The debt cycle: how it works and 5 tips to leave it behind

All people at one point in their life have had some debt, either with a bank or a family member, and when they do not have healthy finances, paying them can become a problem especially if it is not done on time since it it will generate more interest.

But there are also debts that become healthy if they are paid on time and are liquidated in the established time and even before. Never make the mistake of asking for a loan to pay off a debt as this will only complicate your financial situation even more.

Get rid of your debts. Photo: Reforma

The cycle of a debt are behaviors that people repeat and that cause it to grow more, which will ultimately cause it to become unpayable. For example, borrowing more, spending more than you earn, acquiring a debt to pay another, not considering that when you acquire a loan you have to pay interest on it, use your credit card to pay everything or buy, among other.

If you think you can be in this cycle, we give you 5 tips to get out of it:

1. Analyze your finances

This is the first step to heal your finances, the first thing you have to do is have control of them and for that we recommend preparing a budget where you take into account what you earn and all the payments you make.

2. Make a spending plan

This will help you know how much you can spend according to your income, start by noting how much you pay for rent, electricity, food, internet, pantry, among other basic things. This can help you adjust your expenses and start creating good habits, and above all, not spending more money.

3. Use your credit card moderately

While it is true that a credit card can be of great help, it is best that you use it responsibly, avoid paying everything with it. In the same way, it is important that you keep in mind that everything you pay with it will generate extra interest, so consider it within your expenses.

Keep in mind that if you do not meet your payments on time, you will end up spending more money, which could seriously affect your finances.

4. Do not pay only the minimum of the cards

So that you finish your debts faster, avoid paying only the minimum amount they ask for, if it is within your means, give a little more money, this will help you to pay less interest.

It is important that you review your account statement where all the information of the credit that you are going to pay is detailed, this will help you have a better control of your finances.

5. Forget about credit cards

Credit cards are of great help, especially if they are used responsibly, the problem is when there are too many and debts have been acquired in all of them, since this makes them unpayable.

If in your case you think that you cannot control your expenses and having a credit card can be a bit dangerous for your finances, it is best to finish paying the debts you have and then cancel them.

For more information visit the Credits section.

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