5 Things You Should Not Do If You Have Debt

If you have a significant amount of debt, there is no easy way around the fact that you must change your behavior to eradicate the debt.  However, sometimes what people know and do are two different things.

While you may disagree, here is a list of five things you should NOT do if you have a significant amount of debt:

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1. Go back to college and fund your education with student loans.

Within the last few years, many Americans have found themselves out of work and in debt.  Often, the solution is to go back to college and survive on student loans.  This is generally a bad idea.  Many of these people then graduate college with another degree or an advanced degree, and they still can’t find a job.  Now, instead of their original debt, they also have several thousands to tens of thousands of dollars of additional student loan debt.  If you are going to go this route, make sure to choose an in demand field such as nursing.

2. Keep using your credit cards.

If you have credit card debt, there is only one sure way to pay it all off—stop using the cards and make your monthly payments (plus extra if you can) every month.  With no additional work on your part, you will be out of debt at some point in time.  However, if you keep using your credit cards, what typically happens is that you tend to pay off only what you charged the previous month, if that.  My husband and I tried to convince ourselves that we could still have the convenience of using our credit cards while simultaneously trying to pay them off; instead, we slowly started accruing a bigger balance.  It has now been 5 month since we have used them, and we have paid off 35% of our balance, but we didn’t have any success until we stopped using them completely.

3. Pay aggressively on your debt without having an emergency fund.

Paying aggressively (or being gazelle intense, as Dave Ramsey says) is a great way to eliminate your debt quickly.  However, make sure to first save a small emergency fund of at least $1,000 to $2,000 so you are prepared for unexpected expenses.  We got gazelle intense and then had several unplanned expenses this month.  We only had $500 in our emergency fund since all of our extra money was applied to debts.  Since we had no extra money, we had to be creative with selling things around the home and working even harder to make up the difference.  Once we recover from this month’s unexpected expenses, we plan to slow down on debt repayment long enough to build our emergency fund a bit.

4. Make major improvements on your home.

While it is good to maintain your home and make improvements to increase its value, nothing more than required maintenance and repairs should be done while you are trying to get out of debt. There will be time to remodel your kitchen or add on a deck after you are debt-free.

5. Take a vacation.

Vacations are both fun and useful.  You get to have time to relax, travel to new destinations and spend time with the family.  However, if you have debt beyond the mortgage to pay off, you really shouldn’t take a vacation to the Caribbean or Disney or any other destination you may be considering.  That isn’t to say that you shouldn’t take time off and spend time with your family.  Perhaps instead of traveling, while you are paying down debt you can have a staycation and stay home and visit the local attractions in your home town.  You still get to relax and have fun, but you save a few hundred dollars or more by not traveling.

Getting out of debt requires discipline and perseverance as well as an attitude change.   It may not be fun to give up things that you enjoy such as a vacation or things that you think will improve your life such as another college degree or an improvement on your house, but foregoing these things now means you can be out of debt more quickly.  Then, and only then, you can live like no one else, as Dave Ramsey says.  Isn’t it worth a bit of sacrifice now?

Last Edited: 10th February 2014

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  1. says

    Thanks for the tips, Melissa! I think a particularly important one is to save up an emergency fund before you really buckle down on debt. As long as you have that cushion for new expenses, you are much more likely to get out of debt faster and stay out. Getting good saving habits while in the trenches is as good a time as any to start, and once you hit that milestone you may be encouraged to make even more great money choices!

  2. says

    It is surprising how many people make these kinds of mistakes while trying to pay off debt. They don’t stop to realize that being in debt means they need to change their lifestyle. They may want to ignore their debt and keep up the lifestyle they are used to, but that will just extend their debt and delay the time when they can be debt free again.

  3. says

    Great reminders. There should not be much luxury going on when you have debt. We have about 16,000 in student loan debt, and we would be debt free by now if it weren’t for vacations. I believe if you’re building your emergency fund and paying off student loan debt, then there is nothing wrong with saving up for something nice. Helps keep your sanity.

  4. says

    I think GETTING MARRIED, should probably be on this list. We are currently saving for our wedding right now, and it’s really reduced the amount of money I could put towards my student loans. Granted, waiting isn’t always an option for some of these life milestones, but you should definitely factor in your debt when planning the big day!

  5. says

    All very valid points. The emergency fund one is important – we just got hit with a major car repair, wiping out most of our savings. As for vacations, that vice is still one we are struggling with! We’d be debt free much faster if we didn’t travel.

  6. Mel Greathouse says

    I found your article on paying off student debt, and the article on the 5 things NOT to do when in debt MOST informative and encouraging.
    Thank yo for all your hard work in the area of Financial accountability.
    Mel Greathouse.

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