Money often moves in cycles. On the large scale, economists have noted that a business cycle contributes to periods of boom and bust in the American economy¹, and in your own life you have financial routines, behaviors, and obligations that regularly come up. Sometimes these cycles can be harmful to your financial health, and when you’re stuck in a bad cycle, getting out of it is the only way to move forward. With time, effort, and a few strategies in your pocket, you can change your finances.

We’re going to cover two financial cycles, bad habits and debt spirals, and go over methods that can help you escape them. Breaking bad habits can let you free your money so you can spend it on things you truly value, while getting out of a debt spiral is key to putting yourself on the path to financial freedom. 

Financial habits are cycles that pretty much all people go through. People’s everyday lives are filled with habits, some good and some bad. Sometimes those bad habits, like constantly ordering food delivery or impulse shopping online when you’re bored, can put a real drain on your finances. Escaping bad habits can be hard, though, because research shows that engaging in a habit reinforces it, making it even more ingrained in your behavior.

After studying the nervous systems of rats and monkeys, neurophysiology researcher Ann Graybiel proposed that, as people perform actions, the corresponding routines become grouped together in their brains to make them more efficient in a process called “chunking.”² For example, if you soothe yourself whenever you get stressed by looking at pictures of baby hedgehogs, over time the brain functions you need to perform that action will get chunked together so that multiple steps (get stressed, notice stress, think about baby hedgehogs, reach for your phone, search for photos of baby hedgehogs, etc.) become just a couple steps (get stressed, look at some tiny prickly pigs).

So, if habits reinforce themselves, how do you get rid of them? Well, according to a study by psychologists Bas Verplanken and Wendy Wood, trying to break a habit completely is difficult. Instead, it’s easier to replace your bad habit with a different, more positive one³. For instance, instead of browsing Amazon when you’re bored, you can train yourself to go to a news website or open a crossword puzzle app.

The same study also says that changing your environment can help you change your habits, though most people can’t just decide on a whim to change where they work or live. Still, even small changes to the environment in which your bad habit occurs can help, like making sure your kitchen is stocked with food you want to eat if you’re trying to eat out less. Also, you can take advantage of changes to your environment that occur naturally. For instance, if you’re moving anyway, you can use that as an opportunity to help change a bad financial habit you have.

A different, more serious financial cycle is the cycle of debt known as a debt spiral. A debt spiral is a situation where your debts get so high that the interest increases the amount you owe faster than you can pay the debt off. At that point, even though you may be contributing significant amounts of money toward paying your debts off, the amount you owe keeps climbing. It’s not clear how many Americans are going through debt spirals, though considering a recent survey from Northwestern Mutual reported that U.S. adults have an average of $29,800 in personal debt (not counting mortgages)⁴, it’s not hard to imagine it’s a significant number.

It’s definitely possible to get out of a debt spiral, but there isn’t really an easy shortcut you can take. A post on the website for the nonprofit Association for Financial Counseling & Planning Education suggests applying old-fashioned personal finance advice like reducing spending, stopping credit usage, and increasing saving⁵. It also says a good way to start the process of ending a debt spiral is to make a spending plan. Figure out how much you can contribute toward your debt by looking at your variable expenses (expenses you can easily change by cutting back, like entertainment costs) and then looking at your fixed expenses (expenses that tend not to change, like housing costs) for areas where you can cut back. It will probably take some lifestyle changes and sacrificing, but debt is a prison that’s worth escaping.

With Cash Out, Earnin is trying to break the cycle of payday to give people better access to the money they’ve already earned. We view the pay cycle as a system imposed on everyday American workers that holds them back, so we’re building a way for people to escape it. Just like how we’re working to change payday, there are cycles that you have the power to change or break if you put your mind to it.