4 Steps to Getting of out the Debt Cycle

Do you want to pay off debt and learn how to live debt free? If you’re living in a cycle of debt, it may seem impossible. But there are steps you can take to get your financial future in check.



A debt cycle is continual borrowing that leads to increased debt, increasing costs, and eventual default. At some point, the interest costs become a significant monthly expense, and your debt increases even faster.


If you’re desperate to break the cycle of debt, you’re not alone. 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. But realizing that this debt cycle is a dangerous thing is the first step to financial freedom. Here are four steps to help get you on your way…

1. Understand the Process

Understanding exactly HOW you got into this debt is the best starting point when trying to break the cycle. Not only will you understand the steps to financial recovery, you’ll also be aware of how to prevent it happening again in the future.


Start by getting a good understanding of where you’re at financially, and your every day habits that led to the debt. 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. By being aware of your habits you’ll be able to see patterns of your spending behavior and you can begin to make your plan.


A good way to track your expenses is by going through your bank statements and credit card bills CAREFULLY for several months to make sure you include irregular expenses as well as your usual monthly outgoings. Adding up your total debt helps you gain control of your finances, instead of feeling like your debt is controlling you.

2. Create a Budget

The hardest part of breaking the debt cycle is creating a balanced budget to use going forward. Start with all of your actual needs, like housing and food. Then look at other expenses, and see what fits. Ideally, you want to budget for future goals, but getting out of debt needs to be a more urgent priority. Using a budget planner will help this process, there are plenty of great (and free) online budget planners, check them out here.

3. Stick to the Budget

This sounds easier than it is, but it’s a necessity. The best way to do this is to hide/cut up your credit cards and do all of your spending with cash. Once the money runs out, you stop spending. Seeing the money dwindle as the days go by is a helpful reminder that you’re done with your days of accumulating debt.


If you like the convenience (and automatic tracking) of spending with plastic, use a debit card linked to your checking account or a prepaid debit card that doesn’t allow you to rack up debt.

4. Start Paying off Your Debt

Now is the “fun” part: Paying off your debt can lessen your stress levels, allow you to have more money to put towards something else (such as an emergency fund), stop paying interest fees, and more.


You’re final owing number may be frightening to see, and feel unmanageable at first, but you just have to take the first step and start paying it off.


As you reduce your debt, you will find that maintaining your current spending levels is much easier, 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.


This article was brought to you by Total Loan Company – a highly rated lender offering a personal loan online in the states of Illinois, Missouri, South Carolina and Utah.

The TLC team has a long history of working in the consumer finance industry. Most of all we understand the challenges facing our customers and their families. We know there are times where you may need an installment loan to get you through a tough financial time. TLC is here to help, contact us here today.