Home Debt Management 3 Steps To Break Out of The Debt-Cycle

3 Steps To Break Out of The Debt-Cycle

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What would life be like if money wasn’t running you around in circles? How would overcoming the challenges that come with debt, change the way you live and think? What kind of jobs would you seek?  Would you go back to school? Make healthier choices?  Take vacations? Buy a home? Invest in the future?

I know what you’re thinking, “That stuff is fun to dream about and all, but making it through this week mostly intact would do just fine.” Yes, making it through the week is necessary, but the progress doesn’t have to stop there. I want to clear up something that might keep you from dreaming about the future: just because you might not be able to see the light at the end of the tunnel of debt, doesn’t mean you should stop walking in that direction.

Here are 3 Steps that can help put you on that track:

1)  Create a Vision

Imagine you could sweep away the creditors, as if you’d won the lottery.  What would you do? How would it feel? Create a vision for yourself of what a debt-free life would look and feel like.  Keep adding to this list as you move forward. A vision provides the direction you want to move in. If you let it, this incentive can win out against the cycle of repeating old habits.

2)  Determine The Obstacles

What are the obstacles that are preventing you from achieving the vision you created? It might be bills that are hard to pay, credit issues, not working in the field you’d like to be in, car repair expenses, health problems… List out any of the barriers you face, even if you think they’re ones you’ll never overcome. Half the battle of achieving a goal is coming to terms with the fact that it likely won’t be a straightforward process. It’s more like the picture below.

 

3)  Start With Small, Achievable Steps

What are the possible solutions to the obstacles from step 2? Break them down into smaller steps that are easily attainable. For example, if you want to go back to school you might look into a matched savings opportunity like an IDA (Individual Development Account). Solutions for paying of a debt quicker could include: paying a little more than the minimum or breaking-up your monthly payment into two smaller ones. Remember to think practically. Using credit to buy what you need and hoping to win the lottery is probably not an achievable solution. Reference our Goal Template for more help with creating these steps.

For more Financial help in dealing with debt collections and loans, check out our free tools available to you such as how to set up a payment plan and the in’s and out’s of debt-settlement.

 

 

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