6 Reasons You are Still in the Debt Cycle (2024)

Overview: The first step to breaking out of the debt cycle is to know WHY it's happening. Here are 6 possible reasons. You can change your habits today!

I am NOT a debt success story — YET. Don't you sometimes get discouraged reading all the stories of people who paid off a gazillion dollars in less than three months, and you're like, “I've been working at this for YEARS now and don't seem to be getting anywhere”? I know I do. But the first step to getting out of the debt cycle — the pattern of paying down debt and then building it up again — is to know the reasons why we're stuck there.

Obviously there are some perhaps unavoidable reasons why we end up struggling with debt. There may have been a job loss or income reduction, or perhaps a medical emergency. I get that these situations are usually unexpected and can really cause problems for our financial picture. But I'm not talking about those today.

Today I'm talking about why we go into debt or struggle to pay off debt when we truly do have enough money to get by. We don't have any huge bills or unexpected financial obligations; yet we still have trouble living within our means. Our debt payments have become stupidly large. We can still pay them — sometimes barely — but if we didn't have them, life would be sa-weet. For some reason, though, we just can't seem to get out of that debt cycle. I think this is a pretty common situation.

Why are we stuck in the debt cycle?

I know that in my case, it's a combination of habits/attitudes. In fact, I've exhibited every one of the following behaviors at one time or another. See if you can find yourself in any of these repeating debt cycle scenarios:

1) Seeing spending money as a cure for depression. Usually I don't go out and spend a bunch, but a new top from Loft's clearance rack is really a great pick-me-up! At least temporarily… I rationalize the guilt by claiming that the price is so good; but for that very reason it can be difficult to stop at just one… so yea. My mom used to have a saying that when you were out of money, that's when you should go out and buy a hat. Yikes! Obviously doing this is very short-sighted. If the money is in the clothing column of the budget, then fine. But in my case it most often is not (what's a clothing column?). So what eventually happens is the feeling of depression is actually made WORSE, because now there is less money to pay for what is truly needed. It can become a never-ending spiral.

2) Justifying current spending with a future windfall. Can you say “I can buy this with my credit card in March because in April I will pay it off with my tax refund”??? We've all done it. But then what happens in April? There are other uses for the refund money, and the credit card is only requiring the $25 minimum payment… sigh.

3) No savings. This is because we spend everything we make. We live right AT our means, not below them. Then when an “emergency” comes up (more on this in #4), we use the credit card to pay for it.

4) Thinking I need it NOW. This refers to our definition of an “emergency.” Most things we really can wait for; we just don't think we can. We don't want to do the hard work of doing without. Like when the clothes washer breaks. We could go to the laundromat for awhile, but that seems too difficult. It's easier (and more fun, let's admit it) to break out the plastic and get a new washer.

5) Not wanting people to know I can't afford it. This is not quite the same as keeping up with the Joneses. For me that's not much of a motivator anymore. But sometimes in group situations, like when the kids are involved in an activity that has costs involved, or when all the ladies are getting together for an outing, I don't want to be different. Everyone else is coughing up the dough, so I do too. Even if it means I am only able to pay half the electric bill this month. You know I'm not the only one who does this…

6) I think I (or my kids) deserve it. I grew up with a certain standard of living. In the back of my mind, I still feel like that's what I deserve. Especially at my age – my parents were living a certain way by now, so I should be, too, right? Or I don't want my kids to miss out on an experience I think they should have, so I make it happen, even though the money is just not there. How silly is that? The truth is that no one deserves to spend more than they make. We've lost hold of the principle of contentment.

Identifying the habits and attitudes that keep us in the debt cycle is crucial to finding our way out of it. These are the ones that have plagued me over the years. The next step is to come up with solutions to address them. Most of the time, I'm betting that “Just Say No” is probably a great default policy, lol!

Which spending attitudes do you struggle with?