What Not To Do When Re-Paying Credit Card Debt

Many individuals have run into excessive debt through either poor spending habits, medical bills, or a variety of other reasons.  That being said, there are a few things every individual in debt should know before they begin to tackle paying off their debt.

Below you will find a few tips on things to avoid when paying down debt.

1)     Using an inheritance- If you have suddenly come by money through inheritance, instead of repaying debt, look into investments or even buy a deferred annuity.

2)     Taking out a second mortgage on your home- This is highly debateable, and really depends on the individual’s level of debt.  If you only have credit card debt, this is unsecured debt, and if you take out a second mortgage to pay off credit card debt, you are essentially converting unsecured debt into secured debt while putting your house at risk.  If you are considering this option, be sure to talk to a debt counsellor to talk about your options.

3)     Breaking into investments- Long-term investments such as your pension plan, SIP (Systematic Investment Plan), and your Provident Fund should not be used to get out of debt.  These investments are earmarked for other purposes, and unless a real emergency arises, they should not be tapped into for debt repayment purposes.  ■