debtYou’ve had enough! The credit card bills, which are well over $1,000 each month, have gotten out of hand and you’ve finally decided to do something about it. But where do you start?

Not all progress is good progress, especially if you implement a debt-repayment plan that will backfire. And there’s nothing worse than working your rear end off to pay off debt, only to notice that the outstanding balances appear to be at a standstill.

Beyond only making the minimum payment each month, here are some of the worst ways to pay off debt:

1. Raiding your Emergency Fund
If you wipe out your rainy day fund to eliminate debt, what will you do the next time financial emergency arises? In most instances, you’ll rely on that same credit card you just paid off to remedy the issue. A better option: instead of touching your emergency fund, ax unnecessary expenses and use these proceeds and any other financial windfalls to accelerate debt-repayment efforts.

2. Credit Card Cash Advances
Thinking you can avoid interest by taking out a cash advance to wipe out your outstanding balance? Think again! Not only will you be hit with a cash advance fee, but an exorbitant APR may also apply. And don’t expect a grace period, either.

3. Payday Loans
If you have less than perfect credit and your finances are in dire straits, you may be considering a payday loan. And why wouldn’t you? There’s no credit check and the cash could be in your hand or bank account in less than 24 hours. Plus, you can extend the due date if you can’t afford to repay the loan balance on time. All you need is a verifiable source of income, bank account and you’re all set. That’s the pitch payday lenders love to give desperate, cash-strapped and vulnerable consumers, but what they don’t brag about is the exorbitant interest rates that accompany these loans. So, if a payday loan is the only way to pay down debt, call the creditor directly and request payment arrangements, instead.

4. Robbing Peter to Pay Paul
Why not shuffle your debt around to eliminate the balances faster? Debt is debt, no matter where you put it. And this approach only works if shift all your debt to a balance transfer credit card and can actually afford to eliminate the balance before the promotional APR expires. It’s dangerous to skip payments on some cards in order to pay more on others since doing so will tarnish your credit rating and land you in the hot seat with your creditors.

5. Title Loans
Do you happen to have a few cars with titles lingering around in the front yard? Why not take out a title loan to wipe out debt? Do so at your own risk, but don’t be surprised when you default on the loan and the repo man shows up. Also, be prepared for the hefty loan origination fees and interest rates that come with the territory.

6. Personal Loans
Unless the interest rate you’re being offered is lower than what you’re currently paying, steer clear of personal loans. And should you decide to go this route, stash your credit cards and forget about them so you won’t end up with even more debt than you started with.

7. Hire a Debt Settlement Firm
If you don’t mind your credit score plummeting so far into the toilet that it’s practically impossible to improve for years to come, debt settlement may be for you. Reasoning: they may encourage you stop making payments on your debts, which could have serious implications for your credit. Plus, you’ll be paying hefty fees you’ll be paying for their services although there are no guarantees that the creditors will accept the offers they propose.

8. Home Equity Loan or Line Of Credit
If you have equity in your home, all you have to do is access the funds through a loan or line of credit. Sounds simple, but it’s a bit more complex than that. In essence, you’ll be increasing your monthly mortgage payment to pay back the amount you borrowed. And if you default on the loan, guess what? Down goes your credit score if a payment arrangement is not made and the unpaid balance is sent to collections. Also, keep in mind that the lender could exercise the right to foreclose on your home.

9. Loans from Family and Friends
Do you have a wealthy relative or childhood friend who has money trees growing in their backyard? They may be willing to loan you the funds to get out of debt, but you’d better be prepared to pay them back in a timely manner or down the drain goes that relationship. And chances are you won’t be able to rely on them again if you get into a serious bind.

10. Retirement Fund Withdrawals
Are you considering a withdrawal from your retirement fund? While it’s a fast way to access cash so you can be in the clear again, it’s also a costly move. But why? For starters, premature distributions are subject to taxation and a 10 percent early withdrawal penalty imposed by Uncle Sam, himself. Furthermore, you’ll be missing out on the benefits derived from compounding interest and possibly putting your financial future at risk for a short-term benefit.

And a retirement loan isn’t necessarily a viable option either since you’ll have to pay an origination fee. Even worse, if you jump ship and can’t afford to pay the loan back, it instantly turns into a distribution and the consequences mentioned above will follow suit.

Kudos to you for making the commitment to get out debt, but remember there’s no one-size-fit-all approach to get there. So, do what’s best for your financial situation and proceed with caution to make your efforts worthwhile.

Have you made any of these debt repayment mistakes? Share your story in the comments so that others don’t fall into the same trap!

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