According to the Federal Reserve Bank of New York, Americans are still struggling with debt. In fact, at the end of 2017, Americans were saddled with more debt than ever. Some of the numbers: Americans owe $139 billion in mortgage debt, $26 billion in credit card debt and $8 billion in auto loans. Why do these numbers keep climbing? Partly because the economy is recovering and we’re making big purchases again — i.e. homes and cars. But also because debt is tricky, and it’s easy to find yourself repeating the same mistakes over and over again. Below are some of the more common mistakes you might make when dealing with debt (and how to avoid them).
Neglecting the Behavior.If you’ve spent years digging out of credit card debt, you deserve a pat on the back. What you don’t deserve is the headache you’ll feel if you start overusing your cards all over again. As US News reportsOpens a new window, before you start charging your balances up once again, try to understand what behaviors got you into debt in the first place.
Closing Cards. You might be tempted to close your credit card accounts once you’ve paid them off. Don’t do it. Instead, keep them open (as long as they carry no annual fee) to show lenders a long history of credit. Cutting up your card so you won’t use it is a better idea than closing the account.
Head In The Sand. Some people who dig themselves out of debt feel like the dark days are in the past and so there’s no reason to stay on top of their credit report. This is a mistake. There is basically never a point in your life when your credit report should be shelved. Always check it to make sure your credit isn’t taking inaccurate hits. It’s vital to your financial health.
