6 (easy to fix) mistakes that are keeping you in debt

Many people find themselves stuck in a cycle of debt that seems impossible to break. But what if some of the reasons you're still in debt are simple mistakes that can be easily corrected? Let’s look at six common, yet easily fixable, mistakes that might be keeping you in debt.

Ignoring your credit report

Your credit score affects how much you are charged for borrowing, so it’s important to understand how it works.

A low credit score can lead to you paying higher interest rates on credit cards, loans and making it harder to pay them off. Keeping track of your credit score can help you see where your credit stands, spot problems and take measures to improve your score.

You can check your credit score and access a free credit report here.

Lifestyle inflation

Lifestyle inflation is when your spending goes up as your income increases. It’s easy to fall into this trap because naturally we all want to enjoy the fruits of our hard work and improve our standard of living. 

When you get a pay rise it’s all too easy to decide to upgrade your car to one you want but don’t need, eat out more often, or treat yourself to a more expensive holiday. 

If you’re not careful, this extra spending becomes a regular habit, which eats up all your extra income. This means less flexibility to deal with financial emergencies, less opportunity to save and less capacity to pay off debts faster.

The key to fighting lifestyle inflation is to put your longer term priorities ahead of your immediate lifestyle impulses. Sounds easier said than done? We’ve gathered 5 simple actions you can take to get started.

Not having a plan to manage debt

When it comes to debt, having a simple plan in place and understanding what you owe can make a huge difference. Have you set yourself a spending plan (what some call a budget)? Have you prioritised which debts to pay off first and calculated how long it will take you to pay in full?

When you have a plan you are less likely to feel overwhelmed, you’ll feel more confident and better able to keep on top of payments. 

You can find out more about creating a plan for your debt here and explore your options if you are managing debt on a restricted income here.

If you have multiple debts, you could also consider a debt consolidation loan which can be used to pay off your existing debts at a lower rate. Find out if a Salary Finance loan could help you consolidate your debts:
salaryfinance.com/uk/my-salary-finance.

Waiting for something to go wrong

Waiting for things to go wrong before dealing with your finances makes everything much harder to manage. When you’re reactive instead of proactive, you’re constantly in crisis mode, dealing with financial emergencies as they arise. This often means paying more in late fees, interest charges, and other penalties - which keeps you stuck in debt. 

On the other hand, being proactive – making a spending plan, building an emergency fund, and regularly reviewing your financial situation – helps you stay ahead of problems and avoid those costly surprises. 

Access Salary Finance’s 5 step plan to prepare for a financial emergency here.

Lack of consistency

Lack of consistency with your money habits and behaviours is like trying to be healthy by going to the gym twice a year – you won’t see much progress. If you’re not consistently managing your money, it’s easy to slip into bad habits, and lose track of your spending. 

There’s no point in sticking to your spending plan one month, and the next month splurging on stuff you don’t need. This on-again, off-again approach can keep you stuck in debt because you’re not making steady progress. By being consistent you create a solid foundation that helps you chip away at your debt and build savings.

To help you stay on track - check out Salary Finance’s step by step guide on creating (and following) a spending plan here.

Not seeking help

It can feel overwhelming and even embarrassing to admit you need help with your money, but there are so many resources out there designed to get you back on track. Financial advisors, Citizens Advice, and even friends or family can offer guidance, support, and strategies that you might not have considered on your own.

Ignoring the problem or trying to handle everything by yourself can keep you in debt longer and make it harder to see a way out. Reaching out for help can provide you with the tools and confidence you need to tackle your debt head-on and start making real progress.

Click here to find out more about what resources are available to you, or where to access help.