5 steps to break the cycle of debt

Amara walker 02:21:47 07/31/2026

Debt and mental health are linked to each other. Studies have found that the burgeoning cost of living is an intrinsic factor that pushes people to the verge of debt. Wages do not rise in proportion to inflation, leaving savings short of cash. As a result, people borrow money. Borrowing is not a bad idea when it bridges the gap in savings, and you are completely certain that you can repay the debt.

Unfortunately, many people borrow money to fund recurring expenses while others borrow more than they can afford. In both cases, you risk racking up debt. Once you fall into debt, it becomes arduous to get out of it. This is especially true for same-day loans.

They charge very high interest rates. APRs for these loans could go up to 500%. If your credit score is abysmal, it can go beyond 500%. If you fail to pay them off on time, you will have to borrow money to pay them back. Soon, you will find yourself stuck in a cycle of robbing Peter to pay Paul.

What are the ways to break the cycle of debt?

Here are the ways you should break the cycle of debt:

Find out how much you owe

You cannot deal with debt if you keep avoiding it. You will have to face it. Sit down and list all your debts, including credit cards and overdrafts. Note down interest rates for each loan and minimum monthly payments you have been making. It seems overwhelming, but you cannot come up with a debt payment strategy unless you clearly understand how much you owe.

Create a realistic budget

You cannot get out of debt unless you create a budget. It will help you keep track of your expenses, which is essential to ensure that you do not overspend money. First of all, you need to make a list of all your expenses and then categorise them into needs and wants. Since you are trying to pay off all of your debts, you should cut back on discretionary expenses. Your budget should include only essential expenses such as rent, utilities and groceries.

Add them up and figure out how much money you are left with. Now figure out how much debt you can pay off from the available balance. Maybe you will need to reduce your contribution towards your savings. Make sure that you do not stop it, as you will end up taking out bad credit loans in Ireland to meet small emergencies.

Try to pay more than the minimum payment because otherwise interest will keep accruing on the unpaid balance and you will never be able to get out of its vicious cycle. If possible, pay off short-term high-cost debts first. However, if you have secured loans such as mortgages, make sure you do not miss their payments as they are pledged by your house. Non-payment will result in the loss of your house.

Choose a debt repayment strategy

You should choose a debt repayment strategy. There are three strategies you can consider to get out of debt, such as a debt avalanche, debt snowball and consolidation.

Debt avalanche is a method that enables you to focus on high-interest debts first while making minimum payments on others. This method is suitable for those who want to save money in the long term.
A debt snowball method enables you to focus on the smallest debts first while making minimum payments on others. This method is ideal for those who want to stay motivated.
Consolidation involves taking out a personal loan to discharge all short-term high-cost debts (not instalment loans) once and for all, so you are left with one personal loan to pay off in fixed instalments over time. This makes payments manageable. However, you must have a good credit score to qualify for a consolidation loan.

Consult a debt advisor if you cannot determine what strategy would be suitable for you.

Stop taking on new debt

Do not take on new debt because it will never let you get out of your existing debt. It depends on the amount of debt and the repayment strategy; that is how long it would take you to settle all your dues. In the meantime, you might come across some emergencies. In order to meet unexpected expenses, you must have an emergency cushion.

Even though you are getting out of debt, you should never stop making contributions to your savings. You might decide to contribute less than what you had been doing earlier to make debt payments faster, but never cease it.

It is likely that your savings fall short when you are caught unawares by financial emergencies. In that case, you should seek help from your friends and family instead of taking out a loan.

Increase your income

This is the best method to settle your debt faster. Increased income will help you manage your finances better. You can easily establish an emergency cushion. In case you come across unexpected expenses, you can easily fall back on it. This precludes you from relying on loans. Taking out a new loan is not a cinch when you are already in too much debt. Most lenders will straightaway turn down your application because of a poor credit score.

In order to increase your income, you should try to find another job with a higher salary, or if your current employer is paying you less, you can ask for a salary hike. If these options are not feasible, you should try to get a side gig. Consider freelancing or a part-time job. Whatever additional money you earn will help you stay afloat.

The bottom line

It can be intimidating to face the debt, but you cannot deal with it unless you accept the fact that you are sunk into debt. You will need to create a budget and choose a debt repayment strategy. Increase your income and stop taking on new debt. These methods will help reduce your debt obligations.

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