What to Do When You’re Stuck in Debt

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Once you reach adulthood, every step of life may feel like a challenge; you have to choose the right major, build a promising career, and find the right relationships. Your finances will likely be all over the place too.

Debt is a common financial challenge faced by many individuals and families worldwide. According to the World Economic Forum, in the second quarter of 2023, global debt was recorded at $307 trillion due to the sudden rise in inflation. 

An individual can find themselves stuck in debt due to overspending, unexpected medical expenses, a sudden loss in business, and similar unforeseen circumstances. Although you may feel overwhelmed, you must remember that regaining control of your finances and working towards a debt-free future takes time and dedication. Here are five steps you can take when you are drowning in debt:

1. Assess Your Financial Situation

Reviewing what, where, and how you’re spending money is crucial. This will help you rule out how much you’re saving and spending and what expense you are prioritizing. Start by going through all your bills and loan statements and compiling a list of all your outstanding debts, balances, and interest rates. By doing so, you can evaluate your monthly income and expenses to determine how much you can allocate towards debt repayment.

Consider cutting back on a few expenses and sliding a little extra than the installment amount to repay your debt: if you pay more than the minimum amount, you will save a lot on interest and clear your debt much more quickly.

2. Plan a Budget

Organization and mindfulness may be key to helping you regain control of your financial situation, especially if you are prone to impulse purchases and overspending. Start by categorizing things you require monthly from most essential to least essential. This will help you list your expenses by priority and spend only on what is of utmost necessity. Allocate funds towards essentials like groceries, utilities, and housing first. Any remaining income can be directed towards the debt repayment. 

By creating a priority list of expenses, you will also recognize your spending habits and identify areas where you can cut back, for example, dining out less frequently, canceling subscriptions, or finding less costly alternatives.

3. Seek Financial Education and Counseling

Building financial literacy is a requisite for long-term financial success. Educate yourself about budgeting, saving, investing, and managing debt. There are many resources available including books, workshops, and online courses.

Seeking help from counselors and professionals and attending counseling sessions can provide valuable insights and strategies for managing your finances effectively. Delving deeper into understanding what is a debt counsellor and discovering the inevitable support they can provide you on your financial journey can make financial decisions even easier for you.

4. Develop a Repayment Plan

Once you clearly understand your finances, it’s time to create a repayment strategy. If you’re already paying more than the minimum payment, you can try using the snowball method. The snowball method involves making minimum payments on all your debts except the smallest one, for which you’ll pay as much as possible.

Once your smallest debt is paid off, you can redirect those funds towards the next smallest debt and keep the snowball rolling until all your debts are cleared off. If you find it hard to keep track of all your debts, you can also try considering a debt consolidation loan.

5. Avoid Accumulating Further Debt

Once you are on a path to debt repayment, it’s essential to avoid falling back into old habits. Refusing to take any debt may be hard, but for a secure financial future for you and your family, it’s vital.

Try using cash instead of credit cards. Identify triggers that lead to overspending and develop healthier spending habits. Build an emergency fund that can help you avoid relying upon credit cards or loans in the event of unexpected expenses. Aim to save at least three to six months’ worth of living expenses in a readily accessible account to only rely on your savings and never consider taking debt.


While becoming debt-free does take time and dedication, it’s imperative to stay motivated along the way. Be patient and celebrate even the little milestones you achieve like saving a particular amount or clearing off a small debt. Lastly, try not to panic. Falling into debt can be an overwhelming experience, but there are always ways to step out of it. Take help from debt counselors and professionals and stay consistent for the best results. 

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The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.