The debt cycle – it’s a matter of life or debt

Spend, debt, recover, repeat, does that sound familiar? Do you feel like a hamster in a wheel desperately trying to keep on top of your finances but getting nowhere?

A debt cycle is a very common problem.

Credit is now used on any number of things such as holidays, items for the home, clothes etc. After payday, a lot of people pay monthly payments on their credit cards, loans or catalogue instalments having committed themselves to borrow money. If managing that process isn’t done well, a debt cycle can develop. 

For some people, before they reach their next payday, they have little funds left in their account and in some cases, they need to borrow even more on their credit cards. Due to high-interest charges, their debts gradually increase over time.

The debt cycle…
If you’re in it, you need to get out of it – the debt trap is destructive. Does it seem too difficult or impossible? Read on…

It’s a life or debt situation…

Being in a cycle such as that is a life or bad debt situation. You can get your financial life back on track by taking the right steps in the right direction or you can spiral down into a continual state of worry whilst your debts get bigger. Watching those debts inflate like a beach ball can put a strain on your relationships and your health.

Thomas Cook

In September 2019, we witnessed 21,000 European employees lose their jobs at Thomas Cook due to debts of over 1.6 billion pounds! Thomas Cook was responsible for thousands of people having their lives turned upside down, that of their employees and their customers.

Families losing their holidays but even worse, families losing their livelihood. Hopefully, those that have lost their jobs have put away some emergency funds to cover themselves whilst they find new jobs but a lot of them will find themselves unemployed for a while and potentially getting into or even more debt.

From that very unfortunate situation, we hope it has motivated people to think about their financial situation because none of us knows what tomorrow will bring.

Good debts and bad debts…

One of life’s goals should be to stay out of bad debt and put away an emergency fund for unemployment or being unable to work due to health issues. Some people live in the hope that they will win the lottery, get a higher paid job or inherit buckets of money and you never know, it might happen but you can’t sit and wait whilst the debts pile up around you.

Debts for mortgages or student loans are normally good investments for the future but when you can’t pay the bills it can become a very stressful situation.

Here are some tips that should help you get more control over your finances if you are struggling with debt:

  • Seek debt help
  • Have a realistic view on your income and outgoings
  • Be disciplined
  • Don’t spend more than you bring in
  • Track all your spending
  • Pay bills online
  • Avoid borrowing on credit cards
  • Balance your accounts
  • Recognise signs early that you could be getting in over your head
  • Acknowledge that you need to take steps
  • Understand your finances – what have you got, where is it?
  • Work on solutions
  • Take on another job for a while for extra income
  • Steer clear of payday loans or toxic loans
  • Create a spending plan
  • Make changes to save money, for example, cycle to work or make your lunches
  • If you need a loan, get the right loan – take advice

REMEMBER – lenders don’t have your interests at heart.

Don’t give into debt, time and time again – break that cycle!

Need help? Contact us today.

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