Debt: Understanding The Cycle

by A Guest Author

Debt has a way of taking over your life and making things feel completely out of control. However, there is usually a distinct pattern that people who owe money fall into. This is referred to as the debt cycle and unless you take action, it can continue for the rest of your life. There are three basic parts to this unpleasant cycle. Part one is getting into debt, part two is continuing to stay in debt and part three is the inability to get out of it.

Fortunately, this cycle does not have to continue. In order to escape, you need to understand the parts of the cycle and how to break them:

Falling Into Debt

The biggest problem with the debt cycle is the beginning. It seems harmless at first, taking on a loan or getting a credit card, just this one time. However, it can become a pattern that will destroy you.

If you have not been correctly educated on credit and how it works, you can end up spending too much, rather than living on what you actually have. Even in cases where people understand how debt works, they may just miscalculate or ignore the mounting bills.

Once you lose control, things can really get out of hand. There are many reasons why people fall into debt, but it is important to realize that not stopping the cycle is when it takes over your life. Credit is not extra money, it is merely a loan on what you already have or will have shortly.

Remaining in Debt

While getting into debt might start out slowly, it tends to snowball and before you know it, you have a huge debt and no way to pay it. This is where things get tricky. Interest begins to take over and you can be so busy paying the minimum balance that you never get ahead on the actual amount owed. This is a common problem and it forces people to remain in debt, though they are paying as much as they can each month.

Struggling to Escape

You can ignore the fact that you owe a lot of money for a while, but after a time, dealing with it becomes inevitable and you will need to do something. While some people opt for bankruptcy, this causes issues for years to come. Once the bankruptcy period is over, it's hard building your credit back up from nothing.

Escaping debt requires a major change in lifestyle and a drastic, usually unpleasantly so, cut in spending. Living frugally can be hard, but very necessary in these situations.

Many people who are in debt find themselves sinking into depression. Despite the fact that they are attempting to get out of debt, they may feel as though they are running on a hamster wheel, getting nowhere. This can lead to begging for loans from friends and family or even stealing money in some extreme cases. It is an unpleasant scenario, but there is hope. With a little help and some hard work, you can get out of debt!

About the Post

Jeff Adcock is the president of Veritrans Merchant Services which is a online credit card processing firm headquartered in Houston TX. Click here for more information.

This post was written by A Guest Author

This post was written by a guest author. If you have high quality, useful information to share with students, send us an email or click Write For Us to learn more. And in case you're wondering - yes, you can promote yourself in this fancy author byline.

Leave a Comment

Previous post:

Next post: