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Paying off debt is easier said than done. Some people may only be able to pay the minimum amount required each month – this means that they hardly negatively affect their balance and continue to accrue interest, making it difficult to pay off the debt in full.
For others, though, they may go to great lengths to achieve a lower debt stock—but then they fall back into debt and their credit increases. Then, they are left to go through the motions of lowering their balance again.
These experiences can be frustrating and stressful — and they can make many people feel unable to break the debt cycle despite positive habits like making monthly payments on time.
According to Paco de Leon, author of Finance for People: Take Control of Your Money, our unconscious habits often present a problem when it comes to staying out of debt for good. Not acknowledging it and dealing with it can keep us trapped in that cycle of debt repayment only to take on again.
“It is important to note that each person will have their own personal situation that ends up being the reason for their continuing cycle of debt, and it is everyone’s responsibility to know what is going on,” de Leon says. “For some, it’s because they don’t make enough money and there are too many circumstances that overwhelm all of their efforts. And there are some people who are dealing with trauma they may not be aware of.”
For example, De Leon shares a story about a woman who grew up in a house where her parents always quarreled. This stressed her, and to deal with this stress, she was going to go online and do some shopping. So, even as an adult, she found that whenever she was feeling really stressed, she turned to retail therapy, and used shopping to relieve her anxiety.
For a person in this situation who has accumulated a lot of credit card debt by shopping, it will not matter in the long run if he increases his salary or changes jobs to pay off his debts; Their subconscious mind’s need to go shopping whenever they are feeling stressed will cause them to overspend on their credit card no matter how much balance they pay, and no matter how much they earn.
Instead, someone in this situation will need to find a different way of dealing with their stress that does not involve shopping. By finding a different way to deal with stress, they may rely on retail therapy to a lesser degree to relieve those feelings. As a result of spending less, their credit card balance may stop increasing and they will be able to pay it off sooner.
Getting to the bottom of your subconscious habits regarding debt
“When people don’t understand the circumstances that drove them into debt, they fall victim to those circumstances again,” explains de Leon.
She recommends journaling as a great way to start revealing some of your beliefs and habits about the way you spend money and use debt. Hiring a coach and discussing debt and trauma with family members and loved ones can help you see how some of your habits have formed and what you may need to do to overcome them.
And while tracking your spending can often be stressful or stressful, it can be an effective way to get a clear picture of where your money is going. Apps like Mint or You Need A Budget (YNAB for short) connect to your bank account and credit cards so you can automatically track and categorize your spending — in other words, you don’t need to meticulously comb through every bank statement to see where your money is going. Tracking your spending can make it easier to connect points when you notice higher-than-normal spending to determine why.
If you thought that carrying large debts was the source of much of your financial stress, there are a few ways you might seek to reduce your balances and begin to feel more in control. Balance transfer credit cards, for example – such as the Citi Simplicity® card or US Bank Visa® Platinum card – allow you to transfer the credit card balance to a new card and pay off as much as possible with the no introductory interest offer. This can be a game changer for people who feel that their credit card interest charges eat into their monthly payments and prevent them from paying their balance fast enough.
But if you have different types of debt that feel like they’re spiraling out of control, you can use a personal loan to bundle them all into one neat monthly payment, often at a lower interest rate. So, let’s say you take out a loan like LightStream Personal Loan or SoFi Personal Loan: you will apply for a specified amount that is enough to cover the total of all your debts and the lender will send a specified amount to each of the creditors to pay off those debts. After that, you will only be responsible for repaying the personal loan in the form of fixed and equal monthly installments plus interest. This can sometimes be more doable for those who feel that managing multiple monthly payments to multiple lenders is overwhelming.
There are also other, more personalized ways you can get help when it comes to the debt you carry. A Certified Financial Planner (CFP) may also be able to analyze your spending habits and identify patterns or areas for improvement you may not have considered yet. You can use Zoe Financial to find independent, trustworthy third parties who can help you with specific debt concerns.
Debt-related issues are often more than not making enough money to pay off your balance each month. In some cases, habits that we have unconsciously formed are the root cause of our continuing debt cycle. But over time, journaling, discussing debt and trauma, using available financial products and seeking help from a financial professional can help us understand our circumstances on a deeper level.
Editorial note: The opinions, analyses, reviews or recommendations contained in this article are those of the editorial board alone, and have not been reviewed, approved or otherwise endorsed by any third party.