How to break the cycle of debt

As a society, we are offered debt to encourage us to BUY IT NOW. It is far too easy to take out a loan or get a credit card in the UK. We are persuaded to buy now, pay later and for many, the pandemic hasn’t helped household debt levels.

“The Money Advice Service estimated that 8.3 million people in the UK were over-indebted and that 22% of UK adults had less than £100 in savings – making them highly vulnerable to a financial shock such as job loss or large, unexpected bills. This type of financial shock is exactly what the pandemic created: by May 2020, 4.6 million people had accumulated over £6bn in debt and arrears.”

Source: The Guardian:

Being in a cycle of debt is a habit that is difficult to break

Following the financial crisis in 2008, interest rates have been at historically low levels, meaning that debt has been cheap for an unprecedented amount of time. We are not used to debt being expensive or as costly as it once was, which is dangerous because we can become complacent about the potential risks of the future rising cost of debt.

Even if you take advantage of a 0% interest rate offer, you still need to repay this debt at some future point. Repaying debt after you have experienced the pleasure of your purchase can be painful and demotivating.

Don’t get me wrong, debt can be useful and when managed well, it has its place. Mortgages are a great way to buy into the property market. I use credit cards each month to get points for my purchases and build my credit score, but I ensure I repay my credit card off as soon as it's due, in full.

Getting out of debt can be challenging.

Finding the motivation to repay debt can be difficult. This is why I am not a big advocate of using fast credit to fund your lifestyle. In my opinion, you are better off saving for the things you want and living within your means. This is why I am on a mission to help more people change their habits and become savers. If you save you can become financially resilient and have the things you want in life.

Before you can start to save you first need to hit reset, break the cycle of debt and repay those outstanding balances.

Here are my top tips to help you to become free of debt

1: Take control

Being in debt can lead to a feeling of shame, which then has other negative knock-on effects such as not looking at your bank account. When you don’t know what is going on with your money day-to-day, you are likely going to overspend, which will lead to more debt.

The first step is to get into the habit of checking your bank account balance to understand what is going on with your money so that you avoid getting into any further unwanted debt.

Just start afresh. Create a new healthy habit of regularly looking at your money flows. Before you buy that next item, make sure you can afford it.

2: Work out what debt you have

You then need to understand exactly what debt you have. What do you owe, what amounts are you paying as a percentage, and the monetary amounts this equates to. Write it all down. Get clear on how much you owe.

3: Work out your income & expenditure

In order to understand clearly what money you have to spare to repay your debts, you need to work out what you have coming in and out each month. That way you can work out how much you can afford to repay off your debt each month.

You can download my monthly budget template here:

4: Work out how you will repay your debt

There are two ways you can repay your various balances.

  1. Highest percentage method first: this is when you choose the debt with the highest balance and repay that debt first.

  2. Snowball method: This is when you choose the debt with the lowest balance and repay that first, so the balance reduces quickly like a snowball effect. This method can be the most motivating to get started.

5: Debt consolidation

Multiple sources of debt can be overwhelming and a bigger challenge to overcome, so you can look to consolidate your debt and create a repayment plan.

6: Work out when you will be debt-free

You can work out when you will be debt-free. This can be super motivating knowing there will be a date that you can be debt-free. If you want to repay faster, you can then work backward and work out an amount to repay your debt quicker.

There are handy apps you can use that will work out all of this for you!

Getting on top of your debt will lead to life-changing financial habits that will help to you turn the tide and start creating wealth. If you are debt free you are more likely to save and invest!

If you are struggling with managing your debt, get in touch, let’s have a chat if this is something you’d like to work on with me one-to-one.

There is also free support, like Citizens Advice. Remember companies would rather you repay something, so even if it feels impossible, speak out and get help.

Work on your relationship with money and work with me. Email me at to arrange a discovery call.

Download my new Guide to Financial Freedom here:

Join my free community for ambitious people in business, just like you, where I will support you to focus on your finance and find your freedom.

It's time to focus on your finance and find your freedom.

28 views0 comments