6 Steps to Help Stop the Cycle of Debt

Stop the Debt Cycle

Are you caught in a downward debt spiral?

Debt is a vicious cycle, and once you’re stuck, it’s very difficult to get out.

I learned this the hard way when I woke up and realized I was $150,000 in debt, constantly worried about money and was only 23 years old.

That’s not the best way to start out your adult life!

My American dream of owning a home, having a fulfilling career and settling down, turned into a debt nightmare. No matter how hard I tried to get my finances under control, to spend less and save more, the debt just kept growing and the bills kept coming.

For most of my life I was under the impression that everyone has some sort of debt and that debt is “normal”. But that type of thinking is wrong!

Yes, there are good arguments about turning the tables on debt and leveraging them to your advantage, or taking on debt, like a mortgage, since it’s a smart investment in your future.

Sometimes it does makes sense to borrow money, but most of the time it’s not worth it. Experts say your total monthly long-term debt payments – including mortgage and credit cards – should not exceed 36% of your gross monthly income.

Too many of us aren’t disciplined with our finances and it’s time to get honest with ourselves and admit to not thinking clearly. If you want to change your future and end the cycle of debt, here are six steps you need to take!

Step 1: Understand Your Mindset

Before you can successfully stop the debt cycle you’ve created with your finances, you have to think about why you got into this mess in the first place. Before I made the decision to live debt-free, I had to ask myself some important questions.

Why are you in debt? Does your debt consist of consumer debt (like credit cards or payday loans) or secured debt (like a car or mortgage). Perhaps it’s a mix of both, which is a clear sign your spending habits – and financial mindset – is completely out of balance.

Start the process of reviewing the decisions you make and understand the WHY behind them. What caused your financial decisions to be wrong ones?

Whatever your mindset is, knowing the answers will help you avoid these issues and mistakes in the future.

Step 2: Change Your Habits

Once you identify the method behind the madness (and yes, spending more than you earn is madness, it just takes awhile to come to your senses), it will be that much simpler to change your habits. You’ll be able to see where you’re making good financial decisions and enforce them, while identifying the bad ones and stop them.

Of course, changing your habits isn’t easy and it will take some sacrifices on your part. But I can tell you from experience, that making the changes necessary to live a life of freedom and financial security is totally worth it!

Step 3: Go On a Spending Diet

A good way to put an end to your cycle of debt, is to go on a short spending diet. More often than not, your spending habits are to blame for your financial situation, so indulging in more of the same is not the answer.

Challenge yourself to a financial diet and go 30 days without buying any non-essentials or going shopping. Only allow yourself to purchase items that you need, like groceries and gas, along with paying your essential bills – but that’s it!

When I did this, I noticed I didn’t even miss my expensive cable TV and my overpriced gym membership. Once you try it, you too might find you no longer want many of the things you thought you needed. Going on a short spending diet is not only better for your wallet, but for your mind!

Step 4: Set Yourself Up to Succeed

Once you acknowledge and understand your habits, the only way to truly overcome them is by replacing bad habits with good ones. One of my problem areas is eating out and buying fast food. So if I want to save money and spend smarter, I have to substitute eating out with meal planning, grocery shopping and cooking.

But if you really want to overcome this vicious cycle, you have to set yourself up to succeed. For instance, I learned to buy food that’s not only convenient but simple to cook. My schedule is so demanding that if I spent hours making a complex meal plan, I’m likely to give up and go back to eating out again.

Take the extra time to set yourself with a system that really works, otherwise you’ll be right back in the same bad habit.

Step 5: Remove Any Temptations

It’s easier to avoid temptation than to resist it! So if you’re a shopaholic, it’s a good idea to avoid shopping traps, like going to the mall, instead of tempting yourself. It’s much easier and smarter to remove any temptations that keep you stuck in the same bad spending habits.

Breaking free from this cycle not only requires dedication, but also removal of the temptation to fall back into old patterns. Change your habits now and remove any unnecessary roadblocks, so you can ensure your journey to debt freedom will be as smooth as possible.

Step 6: Find Your Inspiration

Once you finally commit to ending your debt cycle and learn to live below your means, you’ll find it’s not easy. In fact, it’s downright hard! There was one moment specifically where I wanted to throw in the towel and give up on my path to debt freedom.

Want to know what kept me going? Finding the right inspiration and motivation.

You have to remember where you’re going, and focus on the end result. Otherwise, it will be all too easy to give up, then you’ll be less likely to try again in the future.

Focus on how far you’ve come, and the milestones you’ve already reached. Make sure to celebrate your accomplishments!

The prize at the end of your journey has to be worth fighting for, to keep you motivated to reach the end. Are you hoping to send your kid to college? Do you want to quit your job and strike out on your own?

Find the goals that inspire you and you’ll have no problem staying the course! It takes years to get into debt and it might take just as long to get out of it. Don’t give up!

What’s the why behind your cycle of debt? Have you found the inspiration for living a debt-free life?

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About Carrie Smith

Carrie Smith is a small business consultant and former accountant. She paid off $14,000 in debt and launched a successful freelance writing career and blog. Carrie now advises online marketers, startups, and virtual teams on how to start, grow and scale their businesses via CarrieConsiders.com. Carrie has contributed to Inc.com and Time.com and has been featured in Glamour Magazine, NerdWallet, Refinery29, Yahoo! Finance, and Redbook Magazine.


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  1. My folks lived in a modest house and my dad was a sculptor. Mom’s best friend’s family had everything even though their income wasn’t high. The first color TV, expensive toys for the kids, etc.  But when someone came by and put sheriff’s notices on their home and all over their yard, that made an impression.  When my husband and I married he still had a small seminary loan.  It was a killer to us as he was grossing $10, 700 a year plus housing and we had a high needs newborn.  (With medical payments still hanging over our heads as well.)  So I couldn’t work.  As a result, we HATE debt of any kind and would rather cut to the bone than go there again.

    • I understand where you’re coming from Olivia. I too HATE debt and would rather scrimp, save or work extra to be able to afford what I need in life. Once I saw how powerful debt was at ruling my income, I never wanted it to have that power again. Good for you!

  2. Living a debt free life is not easy. If you don’t have a strong conviction about it you will waver and lapse back into bad habits.

    • @Luke_1428 That’s so true! Life after debt, is one of the things I’ve written about before and shared my personal fear about slipping back into debt now that I’m debt-free. It takes strong conviction and discipline for sure, which is why changing your habits is vital.

  3. ItMakesCentsUWL says

    RT @GRSblog If you want to change your future and end the cycle of debt, here are 6 steps you need to take: http://t.co/EM2t9N8Q #fb

  4. willisconsult says

    @ptmoney The data presented here is realistic and attainable.