For many, debt isn’t just an obstacle. It’s a lifestyle. Once you fall into debt, it can be hard to pull yourself back out of it. Debt leads to borrowing, which leads to interest and more debt. And before you know it, you’re trapped in a vicious debt cycle.
Fortunately there is a way out. Follow the five steps below to get out of your cycle of debt and achieve financial freedom.
How to Escape a Debt Cycle
Step 1: Save up an emergency fund.
Your first thought is probably to throw every spare dollar at your debt. But one of the things that keeps people locked into a debt cycle is surprise expenses such as a car repair or medical bill. Before fully tackling your debt, build up a small emergency fund. That way your debt payback plan can remain uninterrupted by minor emergencies.
Step 2: Consolidate debt and transfer it to a low (or no) interest rate.
There are a number of credit cards that offer low or even no interest rates for a select period of time if you transfer your debt to them. Doing this can free you up from interest payments that keep you trapped in a debt cycle. If possible, consolidate all of your debts into one loan or credit card.
Step 3: Pay more than the minimum.
Pay more than just the minimum on your balance each month. You’ll pay less in interest and will climb out of your debt cycle faster.
Step 4: Live on a budget.
A key to breaking the debt cycle is maintaining a pattern of predictable spending. Create a budget so you know how much you’ll be allocating each month to food, bills, gas, and other necessities. And of course, make sure that budget is within your means.
Step 5: Pay with cash.
Stop using your credit card entirely. Use cash or checks for all purchases to ensure you are only spending the money you have now.
Break the debt cycle at Carolina Cash Fast
Carolina Cash Fast is where you can get the loan you need to help you get started on your journey to breaking the debt cycle and finding financial independence. Get a cash advance in Charlotte or any of the Carolina Cash Fast locations near you and take the first step toward a debt free life.