Trying To Get Out Of Debt? Avoid These 8 Mistakes - CBS News 8 - San Diego, CA News Station - KFMB Channel 8

Trying To Get Out Of Debt? Avoid These 8 Mistakes

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In these tough times, everybody is looking to get ahead, but people often run into trouble, trying to dig themselves out of debt. Desperate times call for desperate measures, but don't fall victim to these 8 common mistakes.\r\n\r\nIs the interest rate on your mortgage adjusted out of control? Are your credit cards are maxed out and big bills late? Wouldn't it be great if you could just make it all disappear?\r\n\r\nKen Stearns senior wealth manager Jeff Christie says you've got to be careful. Sometimes you think you're doing the right thing, but actually hurting yourself in the long run.\r\n\r\nMistake Number 1: Signing up for Debt Consolidation Scams.\r\n\r\nThese people promise to negotiate with creditors to pay off debt for pennies on the dollar. Your red flag? "Anytime someone is pushing you to sign something or pay anything up front," Christie said. He says the scammers take your money, and do nothing.\r\n\r\nMistake Number 2: Playing the Teaser Interest Rate Game with Credit Cards.\r\n\r\nBefore you jump to those zero interest rate cards, make sure you're not being hit with a balance transfer fee, and make sure you pay off the card before the high interest rates kick in.\r\n\r\nMistake Number 3: Using a Debt Repair Service\r\n\r\nThey promise to clean up your credit report, but many encourage illegal activities that could leave you facing federal fraud charges.\r\n\r\nMistake Number 4: Misusing Home Equity.\r\n\r\nDon't use the equity from your home to pay off credit cards, because if you can't pay the bill at some point, you're now putting your house on the line. \r\n\r\nMistake Number 5: House Pay-Off Scams\r\n\r\nPeople say they'll take over your mortgage payment in exchange for rent until you can afford the mortgage again. Problem is, they let your house fall into foreclosure. "At the end of the day you've lost your home and the rent for that six-month time period," Christie said.\r\n\r\nMistake Number 6: Closing Paid Off Credit Cards\r\n\r\nInstead, leave the accounts open with a zero balance. It will improve your credit score.\r\n\r\nMistake Number 7: Not Paying A Creditor Because You're Mad About A Service Or Product\r\n\r\n"Stonewalling them and simply not paying is only going to hurt you in the long run," Christie said.\r\n\r\nMistake Number 8: Lower Your Credit Limits\r\n\r\nLeave your credit card limits as high as possible, but have the discipline not to spend up to your limit. Higher credit limits combined with low balances will help your credit score.\r\n\r\n
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