One of the worst things about being trapped in a debt cycle is you might not even realise you’re stuck there. Credit cards and other personal financial products are such a part of modern life that buying on a credit card, paying the balance when you receive your salary, and repeat seems normal to millions of people.

Realising that this debt cycle is a dangerous thing is hugely empowering, and can give you the inspiration to do something about it.

Here are some steps you can take to help you break yours.

Understand how it happens

There are numerous ways you can fall into the debt cycle, but at its most basic point it usually starts with spending beyond your means, and often buying things you want rather than you need, and using credit to do this. You then see your access to credit as an extension of your lifestyle, but as your debt grows and you’re paying more to clear a credit card in full or part each month, credit can quickly start to seem essential for your day-to-day existence.

Commit Yourself

Breaking the debt cycle is tough, especially if you’re familiar with the feeling of relying on credit for essentials such as food or for paying bills. Committing yourself to achieving this is the first and often the most important step.

Once you’ve committed, it is time to start taking positive action.

“Even the most committed person can struggle to break the debt cycle, and still having the problematic credit card in your pocket all the time isn’t exactly going to help”

Cutting down Spending

As the debt cycle is reliant on you continuing to add more debt on a regular basis, the biggest difference you can make is to cut right down on what you spend. If you want to cut to the heart of the cycle immediately, look to stop spending on anything but essentials.

You might think that’s a big ask at first, but start writing down everything you spend your money on and you’ll fast realise there are plenty of ways you can save.

Utilise Friends or Family Members

Even the most committed person can struggle to break the debt cycle, and still having the problematic credit card in your pocket all the time isn’t exactly going to help. Remove the temptation by giving your credit card to a friend or family member. If you’re accessing credit through online lenders then look to change your password to something you won’t remember, or even close your account completely if you don’t have any outstanding borrowings.

Use Your Savings to Pay the Debt Quicker

Controlling or stopping your spending is a big step, and you can break and escape the debt cycle even quicker by starting to use the savings you’ll now make to pay towards your debt. You’ll also save yourself money by reducing the interest you’ll pay on any outstanding balance.

As you reduce your debt, you will find that maintaining your current spending levels is easy, which should prove a valuable incentive against you falling back into the debt cycle. Once you’ve broken it and you’re out, stay out, and don’t repeat the habits that took you into it in the first place.


Disclaimer:  This article contains general comments and recommendations only. This article has been prepared without taking account of your objectives, financial situation or needs.  Before taking any action you should consider the appropriateness of the comments made in the article, having regard to your objectives, financial situation and needs. If this article relates to the acquisition, or possible acquisition, of a particular credit product you should obtain and consider the relevant disclosure documents before applying for the product.

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