How to Break Your Debt Cycle


Debt is usually caused by getting caught in a cycle of debt, and before you can eliminate it, you first need to break that cycle.

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.

Realizing that this debt cycle is a dangerous thing is hugely empowering, and can give you the inspiration to do something about it. Unlike the old Nike commercials, you can’t Just Do It when it comes to debt.

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 moneylenders then close your account completely once 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.


By Joel Lim

Starting out as a lifestyle writer, Joel currently share insights on carefully saving money, investing, finance because the little things matter in achieving financial freedom.

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