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Home » 5 Signs You’ll Never Get Out of Debt and What To Do About It

5 Signs You’ll Never Get Out of Debt and What To Do About It

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Get Out of Debt

Debt is easy to come by and hard to remove. If you’re one of the thousands of people struggling to get out from under their debt, then you first need to understand the mistakes you’re making that keep you from becoming debt-free.

Start by checking out Credello’s debt guide to learn how you got here and what strategies are available to get back under control. Once you’ve done that, consider these five signs to see if any of them sound like you. If they do, don’t worry, we’ve included a few tips for how you can stop making these mistakes so you can become debt-free. 

1. You spend more than you earn

The easiest way to get out of the cycle of debt is to ensure there’s always money left over at the end of every month. By spending more money than you earn, you’ll be left scrambling to cover both your regular bills and any emergency bill that comes along. 

If you’re constantly unable to make ends meet and have to rely on your credit cards, there are two solutions: spend less or earn more. While they sound simple, in reality, it can be difficult to make the necessary adjustments to either cut expenses or find multiple streams of income. Whether it’s cutting back on take-out or spending the weekends doing gig work, whatever you do should be doing something to change your current financial situation. Start with what feels the most effortless for you and build from there. 

2. You accept debt as a constant part of life

Many people don’t learn good financial strategies in school or from their families and will be conditioned to accept that debt and interest are just part of life. If that’s the reality you accept, why would you ever work to have a different life? While it’s true that lots of people struggle with debt, that doesn’t mean it’s a reality for everyone. In truth, those who opt to live debt-free usually can maintain a better grasp on their finances, which allows them to do things that enhance their quality of life like retire, travel, start a new business, etc. 

If you’ve spent most of your adult life accepting debt as a way of life and paying interest as just another bill, it’s time to stop. You don’t need to live your life weighed down by loans or credit cards. Treat yourself better by making it a priority to become debt-free.

3. You see credit cards as extra money

Your credit lines should not be used as an extension of yopur income but rather as a way to cover expenses temporarily. If you have difficulty keeping them separate, then put your credit cards away and either use a debit card or cash for your regular purchases. Keeping your cards available but not easily accessible will make you start to realize the true purpose of credit and stop using it for impulse buying.

4. You never make more than the minimum payment

If you’ve ever looked at a credit card statement, then you’ve most likely seen a table that lists the amount of time it will take you to pay off your debt if you only make the minimum payment. This will typically show payment timelines of years, sometimes even decades! So, ask yourself, how long are you willing to keep paying for that shirt you wanted today? 

If you’re able to increase your payments by as little as $10 or $25, you’ll shave years and hundreds of dollars in interest off the timeline of you becoming debt-free. While it’s best to pay off your credit card in full, even $10 extra is better than just the minimum.

5. You don’t keep track of your finances

If you don’t know how much you’re spending, you’ll never be able to get ahold of your finances. Start by creating a spreadsheet that lists every category of expenses, including bills, groceries, gifts, and other regular purchases you make. Track every cent that goes out and start to look for patterns that show where most of your money goes.

Once you start to understand how money leaves your life, you’ll be able to get a grasp on your spending habits and take intentional steps to stop the cycle of debt. 

The bottom line

Getting out of debt takes time, but that doesn’t mean it’s not worth doing. The first step is realizing you need to make a change because you deserve a better quality of life. Create a plan, go slowly, and celebrate every small win. The more diligent you are with small changes, the higher likelihood you’ll be debt-free soon.