Being in debt is a terrible experience, especially when you find it difficult to chart a pathway out of the problem. Every phone call makes your heart beat faster. Each knock at your door makes you break out in a sweat.

You avoid going to certain places out of fear of being embarrassed. Many suddenly fall in love with staying indoors. A few will turn their backs and run. Things take a new turn for many as they experience the vicissitudes of life.

On May 8, 1939, the entire estate of Chief Obafemi Awolowo was auctioned by court order in respect of judgment debts. His property at Ikenne was auctioned for £40. His Chevrolet car was sold for £25. His clothes were sold too.

He was present at the auction, and when a police constable saw him, he remarked, “You are indeed a man.” By 1942, he was able to purchase the property back. He resolved the indebtedness in three years. I resolved mine in two years.

If you don’t change the habits that got you into debt, you’ll stay in the cycle. Share on X

There are certain mistakes you need to avoid while resolving the issue of indebtedness. Avoiding these common mistakes will go a long way in helping you see the pathway more clearly and setting everything in proper perspective.

Let’s review seven common mistakes people make while trying to get out of debt.

1. Running from the creditor

This is a common mistake many make; they avoid their creditors. Some flee their location and settle elsewhere, while others refuse to answer calls altogether. The problem only escalates when you avoid your creditor.

Most creditors are assuaged if you maintain communication and reassure them that you’re sincerely working on a repayment plan. Demonstrate your willingness to repay, even if you currently lack the capacity. Creditors tend to be more lenient with customers who show genuine effort. Don’t run—face the situation head-on.

2. Borrowing your way out of debt

In my own case, I wanted to resolve my indebtedness by borrowing more money, which I threw at forex, but it backfired. If you don’t have a clear repayment plan, taking on additional loans in order to resolve a current one is a major mistake.

You would be digging your hole deeper instead of trying to come out of it. If you are thinking of taking an additional loan to resolve your indebtedness, you should be sure that it will generate enough returns to service the outstanding obligation and pay down the new one.

Otherwise, you would have succeeded only in increasing your debts.

3. Keeping the same habits

It was Albert Einstein who said, “Insanity is doing the same thing and expecting different results.”

You can’t keep the same habits that got you into the rut in the first place and expect to have your problems solved.

You must strive to change certain habits—especially your spending habits—after a holistic appraisal. You can’t maintain the same lifestyle pre-indebtedness and post-indebtedness. Anything that takes money out of your hands must be scrutinized. Resolve to make small cuts or eliminate unnecessary expenses altogether.

If you eat out a lot, can you start making your breakfast and lunch at home?

Can you switch from a DSTV bouquet to a cheaper alternative like GoTV?

Can you either eliminate vacations or choose more affordable destinations?

I can’t fathom anyone in debt going on expensive annual vacations. That’s irresponsible, in my opinion.

4. Not having a clear repayment plan or strategy

Your debts will never be settled by mere wishes. You can’t beg your way out of indebtedness. Crying is not a strategy.

You need to know exactly how much you owe. Take out a book and write everything down, including your monthly expenses. Then outline how you plan to sort them out.

• Is it through your salary?
• Do you have a side hustle?
• Are you selling an asset?
• Is it debt forgiveness?
• Are there expenses you can take out or reduce?

5. Trying to pay multiple debts at once

If you have multiple debts, don’t try to pay them all at once unless you truly have the capacity to do so. Many don’t, so it’s better to resolve them by identifying the priority levels of each debt.

If you’re owing four people, the best strategy is to focus on one debt at a time. There are two ways to do this:

1. Which one is more urgent?
2. Which one can you pay down to lower your interest rate urgently?

The first method is to arrange the debts in order of priority and start payments from the most pressing to the least.

The second method is to clear the smallest loans first and reserve the biggest for last. Clearing the smallest loans first will give you enough motivation to face the rest.

Taking on more debt to pay off a loan without a clear plan is like trying to put out a fire with gasoline. Plan wisely; don’t aggravate the situation! Share on X

6. Waiting to make more money

I’ve seen instances where debtors claim they are waiting to make more money before paying their debts. They forget that an unserviced loan will attract huge interest and take even more effort to repay.

If you’re in debt and you have the capacity to make payments, do so immediately and as frequently as possible. Every naira paid adds up. When the money you’re expecting finally comes, it will help defray the outstanding balance.

7. Not addressing the root cause of the debt

Debt doesn’t happen overnight—it’s often the result of repeated decisions and habits. To break free from the cycle of debt, it’s crucial to understand how you got there in the first place. Ask yourself:

• Why did you get into debt in the first place?
• Were you trying to fund your consumption?
• Were you feeding a particular habit?
• Were you trying to acquire assets that were beyond your means?
• Were you living above your means?
• Were you trying to keep up with the Joneses?

You need to conduct an honest self-appraisal and address the root cause. What can you do about this? If you need help, please seek help.

If you fail to address the underlying cause, you may find yourself in the same situation as the proverbial man who had leprosy but was treating ringworm instead.

In the next article, I will walk you through the final part of this series, showing you the specific steps I took to pay off all my creditors and fully resolve my indebtedness.