Skip to Content

These 5 Things Will Keep You Drowning in Debt

Getting into debt isn't hard. In fact, it can be quite easy to fall victim to the slippery slope of accumulation.

Getting out of debt, however, can be incredibly hard, even seemingly impossible at times. Though the road to recovery may be long, it is possible to get back on your feet after financial woe — just be sure to avoid the following five things at all cost.

If you've got debt, your dream of homeownership is not out of your reach. Now's the time to get the ball rolling on your VA loan application, and Veterans United's Lighthouse program is here to help if debt is in the way.

Ignore It

As much as you wish it would, the debt won't go away on its own. Pushing it aside and hoping it'll eventually fix itself is one of the biggest mistakes you can make concerning your debt. The longer you ignore it, the more you accrue in late fees and interest charges, which only means more debt.

According to an article by ABC News, once a bank, credit card company or other lender gives up trying to collect a debt itself, it often sells the account to a debt buyer for less than the amount owed. That debt buyer either tries to collect it or re-sells it to yet another debt buyer — or both. Consequently, consumers are often hounded by the original creditor, that creditor's hired-gun collectors, the first debt buyer and a string of subsequent ones.

What's worse is that the debt appears on your credit report nearly instantaneously. Once the debt appears on your credit report, it can remain there for up to seven years after the debt is settled, which means you'll have a more difficult time securing future loans or lines of credit.

Pay the Minimum

Paying the minimum on your debt is a risky strategy. The minimum payment is a percentage of the debt balance, typically around one to two percent. It's the smallest amount you can pay without breaching the terms of the credit agreement. Most of the minimum payment goes toward interest, not the repayment of the actual loan.

By paying the minimum and not a penny more, it'll take longer to repay the full debt, and you'll be paying much more in the long run. Even if the total balance decreases, the amount you'll be paying in interest won't.

By doubling your payment each month, or even adding a few more dollars to each payment, you'll be paying off your debts faster and saving money overall.

Rack Up More Debt

Repaying debt takes time and dedication, and adding more debt to the pile in the process will only slow you down. Avoid using credit cards to pay off debt or borrowing from friends and family, as both are merely short-term solutions to a long-term problem.

Payday loans, which are loans given in advance on expected future paychecks, should also be avoided. Payday loans are typically accompanied by hefty fees and can leave you owing more than you did at the start. As a tool to effectively get paid before an individual receives a paycheck, a payday loan can lead to serious debt.

These loans require repayment of the principal and a fee measured as a fixed dollar amount per $100 borrowed. Military personnel are no less susceptible to these loans than civilian consumers. In 2010, the Financial Industry Regulatory Authority report found that 32 percent of enlisted and junior NCO respondents used non-bank borrowing and 11 percent of them had used a payday loan. Of civilian respondents, 9 percent had used a payday loan.

Use Expensive Credit Counselors

While the path to a debt-free life can get lonely, credit counselors can often be expensive and ineffective. Maximize the amount of money you have by putting it toward your debt, not a credit counselor.

According to, participating in credit counseling does not affect credit scores directly. A good credit counseling organization will provide budgeting and financial management education, which will help you gain control of your credit and keep it under control in the future. Participation in such classes will not appear on your credit report.

If you have the opportunity to use a free credit service, such as Veterans United's Lighthouse program, go for it! Veterans United is here to help you achieve your dream of homeownership.

Forget Other Important Payments

Debt can be overwhelming, especially during the repayment process, so much so that it's often all too easy to forget other monthly or annual payments. A car loan or mortgage on a house, for example, are vital to keep current on, even as you repay other debts.

A repossessed car or house only add to the stress of the repayment process, but that doesn't mean you can't prioritize your payments and allocate your money accordingly. It's also a smart idea to know the difference between secured debt and unsecured debt.