Debt loop: What it is and how to escape it.
posted on Jul 12, 2019 | 303 likes
Debt loop: What it is and how to escape it.
If you end up having to take a new loan in order to cover costs incurred by repayment of other loans… you just might be in a debt loop!
You can begin to imagine what we are talking about.
Finance, like life in general, is often unfair. The richer you are, the easier it’ll be for you to hold on to your money.
The more you’re struggling with debt and budget issues, the worse those issues will become.
Subconsciously, our life forms patterns from what it goes through routinely in order to fulfill certain things.
Yes, one financial mistake or slide, whether it’s something you could control or not, can set you up for an unfortunate financial cycle.
So, what is this debt loop, and how can you escape it?
Let’s get down to it.
So, what is a debt loop?
The introductory part of his post has done justice in trying to define this term; however, we will throw in more light here.
Let’s take a very common example.
Paul didn’t have his house rent ready on time, so when the landlord came for it, Paul had to borrow money from Chinelo with the agreement that he would pay back at a given time.
Somehow, Paul was not able to make the re-payment to Chinelo as agreed.
After Chinelo threatened with the Police, Paul had to take a loan from Damilola to offset Chinelo.
Are you seeing the pattern?
It happens that every time Paul has to fill one hole (financial gap), he has to dig another. Remember that every other day, his daily essentials will definitely creep in, hence, what he needs to cover up will always be more than what he owes.
This is the debt loop.
Now how can you escape it?
1. Accept that you’re in a dept loop
You can’t fix a problem until you acknowledge its existence.
This is not only the first best way to get out of it, denial or not recognizing how serious the problem is, is a major reason why it gets out of control.
While it can be difficult to admit that your finances have gotten out of hand, this is the first step to getting yourself back on track.
2. Plan an escape route
Chances are that you never planned to get into this loop in the first place, well if your goals contradict this, then you have to review your goals, it’s time to make some changes, it’s time to get an escape plan.
Let’s examine Paul again, this time he just got an admission into the University, but instead of choosing courses carefully, he started doing a few random courses here and there hoping to meet the graduation requirements in 4 years.
Well, he won’t graduate.
Now let’s apply that concept to your finances. If you do not have a blueprint that directs your financial activities, you will not make progress.
It’s important to take a good, long look at your finances, review your budget and see if you can find areas where you can downsize to free up some funds to make more sizable payments on your debt.
If there aren’t any places where you can cut back, many times this signals a cash flow problem.
Consider ways to increase your income, whether it’s taking more hours at your current job, looking for different opportunities, or taking on a side job.
Use your extra income to make payments on your debt.
3. Get support:
As we’ve seen above, it is not a palatable decision to admit that you have crashed inside a dept loop, however, you need to understand that sometimes, if you do not get help, you may never come out of it.
You see, finances aren’t just about numbers, there are a lot of emotions attached to money.
Reaching out to a financial expert or someone you trust and confide in, can greatly increase your chances of successfully navigating the hurdles you’re facing.
At Page financials, we provide salary earners with quick loans to sort out their needs – without demanding for any collateral or guarantor.
However, one of the things we do for our customers and prospects is Free consultancy. We do this to help you refocus, make a sound financial plan, and how to achieve it.
All you have to do to access this FREE service is to call us on 016317243 or send us an email to customer@pagefinancials.com