Understanding the “Debt Cycle”



The “Debt Cycle”

Ever been here I have. There was a time when I was in debt where I owed quite a bit of money to people and the bank. It was so bad that even my Credit Cards were maxed out. There were times when I would see someone I owed money to and I would cross to the other side of the street just so I would not have to stop and talk to them. I was financially, physically, emotionally and spiritually not in a good place.

I am going to share with you, what I believe is, valuable knowledge regarding the “Debt Cycle”. It was given to me during my darkest hour and was to be a major turning point in the way I looked at debt.

It was explained to me, via a diagram similar to the one below, that when someone extends credit to me I am not the only person in the immediate “Debt Cycle”.


As you can see from the diagram above, everyone in the “Debt Cycle” is reliant on the persons before them and if anyone breaks the cycle everyone after them feels the affected of it.

I either read or was told there are in excess of 250+ people affected when anyone in the cycle does not honour their debt. This being the case there are many people relying on me to pay my debt when it is due.

The first action I took on grasping this revelation was to sell a 15 Foot Bonito Pleasure Craft, which I had worked so hard to get and of course because I was selling it under pressure I didn’t get paid the true value. The next step was to use the equity in our house, combined with the sale of the boat, to pay off the Credit Card debt and consolidate the balance owing into one loan.

I appreciate you may not be able to do that. However there are ways and means to address your debt situation. If you wish to know more regarding this please contact us.

As a result of understanding the effect the “Debt Cycle” had on the lives of others, I made a decision to always pay my debts on time, if not before they are due. I have been fortunate that since then except for the odd occasion I have been able to honour that decision.

The other revelation I received was to always run to my creditor not away from them. As already mentioned if any person breaks the “Debt Cycle” it has an effect on everyone in the circle and it does happen. If I go to my creditor early in the process and explain the situation to them in the majority of cases a solution can be worked out for a win win outcome.

Thank you for taking the time to read this. I trust that the above has been informative and if there is any aspect that you wish to discuss further please contact us.

Disclaimer: This publication has been carefully prepared, but it has been written in general terms only. The publication should not be relied upon to provide specific information without also obtaining appropriate professional advice after detailed examination of your particular situation.

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