It may have taken you months if not years to finally become debt free. Now that you’re off the hook, it’s time to celebrate, right?
Yes and no. While you should be proud to be out of debt, it can be easy to fall right back in the hole. If you are determined to be debt free for good, here are 5 mistakes you will want to avoid.
Not Having an Emergency Fund
Almost all financial experts recommend that every single American should have an emergency fund of cash you can easily access in case of an emergency. These emergencies could be an expensive but necessary car repair or a broken hot water tank.
We recommend that consumers save at least 6 months of living expenses in a savings account that only gets accessed for emergencies. Sadly, many consumers who do not have an emergency savings plan and end up in an emergency situation end up using their credit card.
Closing Credit Card Accounts
If you recently became debt-free, you may be thinking that you’re done with credit cards for good. After all, credit cards got you in your past situation right? Closing your credit cards can actually be harmful to your credit score.
When you close your credit card accounts, you have no utilization and no credit history. These both can lower your credit score. Having good credit is essential to getting a loan, finding an apartment, and in some cases finding a job. Avoid closing older credit cards with large credit limits.
Getting Into More Debt
Even after paying off a massive amount of debt, many consumers find themselves starting to build their debt back up again. Mostly, this is because consumers believe that they have finally learned how to pay off a purchase when the payment is due.
Sadly, once the bill arrives, many card users find themselves in the same situation they were in. They get the credit card bill and start to make just the minimum payments. Sadly, this mindset aspect is something that takes time to change. Consider switching to an all-cash lifestyle.
All in all, it can be hard to break old bad habits. Credit card debt is no different. By taking the time to understand how you got deep into debt in the first place, you can avoid any bad habits from the past.
If you are buried under a mountain of debt and ready for a fresh start, CrediReady can help. Our nationwide network of trusted and experienced lawyers are prepared to give you a FREE bankruptcy consultation to help you. Take a moment to fill out our inquiry form today to speak with your FREE attorney.