3 Mistakes to Avoid When Trying to Pay Off Debt

benefits of a health savings account

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Many people owe tens or even hundreds of thousands of dollars, simply because they bought too much stuff! You may be in a place where your top priority is to pay off debt. While that is a noble and wise ambition, you have to be careful that you do not go about it in the wrong way.

3 Potential Mistakes To Avoid When Trying To Pay Off Debt

These three strategies may seem like a great idea at the time, but they can backfire in a hurry and can end up being huge financial mistakes.

Tap Into Your 401k

Many 401k plans will allow you to borrow from them. I have had a lot of people tell me that borrowing from their 401k was a good idea because they would just be “borrowing from themselves”. That type of thinking has many people taking out tens of thousands of dollars out of their 401k’s in order to pay off debt, or simply buy some expensive new toy (or house). They justify it by claiming that since they only borrowed from themselves, they are just paying themselves back with interest.

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