The mistake people make that keeps them in debt

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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 they barely make a dent in their balance and it continues to accrue interest, making it even more difficult to fully pay off the debt.

For others, however, they might go to great lengths to reduce their debt balance, but then they fall back into debt and their balance increases. Then it remains for them to repeat the movements of lowering their balance.

These experiences can be frustrating and exhausting, and leave many people feeling like they can never break the cycle of debt despite positive habits like making monthly payments on time.

According to Paco de Leon, author of “Finance for the People: Getting A Grip On Your Finances,” our subconscious habits can often present a problem when it comes to staying out of debt for good. And not acknowledging and dealing with this can keep us trapped in this cycle of paying down debt only to engage it again.

“It’s important to note that everyone will have their own personal circumstances that will ultimately be the reason their debt cycle continues, and it’s everyone’s responsibility to understand what’s going on,” de Leon says. “For some it’s because they don’t make enough money and there are a lot of circumstances that outweigh all of their efforts. And there are people who deal with trauma that they may not have had. to be unaware.”

For example, de Leon tells the story of a woman who grew up in a home where her parents were always fighting. It was stressing her out and to deal with that stress she was going online and shopping. So even as an adult, she found that whenever she was really stressed, she turned to retail therapy and used shopping to relieve her anxiety.

For someone in this situation who has racked up a lot of credit card debt while shopping, it wouldn’t matter much in the long run if they raised their salary or changed jobs to pay off their debt; their subconscious need to go shopping whenever they’re stressed will keep them from spending too much on their credit card, no matter how much balance they pay off and no matter how much their income.

Instead, someone in this situation should find another way to deal with stress that doesn’t involve shopping. By finding another way to deal with stress, they can rely less on retail therapy to alleviate these feelings. And by spending less, their credit card balance might stop growing and they can pay it off sooner.

Getting to the Bottom of Your Subconscious Habits Around Debt

“When people don’t understand the circumstances that put them in debt, they fall victim to it again,” says de Leon.

She recommends journaling as a great way to start uncovering some of your beliefs and habits about how you spend money and use debt. Hiring a coach and discussing debt and trauma with family members and loved ones can help you understand how some of your habits may have formed and what you may need to do to overcome them.

And while tracking your spending can often seem daunting or stressful, it can be an effective way to get a clear idea 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 they can automatically track and categorize your spending for you – in other words, you won’t have to. no need to meticulously go through every bank statement to find out where your money is going. Tracking your spending can make it easier to connect the dots when you notice higher than usual spending to identify what triggered it.

If you think carrying a lot of debt has been the source of much of your financial stress, there are ways to minimize your balances and start feeling more in control. Balance transfer credit cards, for example — like the Citi Simplicity® Card or the U.S. Bank Visa® Platinum Card — allow you to transfer the balance from one credit card to a new card and pay off as much as you want. can with an interest-free launch offer. This can be a game-changer for people who feel that their credit card interest charges are eating away at their monthly payment and preventing them from paying off their balance quickly enough.

But if you have different types of debt that seem to be spiraling out of control, you can use a personal loan to consolidate them into one neat monthly payment, often at a lower interest rate. So, let’s say you take out a loan like the LightStream Personal Loan or the SoFi Personal Loan: you’ll request a specific amount that’s enough to cover the total of all your debts, and the lender will send a specified amount to each of your creditors to pay off those debts. Then you will only be responsible for repaying the personal loan in the form of fixed, equal monthly payments plus interest. This can sometimes be more feasible for those who feel that managing multiple monthly payments to multiple lenders is overwhelming.

There are also other, more personalized ways to get help with the debt you are carrying. A Certified Financial Planner (CFP) might also be able to analyze your spending habits and identify patterns or areas for improvement that you may not have considered yet. You can use Zoe Financial to find independent CFPs and trustees who can help you with specific debt issues.

At the end of the line

Debt-related issues are often more than not earning enough money to pay off your balance each month. In some cases, the habits we have unconsciously formed are the root of the persistence of our debt cycle. But over time, keeping a journal, discussing your debt and your traumas, using available financial products, and seeking help from a financial professional can help us better understand our situation.

Editorial note: Any opinions, analyses, criticisms or recommendations expressed in this article are those of Select’s editorial staff only and have not been reviewed, endorsed or otherwise endorsed by any third party.

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