7. Kidding yourself about a pawn shop "loan"

You might think that taking your fur coats, jewelry or other valuables to a pawnshop is a good way to get fast cash. It's not. If you don't repay a pawn shop loan promptly, you can just as promptly lose those treasured personal items. You'll never be able to enjoy them again or leave them to your kids or grandkids.

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8. Using a debt settlement company

Debt settlement firms tout themselves as a good solution for consumers in debt but they charge high fees, often many thousands of dollars. And after you "settle" your debts — by paying way less than you owed — you wind up with a terrible credit rating and a big bill from the IRS. (The agency views forgiven debts as income and wants you to pay taxes on them.) So if you're up late one night worrying about your bills and you see one of those infomercials promising to help you settle your debts "for pennies on the dollar," do yourself a favor and flip the channel.

9. Filing bankruptcy unnecessarily

Sometime bankruptcy is necessary, like when you have insurmountable medical bills or credit card debt you'll never be able to repay. But since bankruptcy stays on your credit report for 10 long years, making you a financial pariah, it should only be used as a last-ditch option. It shouldn't be employed to wipe out small obligations.

10. Giving postdated checks to creditors

When bill collectors come knocking, they'll sometimes urge you to give them a postdated check if you don't have the cash on hand. That's risky business. Your economic circumstances could change in the future and if you bounce checks, that will just set you back further financially. Plus, unscrupulous creditors have been known to cash postdated checks prematurely.

11. Doing anything illegal

This should go without saying, but you should avoid illegal activity of any kind, no matter how much you want to get out of debt. Unfortunately, people of all ages — including older Americans — have been known to steal, arrange to have their cars stolen or even set their homes on fire to collect insurance money. These actions not only are illegal and morally wrong, but also could cost you a lot more than money. You may wind up in jail, losing your personal freedom. No amount of money is worth that — not even enough money to pay off every last cent that you owe.

Lynnette Khalfani-Cox, The Money Coach(R), is a personal finance expert, television and radio personality, and the author of numerous books, including the New York Times bestseller Zero Debt: The Ultimate Guide to Financial Freedom.

Also of interest: How to raise your credit score. »