The No Credit Needed Blog gives some insight into the mistakes most commonly made when trying to climb out of debt. The foundation of the tips seems to be staying calm, protecting yourself and your assets, and creating a plan to get out of debt (not just going for broke trying to pay everything off at once). The following are my favorite tips from the list:

Try not to skimp on the emergency fund. I’m a big fan of having a “baby emergency fund” of at least $1000 in my savings account at all times. If you are going to get out of debt, you will be VERY tempted to empty out your cash savings and put every single available penny towards debt reduction. Resist this very powerful (and very real) temptation. Why? Just as soon as you empty that emergency fund for debt reduction, an unexpected expense will arise, and you’ll have to borrow money to pay for it. Instead, use your emergency fund for true emergencies, build it back up, and then continue with your debt reduction. It’s better to miss your goal date by a few months (like I did) than to live life without some emergency cash.

Avoid using a second mortgage to consolidate automobile or credit card debt. Before you use any company to consolidate your debt, read the fine print! Personally, I find that most people who move debt from a credit card to a mortgage, without changing their behavior, end up with mortgage debt AND additional credit card debt. Plus, who wants to risk their home for the sake of paying off unsecured credit card debt?

Never think that you are stuck with the life that you have right now. I find it amazing the number of people who don’t think they can do anything about their jobs, their health, their finances, or their futures. If you want a better life, you must choose a better life. Read a book. Write a resume. Find a church. Join a support group. Create a plan. If you are frustrated and feel like there is no hope, wake up! You can have an awesome life. Stop feeling sorry for yourself, stop worrying about your past, stop blaming yourself and others, stop making excuses, get up, get out, get going, and get a life! You can ROCK!

Avoid 10 Common Debt Reduction Mistakes – [No Credit Needed Blog]

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