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How to Get Off the Debt Treadmill


Have you ever felt like you were paying your debts month after month, but the principal never seems to go down? Are you broke at the end of each month but no closer to being debt free? If so, you are probably on the debt treadmill.

The debt treadmill is a term to describe a situation where someone pays the minimum payments on their debts, month after month, but is never able to get debt free. They often find themselves running in place even after getting a raise or promotion at work. Running on the treadmill is exhausting—and sometimes can leave a consumer even more indebted than when she started.

Stuck on the debt treadmill is a terrible place to be. Fortunately, there are steps you can take to get off, save your sanity, and save some money in the process.

Assess Your Debts

You need to fully understand your debt before developing a game plan. The most common debts are:

  • Credit card debt
  • Personal loans
  • Medical debt
  • Home mortgage
  • Car payment
  • Student loans
  • Child support
  • Spousal support

Identify your current balance and interest rate, as well as the age of the debt.

Create a Budget for Debt Repayment

Write down all your monthly expenses, including for debt payment. Then tally up all your income. If you are spending more than you make, you need to either get a side hustle, cut your expenses, or both.

After cutting expenses to the bone, identify how much money you have freed up for debt repayment. You should have enough money so you are paying more than the minimum on your debts.

Prioritize Your Debts

Your debts are different, and some are more important than others. For example, mortgages and car loans are typically secured by the asset. If you go into default, you lose your home or car. So these are often priority debts that you must pay.

Credit card debt comes in different shapes and sizes. Some cards charge 24.99% interest; others might charge 15.99%.

List your debts from most important to least. Then decide how you will allocate all the money you have freed up for debt payment. For example, if your only debts are credit cards, decide which cards you will pay the minimum on and which will get excess payments. Some people choose to pay off the card with the highest interest rate first, which saves money. Others choose to pay off the card with the lowest balance, which builds momentum.

Consider Consolidating Debt

Debt consolidation can lower monthly debt payments and free up more money for debt repayment. Transferring balances to a zero or low-interest credit card is a method of debt consolidation. You should never take out a loan that is secured (such as a second mortgage) to pay debts that aren’t secured (like credit cards and medical debt).

Stop Spending!

One reason people cannot get off the treadmill is that they never stop spending. For each dollar they manage to pay down in debt, they spend another dollar—sometimes much more. Once you come up with a budget, you must stick to it.

Consider How Bankruptcy Can Help

Bankruptcy is an extremely helpful tool for managing debt. In some cases, bankruptcy can completely eliminate a debt. In other cases, it can free up money so you can pay down debts aggressively.

If you are on the debt treadmill and can’t get off, call Nowack & Olson, PLLC today at 888-813-4737. Our Plantation bankruptcy attorneys are standing by prepared to help.


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