Stop the Freelance Debt Spiral: What I’ve Learned (the Hard Way)

Recently, I wrote an article about having an emergency fund and shared it on LinkedIn. A colleague replied with a question that hit home:

How do you build up emergency savings when you’re constantly trying to pay off debt, only to go back into debt again during the next slow period?

It’s a question I’ve asked myself more than once.

Before I go any further, a quick note: I’m not a financial advisor. What follows is based on my experience, what I’ve seen and heard from other freelancers, and the guidance I’ve received over the years. Your situation might look very different, and that’s okay.

Photo by Taylor on Unsplash

Here’s a cycle I’ve seen far too many creative business owners fall into (myself included):
Business slows down → we rely on credit
Business picks up → we throw everything we earn at the debt
Business slows down again → we’re back on the credit card

It’s a stressful, vicious cycle, and it doesn’t leave much room for saving, let alone planning for retirement.

I was stuck there for a long time. Seeing a zero balance on my credit card felt amazing. But every time things got quiet, the balance crept back up. I kept telling myself I was being responsible. But the truth was, I had no cushion and no options. Just a reset cycle of stress.

It feels smart to pay off debt aggressively. But here’s what I’ve learned: when you don’t build a financial buffer alongside your debt payments, you stay trapped. And you start making decisions from a place of fear instead of strategy.

It’s not just about money. It’s about your peace of mind.

Let’s talk about what happens when you don’t have that cushion and the slow times hit:

• You start to panic.

• You say yes to clients you’d normally avoid.

• You drop your prices.

• You take on too many projects, no matter how low the pay is or how unreasonable the conditions are.

• You overwork.

• You burn out.

• The work slows up again, and you’re no further ahead than you were last time.

With a bit of savings, the panic doesn’t hit as fast. You have a moment to think. To breathe and weigh your options. You can stick to your guns, rather than taking on every client that shows up looking as welcoming as a wolf in Grandma’s clothing.

You give yourself options.

It enables you to take real breaks

Historically, farmers worked incredibly hard during planting and harvest seasons. But once the fields were dormant—especially in winter—they had time to rest, repair tools, plan for the next season, and recover their energy. The rest wasn’t a reward, it was a necessary part of the cycle.

Freelancers aren’t so different. We “make hay while the sun shines,” cramming in as much work as we can when things are busy. But unlike farmers, we rarely allow ourselves a rest season.

We plough through the slow months in panic, trying to generate work instead of letting that time restore us. We spend hours at our computers, marketing ourselves, taking courses, and sending out pitches, because we’re terrified we won’t find our next client. But that means we miss out on what could be an important break.

With even a modest cushion, slow seasons become rest periods. You can take a breath. Focus on a personal project or do some work on your business (without the stress of client work getting in the way). Or you can enjoy some much-needed downtime by stepping away without the weight of financial dread crushing your chest.

That’s what happened to me recently. Last week was quiet. Instead of spiralling, I did a little work on my business, spent time on Happy Freelancing, and let myself process the recent goodbye to my dog. Now that work is picking back up, I’m grateful I gave myself those days.

What’s helped me (and might help you):

Build savings alongside your debt payments
Start small. Even $10–$25 a month into a separate emergency fund helps you build the habit. It gives you a little bit of freedom, which can mean the difference between gasping for air and taking a deep breath.

Separate your business and personal finances
A business bank account and credit card were game-changers for me. I could finally see where my money was going. It also helped me respect my business as a business, not just a collection of client payments and random expenses.

Review your expenses regularly
Those $14.99/month charges sneak up fast, especially subscriptions you don’t use anymore. Cancel them. You can always re-subscribe later if you miss them. That money can go toward your savings instead.

Plan for slow seasons before they happen
If you’re in a busy season, set aside a bit for the inevitable lull. It doesn’t have to be a lot. Just enough to buy yourself a few calm days when things get quiet.

Don’t spend beyond your means when you’re earning a lot
When money finally starts flowing in, it’s tempting to reward yourself. You put off that new tech, that online course, those upgrades until you had some money, so you go for it all at once. But unlike a salaried job, freelance income isn’t guaranteed. What you make one month might not come close to what you made the month before. Until you’ve built up a cushion, hold off on overspending. Focus on stability first, then you can spend a bit more freely.

Don’t spend money that isn’t in your account
It’s easy to justify a purchase because “that client said they’re moving forward.” But saying they’re moving forward and doing it are two different things. It’s better to delay the purchase than to find yourself paying interest because of a promise that never came through. A lot can happen that prevents you from getting that income; clients change their mind or ghost you without paying, for example. Don’t count on income unless the money is in your account and the project is completed.

It takes discipline—but these changes have made a huge difference in how I feel during slow weeks. I don’t feel desperate. I feel equipped. And when things get busy again, I feel rested and prepared.

And that changes everything.

Reflection prompt: What’s one small financial habit I could start this month to build more stability for my freelance business?

Want some practical next steps to help you feel more in control of your finances?
Later this week, I’ll be sharing a paid-subscriber-only post with a checklist of simple, smart things you can do to create more financial breathing room in your freelance life and a template to help track finances. These aren’t massive overhauls—just realistic shifts that can make a real difference.

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