In my early 20’s I thought that I was drowning in debt. Credit saved me several times from financial emergencies, but figuring out how to make the monthly payments became an ongoing challenge. I remember keeping a notebook and a calendar. In my notebook, I had a debt repayment log. I kept up with bill due dates, interest rates, minimum due, amount paid and the remaining balance. The calendar was filled in with bill due dates and the amount that I was planning to pay. I was so excited each month and I was able to reduce the amount I owed or cross another paid account off my list. I kept up with everything, until all of my debt was completely paid off.

Looking back, the amount of debt that I had back then is laughable (now), but at the time I was completely overwhelmed with the looming reality that I owed money and had to pay towards it every month. My anxiety was likely caused by the fact that there was no extra to spare. I was barely making ends meet and I remember trying to stretch my remaining $20 – after all bills were paid – until my next payday. But I learned a lot about the rewards of discipline and the mindset shift that needs to take place to overcome debt and change your financial situation.

Does any of this sound familiar?

Maybe you’ve paid off your debt, celebrated and have given yourself a pat on the back… only to find yourself back in debt within a few short months. Many people have experienced this, because they haven’t changed the way they think about debt and have now found themselves in the relentless cycle of debt.

It’s time to stop being mugged by your money! Being financially overwhelmed can lead to debilitating levels of stress, hopelessness and even depression. In this edition of Women and Wealth, we will cover the tools to help you shift your thinking and position you to take control of your financial situation and thrive. Let’s get started.


Acknowledge that there’s a problem

For a long time, I viewed credit like a private stash of extra money.

I would use what I needed for the moment and figure the rest out later… not considering the accumulating interest, the # of payments over time, or how growing debt would impact my monthly budget. As a result, I found myself in the same situation over and over again. The truth is that credit is not just extra money waiting to be spent, and every time you use your credit cards or line of credit, you create a lien against your future earnings.

Breaking free from the cycle of debt means first coming to terms with why you keep finding yourself in a negative relationship with money. In order to find a solution, you always have to find and acknowledge the problem. Here are a few questions to ask yourself. The answers will help to determine the root cause of your debt cycle.

Does shopping make you feel good?

Are you currently living paycheck to paycheck?

Does the amount of debt that you have make you anxious?

Are you financially prepared for a financial emergency?

Do you ever feel as if you live beyond your means?

Do you shop when you’re upset, depressed, feeling lonely or are in need of attention?

Do you understand how interest on your debts is calculated?

Is there enough money each month to pay all of your bills and your TOTAL credit card balances?

Does using credit make things seem more easily accessible or more affordable for you?

Understanding why you’re overwhelmed with debt is more important than knowing how to get out of it. Being introspective and honest in your answers, will help you to expose the real truth behind how you currently view debt and any emotional attachments or triggers that you may have. By reading this post, you are already taking the first step but this plan is not a quick fix, it’s a permanent one – aimed at changing the way you see credit spending and educating you on how to get control over and then eliminate the debt cycle from your life.


Get real: How much debt you actually have

Each month an envelope comes in the mail or a statement arrives in your inbox, and like most people, we pay the minimum balance due. A few people add an extra $10-$20 dollars on top, but rarely are we able to pay off the entire balance in full. In fact, for the most part, we pay the minimum and then don’t think about it again until the next bill comes. But there’s power in knowledge.  Today’s the day that you need to log into those accounts, or dig out those statements and add up how much debt you truly have (yes, student loans too)! In order to gain control of your debt, you have to know the know the grand total of what you owe – even if it’s painful and a little scary, to think about or see it all totaled up and written down – in order to move forward and win.


Budget, Budget, Budget

Yes, we’ve all heard it before, but it’s a major key to overcoming debt. Think about this: most of us have mortgages or monthly rent payments, auto loans, credit cards, personal loans and student loans; but how many people do you that have a monthly budget. Now that bank accounts and most financial transactions happen digitally and the fact that we access our money using debit cards and services like Paypal, it’s easy to not consider the importance of a monthly budget. We swipe and go! Gone are the days of balancing a check book or paying with cash – both of which allowed for more direct accounting of what you spend daily. But having a monthly budget of any form is essential to taking back control of your debt.

A monthly budget doesn’t just provide transparency into the flow of money coming in and going out, it puts you in the driver’s seat. It allows you to set parameters on your spending, to have a better understanding of where your money flows, and how you can better allocate your funds.


Make it Real

It’s so easy to pay a bill online or through an app and move on, that the severe impact of debt can often be lost. A great tool to help with visualizing your financial picture is through a debt graphic or a money journal.

So what is a Debt Graphic?

Have you ever seen the thermometer often used by non-profits to display how much money they’ve raised… that’s a good example of what you need – a graphic that clearly displays how much debt you’re in, where you can indicate your pay down progress each month. And don’t hide it away, you need to keep it in a place where you see it EVERYDAY!

So what is a Money Journal?

This is a designated journal where you will dedicate time each month to notate your financial progress. Here, you can reflect on any setbacks that you may have experienced and also to celebrate your wins! You would also record your overall debt monthly, and how you’re feeling as you consistently pay down your allowance; allowing you to better understand how life situations affect how you handle your emotions and your money.

Get Prepared

If you’re overloaded with debt, you have already experienced financial emergencies that caused you to use your credit more than you intended to.

This is a clear indicator that you probably don’t have an emergency fund. Being prepared for emergencies can sometimes mean the difference between financial prosperity and debt.

Consider the ways that an emergency fund can help you:

Job loss or fewer hours at work

Unplanned auto or home repairs

Emergency medical treatment

Kids school expenses

Since a well-established emergency fund is the equivalent of 3-6 months of your total living expenses, having one in place would keep you from needing to use credit for unexpected expenses.


Less Out More In

You’ve heard it before but I have to say it again, because it’s is so true:

You should always live below your means.

Even if you’re not in a tight financial situation, I’m sure that you know several people that are currently living payday to payday. Not so sure? Think of friends and family members that you have heard say “I will have to wait until I get paid” or “maybe next week when my direct deposit hits”. This way of living often leads to overuse of credit – just to make ends meet. Spending less than you earn, puts you in position to increase your savings, prepare for emergencies and put aside money for those ‘extras’ that you desire.

A few ideas to get you started:

  • Evaluate your monthly bills to see where you can cut back (think: less expensive cell phone plan, car insurance discounts that you’re currently not receiving, reduction in cable services and not so frequent trips to the dry cleaners)
  • Use your financial journal to evaluate your daily spending habits. Can you find an alternative to your daily coffee run? … or stop eating out every day for lunch?
  • Check into other banks. Are you missing out on fee-free checking or even a higher interest rate on your savings account?

Earn More Money

Let me let you in on a little secret:

You need more than one source of income.

Whether that means a second job, a side hustle or turning your hobby into income, you need to diversify how you earn income immediately. Earning more money puts you on the path to breaking the cycle of living paycheck to paycheck. An additional stream of income makes room for accelerated debt repayment; and debt reduction/elimination allows for more aggressive saving and long-term financial growth.

Cash is King

Now that you have a better understanding of some of the cause of your debt cycle are, you may have discovered that digital currency is not the best way for you to handle your money. If using credit cards (and even debit cards) is wreaking havoc on your financial management, then a cash budget may be the way for you to go… at least in the beginning.

A cash budget simply means that you follow your budget with a cash payment method. Instead of swiping with plastic, you pay for most of your purchases in cash. Of course there are some expenses that this would be hard to fully implement, but for the most part it’s a fairly easy system to use and it will help to eliminate the desire to overspend by simply ‘charging’ what you don’t have enough money for. For example, if your ‘weekly casual spending allowance’ is $100 and you have that $100 in cash, then there’s no way for you to overspend. Once you’ve exhausted the funds, they’re gone.

Benefits of a cash budget:

Curbs impulse and emotional shopping
Forces you to consider what you’re spending your money on
Watching yourself pay cash (and actually seeing the money) will help you to put a greater value on the income that you’ve earned for yourself

It’s good to have goals and aspirations to have more and experience more in life… but those dreams shouldn’t cause you to spend money that you don’t have.

When people want things that they can’t afford, they often to turn to credit as a remedy; placing themselves firmly in the debt cycle.

Credit fools you into believing that you had enough money to make those purchases, but in reality you didn’t and the financial impact could last years. Just because you can get approved, for the credit, doesn’t mean it’s worth it or that you need it. If you’re contemplating a new car purchase, moving up to a bigger house or taking a fancy vacation that you cannot afford, STOP. If you plan accordingly, a proper savings plan can keep you on track and debt free for most major purchases. Maintaining the correct perspective when it comes to debt is key. Because, most of the time, the items that you’re charging, are things that you don’t really care about or need – all in an attempt to keep up with… the Joneses.


My weekly posts are designed to help you: change how you feel about money, increase the ways you earn it, open your eyes to non-traditional streams of income, explore new ways to save, build wealth and improve your credit score!

You won’t want to miss ANY of these money tips, so subscribe!!!

Don’t miss next week’s post as we navigate the importance of the monthly budget and setting goals for your money! You’ll learn how to create a realistic budget, that aligns your bank account with your financial goals. I’m also sharing key secrets to help you identify where you can trim back on expenses and maximize your income.

Have a specific financial question? Want information on a particular topic or have a tip that you would like to share… leave it in the comment section, let’s have a conversation.