any resources for teaching kids about money, strategies for planning and saving? Thanks!

    • Amy July 25, 2013, 11:25 am

      Hi Kate,

      I’m so impressed that you are close to zero — that’s awesome!

      My daughter, Sofia (age 10), wrote a post about how we handle allowance in our house (and how we use it as a teaching tool).

      And here is another post about how we handle household chores in relation to allowance.

      Coming up soon here on Frugal Mama, we’re going to feature a guest post by an expert at T. Rowe Price on how to use banking to teach kids about financial responsibility, so stay tuned!

      Thanks for checking in, Kate,