To understand the nature of debt, one has to understand the debt cycle. As explained by BYU’s Marriott School of Management, the debt cycle starts when spending outpaces income.
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Debt accumulation begins in basic habits, which include ignorance and carelessness in daily finances. When people charge spending to either loans or credit cards, they often do not understand the concepts of interests and costs. Dismissing these eventually mires them in unfettered spending and perennial indebtedness. This cycle can be very difficult to change and escape, especially if people are surrounded by opportunities to spend.
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Another common mistake among people with unmanageable debt is giving in to compulsion and pride. Some people do not want to control their spending, so they find ways to get what they want. This hard-won mentality takes no less than therapy and psychological shift to keep in check.
“Money, like emotions, is something you must control to keep your life on the right track,” said bestselling author Natasha Munson in her book, Life Lessons for My Sisters: How to Make Wise Choices and Live a Life You Love!
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This is the pragmatic voice that anyone trapped in a debt cycle must heed to start digging out of a hole. Live within your means and never borrow money just to maintain a standard of living---and the debt cycle will be as foreign a concept to you as poverty.
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