As a practicing bankruptcy attorney, I’ve seen people make many of the same money mistakes, year after year, time and time again, and I’d like to point a few of those out to you. One very common mistake is to take money out of an IRA to pay off credit card debt. That’s typically a mistake for a couple of reasons: First, with unsecured debt you may have other options for resolution, such as debt settlement or bankruptcy. Second, you’re cashing out your retirement and will probably have to pay taxes and early-withdrawal penalties on that money – in other words, you’ll end up paying more than you owe, and at the expense of your retirement. Furthermore, often it doesn’t solve the whole problem, and so what you’re left with is a tax bill that you generally can’t get out of, instead of unsecured debt, which you may have been able to deal with in other ways.

Another common money mistake involves borrowing money from friends or relatives to get yourself out of your debt situation, or involving a co-signer in some way. Both of these typically make your life a little harder than it was prior to getting the co-signer or friends and relatives involved, for reasons that should be fairly obvious.

Owing money to the IRS is always a mistake, and you want to prioritize any tax bills you may have so as to get them paid as quickly as possible.

Although not a huge mistake, another common money mistake is having more than three credit cards. We’ve had people come into our office who have 20 or 30 credit cards, and that’s a situation that will certainly affect your FICO score negatively, not to mention making your life more complicated. Using overdraft lines of credit is another thing to be wary of.

Those are just some of the most common mistakes we see people making with regard to money and debt. One more that I would point out – and this is something we saw a lot in the 90’s – is refinancing your home to pay off credit card debt, and I would typically advise against that.