Living Debt Free

Getting out of debt can be a long and difficult process, but once you’ve done it, can you stay debt free? With a little help and some lifestyle changes, it is possible to get out of debt and live debt free.


Step One: Getting Out of Debt

The first step in living debt free is to get out of as much debt as you can. Some debt is alright, like having a mortgage or a car payment, or even student debt. But debt like credit cards and medical bills can be reduced or eliminated with a few lifestyle changes and some discipline.

First, assess the situation. Sit down and list every creditor that you have, how much you owe each one and what your interest rates are. Start by paying just the minimum payment on all of your debts except for the smallest one. That single credit card, pay extra every month until it’s paid off, then take that same monthly payment and roll it into the next smallest bill. It’s a snowball effect.

For example, if you have seven credit cards and the minimum payment on each one is $50.00, pay $50.00 for every one of them. The last one, pay $100 (or whatever extra you are able to afford.) Once the smallest one is paid off, roll that $100 payment, plus the $50.00 payment that you’re already making into the next bill. You’ll be paying $50.00 a month on five cards, an the sixth card, you’ll make a $150.00 payment. And so on. Every time you pay one off, roll that entire amount into the next card. You’ll be amazed at how quickly you can pay them off this way.


Stay Out Of Debt

Once you have your credit cards paid off, eliminate the temptation of using the cards by cancelling all but a couple with a low interest rate and higher limit. Remove these from your wallet and save them in your home filing system to use only in emergencies. For example, your furnace goes out in the middle of December and you have to get it replaced quickly. Do not give into the temptation to use them for everyday items. It’s a slippery slope and you’ve done a lot of work to get yourself out of debt. Don’t sabotage yourself by getting right back into debt again.

Now that you’re not making all of those credit card payments, it’s time to start saving. Open up a separate savings account or checking account and put the money that you’ve been using to pay off accounts into that savings. Keep this up until you feel like you have a good sized ‘nest egg’ that will see you through minor emergencies. Maybe you suddenly need new tires on your car? Don’t put it on your credit card. Just use the savings, and keep paying into the savings so that you don’t deplete it.


Change Your Thinking, Change Your Life

Ask yourself before you purchase anything, “Do I really need this?” If the answer is no, put it back. Don’t buy it. Change the way you look at your possessions. Plus, remember that we as humans really need a lot less to survive than we think we do. We have a tendency to associate our happiness with our belongings. Once we can let go of this way of thinking, we can get out of debt and stay out.



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