Tips For Breaking The Cycle Of Debt

Break The Debt Cycle

You can often feel trapped by your finances. If you’ve been neglecting debt because of your inability to pay it, or you aren’t sure what your payment options are, you might be feeling the pressure of growing financial debt. Unfortunately, some people fall into a cycle of debt in which they pay off their dues but then shortly after fall back into the same spending habits, or fall victim to surprise expenses they haven’t budgeted for. If this sounds like you, speaking with a licenced insolvency trustee is an important step toward understanding what you owe, however you should also keep the below tips in mind to help break the cycle of debt:

Acknowledge the problem

It’s important to understand how you’ve entered a cycle of debt and accept the situation so you can start to work towards financial freedom. Ignoring the root of the problem will make things worse. Being accountable for your spending habits will help motivate you to spend better. It is also important to acknowledge when you may need the assistance of a professional, such as an Insolvency Counsellor, who can help you sort through your options and come up with a financial plan for recovery.

Cut expenses

Budgeting appropriately will help you to see the areas of your life that are costing you more money. You’ll also want to start putting away money in a savings account for unforeseen expenses, and start looking for spending alternatives such as opting for public transit. As well, if you’re paying for expenses like a gym membership that you don’t use, it’s time to cancel it. Budgeting appropriately will provide you with more financial freedom, not take it away.

Pay bills right away

Once you’ve started to get your finances back on track, it’s important to make a habit of paying bills as they come. This will prevent a build up of late fees and ensure that once you’ve reached steady financial ground, you can set up an appropriate payment plan that leaves no bills unpaid.

Involve friends and family

Ensure your family and friends are aware of your new spending habits so they can adjust to your new routine, especially your spouse or those you live with. Alternatively, it is beneficial to have a friend or family member help you to stay on track with your spending.

Breaking the cycle of debt will help you to stop living paycheck to paycheck, and ensure you’re prepared for any costly situations that come your way. It’s also important to reward yourself every so often in a free or cost-effective way. Using these tips can help you to live freely and plan your future responsibly, but if you require more guidance it’s advisable to contact a licenced insolvency trustee to get your finances back on track.

Speak to an expert today.