ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel
  • »
  • Personal Finance»
  • Debt & Bankruptcy

15 Secrets To Becoming Debt Free

Updated on September 28, 2017

Drowning In Debt

So many Americans are doing just that. Their spending and debt habits are so high they are literally in over their heads, drowning. But it doesn't have to be that way. You can learn how to live on a budget and control your spending and your debt. Times are very tough right now and it may seem like your finances and you are in a deep black hole right now. But if you are willing to commit to taking some steps to set up a budget along with getting some good financial advice and information. It may be tough and a bit painful, but it can be done. It has never been easy for any generation, but if we look back and listen to some of our older people, it was not easy for them either. But they believed in hard work, pay as you go and saving for a rainy. Many of those older people have now retired and are now able to enjoy a fairly nice standard of living. All of us can do the same.

Credit cards can create debt


Budget And Tools

Some simple tools for starting to manage your money and get out of debt
Some simple tools for starting to manage your money and get out of debt | Source

Budget: Getting Started

Steps to get started.

  • Gather your information about your income and what your expenses are
  • If possible try to find a personal finance class or course. Even if you have to pay for it, it will be worth the expense.
  • If you can't afford to take a course, go to the library for some books on personal finance
  • Beginning with that information start a budget, income on one side. expenses on the other
  • Now plan what you need for basic expenses. This is your rent, mortgage. utilities, food and transportation
  • Pay those basics first. Those are necessary expenses
  • Cut out unnecessary spending such as eating out, movies, new clothes and shoes. These things are not necessary until you have all your basic expenses paid
  • Make a savings plan even if it is just saving your change or a dollar a week. As your debt decreases, you can increase your savings
  • If you can afford to do it, talk to a financial planner

Saving Change Can Help You Get Out Of Debt

Saving change is a good way to save and it really adds up.
Saving change is a good way to save and it really adds up. | Source

How to Budget Your Money

Paying Down The Debt

Once your budget is finished and you have planned for basic needs the next step is paying off any debt that you owe. If you have more than one credit card, you might want to check over the bills, see what your balances are and which ones have the highest interest rate. This also includes other outstanding loans you may have.

You will need to pay at least the minimum on any credit cards or loans but if your budget shows that you have even a little bit of extra money left at the end of the month, you should apply that to at least one of the accounts. You might decide to pay the extra on the account you owe the least amount of money on or the account with the highest interest rate. Let's say that your lowest balance is three hundred and your minimum payment is twenty five dollars. Instead make a payment of fifty if that is possible and in just six months that three hundred dollar bill is paid in full. If you can only add an extra five or ten dollars each month, you will still get it paid quicker and save on the amount of interest.

After paying off that three hundred dollar credit card, you can now make the minimum on another card with the lowest balance plus the fifty you were paying on the first card. Now it won't take long to pay off that second card and you are on your way out of debt.

It is very important that you stick to your budget and make no new debts of any kind. Stick to resolve to pay off all credit cards and start to deal on a cash basis only.

You should also sit down each month and review your financial situation. As you pay off debt, your budget and your goals will change. Your family may grow, you will eventually need a new car, or you may want to include saving for a home in your budget. And, of course, before you know it, those little ones will be leaving for college.

Pay It Down The Debt Snowball Way

Living On Your Budget

Now that you are actually living on a budget and cutting unnecessary spending, you may have some money left at the end of the month. This money needs to be budgeted as the beginning of your emergency fund. Everyone should have some money included in their budget that is easy to get to for emergencies. Many financial experts suggest two or three months of living expenses while others suggest that you should have between five hundred and a thousand in the emergency fund. You just don't know when the roof will leak, and you will have to tap that "Rainy Day Fund" Or if you happen to hit a huge pothole in the road like I did, which cost me over three hundred dollars, you will have the money to pay the repair bill.

The emergency fund is exactly that: It is only to be used for emergencies. Any money taken out of the emergency fund should also be replaced as soon as possible. The next emergency may be right around the corner.

Benefits Of Losing The Debt

It may take some time and some real effort to stick to your budget but when you are debt free there will certainly be some great benefits that you are going to love.

  1. The stress over whether you can make the payments each month will be gone
  2. You can start to use that money you were paying on credit cards to save for other things and then pay cash
  3. You will begin to achieve a sense of security that you did not have before
  4. If you are married, you probably won't fight over finances nearly as much
  5. Life will become more enjoyable and peaceful

If you follow this advice and get yourself out of debt I think you will find that life is much more enjoyable. if you keep things simple, stop trying to "Keep up With The Neighbors" and learn to enjoy what you do have. Debt causes stress. If you have everything you need, why stress yourself out for things you just happen to want? Enjoy your family, friends, neighbors and life in general. What else do you really need?


    0 of 8192 characters used
    Post Comment

    • L.M. Hosler profile image

      L.M. Hosler 3 years ago

      Thank you for the compliment RefundSweeper. Yes, this has worked pretty well for me. I am down to where I owe last than $500 on my last credit card. It has taken me awhile but I am almost debt free but for my car payment.

    • profile image

      RefundSweepers 3 years ago

      Good advice, I have heard pay off smallest debt first, then you can apply what you were paying on that debt to the next smallest debt and keep going until they are all paid off. Nice Hub!!!!

    • L.M. Hosler profile image

      L.M. Hosler 4 years ago

      Thank you so much Billy. I have spent my life pinching pennies, making do and saving. Your hubs are always full of some really good information also especially the ones about writing.

    • billybuc profile image

      Bill Holland 4 years ago from Olympia, WA

      I have written about this before and you are right on! Getting out of debt calls for a plan and willpower and determination. Getting rid of old spending habits is crucial....purchase according to need rather than want and stick to a budget. Great information here.