How to break the cycle of debt
September 24th, 2015 • 2 comments
Closing the financial gap of getting out of debt and into savings and positive territory can become a downward spiral.
We’ve all been here at some point. Struggling to pay the next mortgage or rent repayment, credit card bill or living in overdraft. But how do we get out of the debt trap?
Here I share my top tips on breaking the cycle:
1) Change your mindset
Once you understand the why behind your debt, you can move forward and focus on how to break this cycle. Asking yourself questions such as was this debt out of your control? Was it a lack of planning and prioritising your spending? Or are you just disorganised and don’t keep a budget?
Once you figure out why, you can begin to change your relationship with money starting right now. While you can’t change the past, you can find new ways to better prepare a great financial future.
2) Stop “poor” spending habits
You can’t create a positive financial foundation with poor spending habits. Do you spend beyond your means? Are you an impulse purchaser?
There are also many things that you can reduce to ease financial pressure. Can you reduce your mobile phone bill? Can you find better insurance quotes? Can you cancel the gym membership you never use?
Once you can get clear on your spending habits, and make better choices, you can make the necessary changes to spend less and save more.
3) Find new income opportunities
Multiple income streams can increase your earning power and get you out of debt quicker. It can also allow you to diversify your cash flow and even save and invest while breaking free of debt. A few hundred dollars a week extra can have a massive impact on your overall personal finances.
Debt cycles don’t solve themselves, so you’re going to need to buckle down and make some changes If you are serious about breaking the cycle of debt, now is the time to invest in yourself and your financial future. The sooner you start, the less debt you’ll have to deal with.
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Hi Ryan, I don’t have a question but I just wanted to say that this article was great.
Thank you, Liz!