4. You Don’t Have a Plan to Pay Off Your Debt
There’s a difference between knowing you owe money and truly understanding how much you owe, the interest rates, and what it’ll take to be debt-free one day.
“A lot of people don’t really take ownership of their debts; they just glide along,” says Andrew Rafal, president and founder of Bayntree Wealth Advisors in Scottsdale, Arizona. “Maybe they feel like as long as they’re making payments, they’re doing the right thing. But if you don’t have a timeline for becoming debt-free, you will probably never get out of debt.”
What to Do
If you don’t have a handle on how much of your income is dedicated to debt—or for how long you’ll be paying it down—Rafal recommends tapping the same tech resources you use to track your spending.
They’ll give you a more comprehensive financial picture and often let you enter your balances and interest rates, in order to help you prioritize which debt to pay first. (Hint: Start with the balance attached to the highest interest rate to save the most money.) You can also use online credit card calculators or other debt calculators.
Rafal likes this process because it teaches you to build a roadmap, set goals, and hold yourself accountable—the same process you’ll lean on again and again, whether you’re endeavoring to pay off another card or to become a millionaire.
