7 Debt Repayment Mistakes That Are Keeping You In the Red Does it feel like no matter how hard you work at eliminating your debts, you just can\u2019t seem to get the upper hand? Common debt repayment mistakes can keep you from getting out of debt. Carrying debt is a common narrative for Canadians across the country. A report by credit monitoring agency Equifax warned that total debt per consumer sat at a whopping $72,950 as of the end of 2019. This includes mortgage debt, which was about $49,150, and non-mortgage consumer debt, which was another $23,800. Consumer debt includes everything from credit cards and lines of credit to personal and student loans. The typical Canadian consumer who asks the Credit Counselling Society for help with their debts owes about $32,000. So despite your best efforts, why are you stuck in a vicious cycle when it comes to your debts? Here\u2019s a look at 7 common debt repayment mistakes that are stopping you from becoming debt-free. 1. You\u2019re Still Spending on Credit While you may be diligently funnelling part of your monthly income towards paying off your debts, if you\u2019re still swiping, tapping, and spending with your credit cards or your line of credit, then you\u2019re still feeding your mountain of debt. It\u2019s hard to break free of living with credit to start living within your means. But until you do, you\u2019re simply paying down debts and adding back to them each month. Spending with invisible money comes with a string of issues too \u2013 research has suggested that consumers shopping with credit cards spend 12-18% more than when they use cash. And if you don\u2019t pay off your balance in full each month, you\u2019ll end up spending as much as 50% more on everything you buy after interest, fees, and penalties are factored in. How to Find the Money to Pay Off Debt 2. You\u2019re Only Making the Minimum Payment If anything should scare you away from adding to your credit card debt, it\u2019s the excessive interest you\u2019re paying on your purchases. Each time you make the minimum payment on your debts, your outstanding balance is charged interest rates as high as 30% or worse. At the end of the day, your minimum payments may just cover the interest you\u2019re incurring and won\u2019t apply to your principle debt at all. Until you increase your payments, you could be stuck in debt for years. Open your statements and study them closely. They will outline how much you\u2019ve paid in interest so far this year alone and how much you\u2019ll pay in interest if you stick to making the monthly minimum payments. If you\u2019re making a minimum payment of $60 on a $3,000 balance with 19.9% interest (APR), it would take you 53 years to pay it off and you\u2019ll have paid an extra $12,709 in interest. Minimum Payment Myths \u2013 Avoid the Pitfalls 3. You\u2019re Missing Payments and Facing Stiff Penalties Missing payment due dates will lead to many setbacks, from hurting your credit rating and tarnishing your credit history, to facing stiff penalties and further charges on your debts. Missing even one full billing cycle with your credit card could increase the interest rate by 5%. And it takes a full year of on-time payments to get that 5% penalty removed. Falling behind further, late fees and penalties make your debts even more expensive. If you\u2019re months into delinquency, you could even end up in collections and the interest rate could go up again. COVID-19 Resources for Financial Help Stay on top of making your payments each month, whether it\u2019s by setting reminders on your smartphone or automating payments before their due dates. And if you need help, asking for it sooner than later gives your creditors more options to help you. Contact us and we\u2019d be happy to give more details. 4. You Aren\u2019t Tackling High Interest Accounts There\u2019s a reason why Credit Counsellors insist on consumers choosing a debt repayment strategy \u2013 and why the avalanche method is so popular. We\u2019ve warned about the dangers of high-interest accounts keeping you in debt, and if you aren\u2019t paying off these accounts strategically, the interest will keep you drowning in debt. With the avalanche method \u2013 also known as debt stacking \u2013 you\u2019re targeting the debts with the highest interest rates first. As you pay down your debts that rack up the most interest, you\u2019re freeing yourself from excessive interest rates so you can funnel more of your payments towards the principle. Prioritizing your high-interest accounts can help you get out of debt fast. Snowball vs. Avalanche, Which Is Better? 5. You\u2019re Repeating Old Habits Some consumers take action by consolidating their debts and streamlining what they owe onto a balance transfer credit card, line of credit, or personal loan. When you consolidate your debts, you effectively free up thousands of dollars on your credit accounts. This can be really risky if you\u2019re a spender as there\u2019s a chance you could turn to your cards all over again. Many consumers repeat the same mistakes that got them into the red in the first place and re-accumulate debts onto their accounts, especially if they don\u2019t have a budget in place that will help them live within their means. If you\u2019re choosing to consolidate your debts, you need to refrain from creating a new mountain of debt onto the accounts you\u2019ve just wiped clean. Debt consolidation is a good time to clean up your finances and reflect. Acknowledge how you got into this position, what it\u2019ll take to get you out of it, and how to ensure it won\u2019t happen again. What to Be Aware of With Debt Consolidation Loans 6. You Don\u2019t Have an Emergency Fund When it comes to spending and saving, sometimes it can feel like you\u2019re taking one step forward and two steps back. You\u2019ll make your debt payments diligently and avoid adding to your debt load, but a financial emergency will come up and you\u2019re suddenly back to where you started. Try to avoid adding to your debts when a crisis strikes by creating an emergency savings fund. This way, when you\u2019re facing challenges such as a job loss, home repair, or medical emergency, you\u2019ll have a savings cushion to get you through at least part of the expense instead of undoing all the progress you\u2019ve made in paying off your debts. Savings is the Secret Weapon Against Debt 7. You\u2019re Doing It Alone Even with the best intentions, many consumers don\u2019t know how to start tackling their debts or how to put their debt repayment plans into action long-term. It takes dedication to budgeting, tracking your expenses, and ensuring you\u2019re staying on top of due dates to reach the checkpoints and milestones you\u2019ve set (and you need to set them!). If you\u2019re having difficulty with setting up the building blocks to get yourself out of debt, whether it\u2019s building a balanced budget or sorting through your debts, seek help. Recruit your partner, sibling, or personal finance-savvy friend. Also consider whether you might need professional help. Taking on the major undertaking of getting out of debt on your own is a daunting task and if you\u2019re unsure of how to make realistic changes to your spending and your lifestyle, you\u2019ll only freeze or worsen your situation. Is This Missing From Your Plan to Get out of Debt? Professional Credit Counselling Help is Available from CCS Sometimes, getting professional help from an expert is your best course of action. We\u2019re an award-winning, non-profit credit and debt counselling service. You aren\u2019t alone in tackling your debts \u2013 we\u2019ve helped hundreds of thousands of Canadians with their money and debt problems. Reach out to us by toll-free phone, email, or anonymous online chat. We\u2019ll answer your questions and give you the guidance you need. If you want to know more about getting out of debt, contact us now for a free, confidential appointment. We\u2019re here to help you in any way we can.