Editor's note - You can trust the integrity of our balanced, independent financial advice. We may, however, receive compensation from the issuers of some products mentioned in this article. Opinions are the author's alone, and this content has not been provided by, reviewed, approved or endorsed by any advertiser.

Welcome to our week-long series on crushing your credit card debt. In this last of five articles, we look at some common mistakes people make as they try to pay off their credit card debt.

So you have considered the decisions and circumstances that got you into your current debt situation. You are committed to doing something about it. You’ve taken steps to lower your credit card interest rates. You’ve set up the debt snowball system to pay off your cards as quickly as possible. And you’ve squeezed every dollar possible out of your budget to throw at your debt.

Now, in the words of my first boss as I was about to argue my very first motion in federal court, “Don’t blow it.”

You are primed for success, so long as you stay on track. Unfortunately, there are some common mistakes that people make as they work their way out of debt.

Being Too Aggressive

What you do now is critical. If you approach debt repayment with unrealistic expectations and a timeline that is not achievable, you will be setting yourself up for failure. If your research indicates that with all the proper tools in place you should be out of debt in three years — don’t shoot for half the time.

Think of the last time you went on a crash diet with the expectation that you would lose some crazy amount of weight in a short amount of time. Meanwhile your friend went on a program that required a steady plan of action that modified their behavior and focused on being fit and healthy when they reached their goal. I think we all know what happens next. Slow and steady wins the race.

Dave Ramsey tells his followers to attack debt with gazelle-like intensity. That’s fine, but just remember that even a gazelle has to rest from time to time.

Borrowing From Your 401K

Taking out a loan from your 401K has some initial appeal. You get rid of high interest credit card debt in exchange for a loan that typically charges much lower interest. And on top of that, the interest you pay goes back into your 401(k), so you are really paying yourself the interest charges.

But there are three significant risks to this approach. First, if you leave your job for any reason, you’ll have to pay the loan back in full. If you fail to pay it back, the IRS treats the loan as a distribution, charges you a 10% penalty if you are not at retirement age, and taxes you on the rest. Second, the amount of the loan gets pulled out of your investments, which could have a significant affect on your retirement. And third, you run the risk of adding more debt to your credit cards, leaving yourself with credit card debt and a 401(k) loan.

I won’t say that Borrowing from your 401K is always the wrong choice, but it’s rarely the right one.

Not Saving the Maximum for 401K Matching

Readers often ask me if they should pay of debt or save their money. My answer is always the same–yes. It’s not an all or nothing situation. You can both pay of debt and save at the same time.

How much you put toward debt and how much you save depends in part on the interest rate of your debt. The higher the rate, the more you should put toward debt first. But there is one important exception–401(k) matching contributions.

If your employer matches some or all of your 401(k) contribution, you should contribute enough to get the full benefit of the match. Otherwise, you are turning down free money. Not taking advantage of this is no different than tossing cash out your car window.

Not Tracking your Progress

The opposite of being too aggressive and setting yourself up for failure is not tracking your progress at all. Tracking your progress is motivating! You can see how much you have paid down and pat yourself on the back.

If you are looking for a free tool to track your progress, I’d recommend Mint.com. It has great tools for tracking your accounts and monitoring your progress. If you don’t mind spending a few bucks for a great budget tool, YNAB is in my opinion the absolute best. It’s what I now use for our monthly budget. You can read our full YNAB review for more details.

Giving Up

There will be setbacks. Getting rid of credit card debt is one of the hardest things you’ll ever do. As soon as you realize this, it all gets a bit easier. When you do make that purchase you later regret, think about what led you to that decision. Make any changes you need to, and then continue on your path to debt-freedom.

But whatever you do, don’t give up!


Balance is the key to life and debt. Consider what a full life means to you. Is it a life full of stuff or a life full of friends, family, and stability? Understanding this will help you to determine if there is value in something you are considering as a purchase. Always ask yourself if you need it. Will it add value to your life?

I hope this series has been helpful to you. And if you have any questions at all, leave a comment below and I’ll be sure to respond.

Author Bio

Total Articles: 1081
Rob founded the Dough Roller in 2007. A litigation attorney in the securities industry, he lives in Northern Virginia with his wife, their two teenagers, and the family mascot, a shih tzu named Sophie.

Article comments

Money Beagle says:

And, if you have made any of those mistakes, just move forward the best you can. The worst thing you can do is just stop because you’ve made one mistake.

TekGems says:

> But whatever you do, don’t give up!

This is essentially the issue right? Its a long-term goal for some to get out of debt and the longer it takes, the less momentum you are given to carry this out successfully.

> Dave Ramsey tells his followers to attach debt with gazelle-like intensity.

I think Dave Ramsey partially says this to keep his message on-point and simple. Whether we actually sacrifice all the other things in our lives to operate in this way is all together a different challenge.

> Not Saving the Maximum for 401K Matching

If your debt re-payment schedule is short-term like the next 36 months, I could be convinced to not contribute to the 401k match. Factors like high interest rate APR would make 401k contributions even with matching a negative gain anyway.

Good recommendations, though I’m not sure I’m on board with the 401k until you’re out of debt. I’d also celebrate the small victories. Not buying that new pair of shoes, saving $10, etc. Gotta celebrate the small victories, especially if there is a lot of debt or celebrations will too far apart.

When I was first trying to get out of debt, I was guilty of being too aggressive. The plan I had wasn’t too aggressive, but I would pay my bills for the month and see that I still had ‘X’ amount left over. Being only focused on debt repayment, I took some of that money and used it to pay down more debt. What I forgot to realize is that the money that was there was for some of next month’s expenses! When the time came to pay all of my bills for that month, I was suddenly short!

I learned that I needed to trust my budget and I could only use “found money”, like birthday money, to pay extra towards my debt.

Linda says:

I am 71 yrs. still working partime.have a 401k it’s matched 6% which I do. my question is, I have a equity line of 57,000. Should I take some of the 401k money to get the equity line down so I can get a reverse mortgage. My house is paid. I could pay the equity off out of the 401, with money left in the 401k.

I want no payment going out, just for proproty taxes and house ins. the only debt i owe is the equity line. I am trying to set my self up to retire. the debt in the equity line is years raising kids and cars and life. any tips.