debt

6 klutzy steps to debt mismanagement

Rob Peter to pay Paul
Rob Peter to pay Paul © Marco Scisetti/Shutterstock.com

Rob Peter to pay Paul

A good way to mismanage your debt is using one debt source to pay off another, says Caralyce M. Lassner, a bankruptcy attorney in Michigan.

She suggests that consumers stay away from taking cash advances on their credit cards or using a credit card to make a mortgage payment. Those are signs that a consumer may be headed toward serious trouble.

Similarly, Cunningham says it's not a good strategy to use money that's been earmarked for rent or utilities to pay off a creditor. "If your creditors are happy but your lights have been turned off, you're backwards," she says.

She says it's bad debt management to use one source to pay off another, the "robbing-Peter-to-pay-Paul syndrome. Peter gets tired of it."

advertisement

Show Bankrate's community sharing policy
          Connect with us
advertisement
advertisement

Debt Adviser

Don't be seduced by this debt plan

Dear Debt Adviser, I have about $50,000 of debt on credit cards. My credit rating is still high. I am thinking about a debt consolidation loan. Will that adversely affect my credit rating? -- DT Dear DT, The cliche... Read more

advertisement

Connect with us