How to Break the Debt Cycle

It's not easy to pay off debt. In fact, many people live paycheck to paycheck and struggle to pay their bills. People often find themselves in debt for different reasons, such as unexpected medical bills, purchasing expensive items, poor spending habits and using credit cards to pay for everything. Fortunately, there are ways that you can gain control of your finances and live a comfortable lifestyle. Find out how you can break the debt cycle and gain financial freedom.

Instructions

1

Create a list of your debts. The first step in breaking the debt cycle is to determine how much you actually owe to creditors. So take time to make a detailed list of your current debt, such as the creditor's name, total amount of the debt, monthly payment amount and the due date for each debt.

2

Pay your bills in a timely manner. An effective way to reduce the amount of debt you owe is to pay all of your bills on time. Constantly skipping payments or making late payments to creditors can be very costly. In addition, if you are currently behind on your bills, try to work out a payment plan with each creditor and be sure to stick to the new payment schedule.

3

Make the appropriate adjustments in your life. For instance, try to reduce your living expenses so that you can have more money to pay down your debt. Get a roommate or move into a smaller apartment. You should also make substitutions when you can, such as purchase generic products instead of name brand items, carpool to work and cook your meals instead of dining out at restaurants.

4

Find a way to increase your income. Maybe you can earn more money on your job by working extra hours every week--or perhaps you can find a part-time job to supplement your income. There are a variety of creative ways you can earn extra money in your spare time, such as babysitting, tutoring students, running errands for family and friends, blogging, taking surveys online, mystery shopping, pet sitting or finding a paper route job.

5

Open a savings account. Quite often, people accumulate excessive debt because they do not have enough money saved up for unexpected emergencies. So decide how much money you can set aside from each pay period and start depositing that money into your savings account.

6

Consolidate your debt. Many people choose to consolidate their debt to lower their monthly repayment schedule and to save money. There are a variety of financial institutions that offer debt consolidation loans or balance transfer credit cards to help consumers consolidate their debt. Speak with a certified credit counselor or debt specialist to learn more about debt consolidation.