Stop the Cycle of Financial Debt and Future Mistakes

Cycle of debt

One day I woke up and realized I was $150,000 in debt and was constantly worried about money. I didn’t envision my life to be like that at only 23 years old, but that’s what happened. Now that I’ve started getting my debt under control, I found I have another financial worry.

I fear that when I become completely debt free, I’ll slowly find myself back in debt because I wasn’t being careful. For a good part of my life I grew up thinking I will always have debt payments and that debt is “normal”. It can take a lot of effort and time to reverse that wrong type of thinking. If you want to change your future, and avoid future financial disasters, these steps will help you along the way.

Step 1: Reassess your decisions
Before you or I can successfully move forward with our finances, we need to think about how we got into this mess in the first place. More than likely it was small daily decisions, that added up over time. Begin the process by reviewing the decisions you made, think about HOW you got into so much debt. What caused your financial decisions to be wrong ones? Maybe it was emergencies that wrecked your finances, or accepting that small amounts of debt are okay. Whatever your money mindset is, the answers can help you avoid the same issues in the future.

Step 2: Remove the temptations
After analyzing your past decisions, I’m sure you found some of the answers consisted of temptations. Maybe you enjoy shopping, eating out or a daily trip to the coffee shop. Whatever your “achilles heel” is, the sooner you acknowledge it, the better success you will have at dealing with it. It’s easier to avoid temptation than to resist it. If you’re a shop-aholic, you might want to avoid shopping traps like the mall entirely, instead of tempting yourself by window shopping.

Step 3: Replace bad habits
Once you acknowledge your bad habits, the only way to truly overcome them is by replacing them with good ones. If I want to stop eating out every night, I need to go grocery shopping more often and buy food that’s easy to cook. By having convenient food available, it will reduce my chances of stopping for fast food. If I vowed to just stop eating out, without replacing it with something better, I would either starve, or find myself right back in the same bad habit.

Step 4: Remember where you’re headed
A great way to stay on track and avoid future debt is to remember where you’re going, the end result. All of us will quickly lose steam if we don’t have a purpose or reward at the end of the sacrifice. It has to be worth fighting for, to keep us motivated. Are you trying to become debt free so your kids can go to college? Do you want to start investing to provide a better retirement future? These are the goals that will inspire you and they will be so much more rewarding once they’re reached.

Putting it all together
Once you break the mental chains of debt, remove the temptations and replace them with good habits, then you will be able to see through the doubt and remember where you’re headed. It takes years to get into debt and it could take just as long to get out of it. As long as you and I remind ourselves of these steps, we will be able to become debt free and stay that way!

This article is part of our Budgeting Tips Resource Center.  If you’re looking for additional information about budgeting tips, be sure to pay a visit!

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