Reducing your debt may be simple, but no one said it would be easy. Depending on what threw you into debt, there could be many issues to address to dig yourself out of your financial hole. Financial freedom requires a plan. Here are some ways that could derail that plan:

Paying off the wrong debt: Some people mistakenly believe that they should pay off their mortgage first because it is an "investment" that steadily appreciates. This is only a good choice if you have already paid off higher interest rate debt and have adequate emergency funds. With low interest rates and tax deductibility, this is often the last debt you want to retire.

Limiting flexibility: Sometimes people facing large debt decide to double up on payments to expedite the payoff. This can actually sabotage your efforts if an unexpected financial crisis occurs. Paying off debt early without maintaining adequate savings can put families on the brink in case of job loss, income reduction, divorce, accident, or illness. Instead of focusing single-mindedly on paying off all debt, today's families need to ensure they are financially sound overall.

Eliminating credit altogether: When individuals launch a full out battle on debt, they often resort to cutting up their credit cards and closing their accounts. However, credit cards are an important safety net when families face job loss or other setbacks.

If you don't have enough cash set aside in an emergency, you can live on your cards temporarily until the crisis subsides. In addition, you need to use credit to get credit. Credit scores are based on evidence of the ability to properly manage revolving debt such as credit cards.

Simply closing your accounts actually hurts your credit score, making future borrowing more expensive. Unless you absolutely have no self control in managing your spending habits, this is a bad idea. A better approach is just not to use your credit cards and live on cash alone while paying off your debt.

Neglecting retirement savings: People are often advised to forgo retirement contributions when looking for cash to pay off credit card debt. This may get the cards paid off more quickly, but the long-term ramifications can be huge. Contributions to tax advantaged retirement accounts are limited, so you can't make up for what you miss this year next year. The opportunity is gone. Any employer match would be lost as well. You can try to make up for lost opportunities once your debt is paid off, but you can never make up for the contributions you failed to make or get back the free money you passed up in company matches, or the value of growth over time.

Raiding your retirement funds: There's only one thing worse than suspending retirement savings and that's raiding what you've already set aside. Withdrawing retirement funds early costs you in taxes and penalties. Not to mention the future tax-deferred returns that money could have made. This approach is often a band-aid cure rather than a long term fix because it usually masks a spending issue and prevents many people from overcoming their debt problems. Forcing yourself to leave retirement plans for one purpose - retirement - can lead you to find real solutions that will ultimately create, rather than destroy, future wealth.

Emergency debt relief: Some people find themselves facing credit card debt or medical bills that total more than a year's salary. They could struggle for years and never pay off what they owe. Many of these folks could have avoided the crisis they're in, but often they're just victims of bad luck, rather than bad choices. Bankruptcy becomes their only option.

The good news is that bankruptcy isn't the credit killer it once was. Those who have declared bankruptcy can get new credit cards almost right away, auto loans within a few months, and reasonably priced mortgages within two years. If you handle your finances responsibly after bankruptcy you can restore your credit score to near-prime status within four years of filing. Bankruptcy shouldn't be your first choice, but sometimes it's the best option among a slew of very bad options.