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How To Become Debt Free Without Debt Consolidation

Updated on September 5, 2009

Especially after the past year of economic turmoil, the desire of becoming debt free has become a top priority in many households. We are moving towards a time of back to basics instead of living above our means. More and more people are looking to move towards for financial freedom as apposed to shopping for their next 52" Plasma TV.

When I started out with my debt free goal in Aug 2007 I had a grand total of over $27k in debt. Add onto that an additional two surgeries that after my health insurance were both over $2k each. I hit the over $30K mark. I looked towards making money online and made the fatal mistake that many who first start out do. I wanted to create a website that taught people how to get out of debt as I went though my own. Turns out, EVERYONE else is already doing this. In fact, the idea was not original to me and was something I picked up after reading Amy Bass's website My Debt Free Goal.

After the failure of my first blog I searched for other ways to supplement my income to speed up my path to becoming debt free and have become semi-successful with these. I am still not debt free. But I have managed to bring my debt down to $18k in two years even with being out of work for a year of it and am on the fast course to becoming debt free within the next 2 years. My hope is that my story and my method for how to become debt free will offer some encouragement and show that strong accomplishments towards becoming debt free can be made by anyone.

Murphy's Law On Becoming Debt Free

I started in August of 2007 on my path to paying off my bills. I had 27k in debt due to my car, a family loan, and 2 credit cards. I had made up my mind that now was the time and that I would do everything possible to pay off bills. I started putting whatever I could towards my debt but at the time it was very little due to most of my income going towards rent and daycare.

Then in the late fall, I had to have surgery to repair a hernia. $2k added to what I now owed. A few months later in January of 2008 I lost my job and moved back home with my parents. Not only was I not able to put money towards my debt, but I was so upset about the entire problem. Instead of trying to work through it, I tried to forget it instead. Those $2,000 in medical bill went to collections and now I was accruing interest on top of what was owed.

In June of 2008 I was hired to work as an office administrator for a metal distributor. The pay was good and I was back on track. I was able to really throw as much money as possible towards my debt and was making some good ground. I had paid off the creditors first to get them off my credit report. Then again, in the late fall I required another surgery. This time endometriosis in my abdoment caused by my 2004 c-section. Ugh. Another $2k owed and what do ya know.. In Feb of 09 I was laid off due to the economy in shambles. This time I made a huge commitment that I wasn't going to let not working, stop me from paying my debt. I got online and went full speed ahead writing as many articles online at hubpages as I could online to increase my passive income through the advertising on my pages.

I was hired back at the metal distributor in June '09 and my debt free goal is getting closer and closer. If your ready to become debt free, don't let anything hold you back. Murphy's law comes for us all, but it should'nt stop your plans to becoming debt free, only allow it to slow them down a little. Don't give up.

Dave Ramsey?

Dave Ramsey is the best selling author of The Total Money Makeover. While I do not suggest going out and spending money on a plethora of debt books (try to pay off debt, not create more) I do recommend this book.

In addition to being a great pep talk to get you started, it has a lot of personal stories from everyday people who have succeeded in becoming debt free. It also has worksheets in the back that can assist you with creating a budget and writing out your debt.

The book is good, it will teach you Dave Ramsey's way to pay down debt, and it will motivate you to pay off your own debt for good.

How To Become Debt Free

There are a few methods out there for people working towards becoming debt free. The popular debt consolidation is a last resort method, and in many cases should'nt be attempted. You can get ahead of your bills. Debt consolidation has the possibility to hurt more then help. Doing it on your own, there are two popular ways to paying off bills. 

Some believe the best way to pay off bills is to try to pay the highest interest rate first. This allows you to lower your monthly payments and the amount of interest that is accruing. The reason being if you are paying $50 towards one debt with very low interest rates but another is accruing $50 a month in finance charges then your not getting ahead. In some cases, it may be better to attack your debt with the highest interest rate.

Others believe that if you pay off the debts with the least amounts, then when the debt is payed off you can use the money that was going to the debt and put it towards one of your others. This is called the snowball affect and Dave Ramsey followers swear by it.

Everyone's debt is different. For myself, I was paying my bills thinking about long term. I first went for the debts that were in collections. This way I could repair my credit rating because I knew eventually I wanted to buy a house. Then I went for a debt I owed a family member. I had carried it for 7+ years and it was important that I get them paid off so that it no longer held over my head. Now I am paying my bills considering the amount. Currently I am working on a $4300 credit card balance with a 16%+ interest rate. Next will be my car loan, and then the remainder going towards my $1600 still owed to medical bills.

Need A Jump Start?

Feeling like you don't have enough money to get started? Find ways to sell what you have. Take items that will get $20 to $100 and list them on Craigslist or Ebay. Have alot you can part with? Have a garage sale or take it to the flea market. Do whatever you can to get pay more towards your bills so that soon you can be paying more then minimum payments

Becoming Accountable To Your Debt

There are a million tips, tricks, and pieces of advice online that will tell you how to become debt free. But, if they all worked for everyone, credit companies would be out of business.

What works to get you debt free is going to be what triggers your brain to become accountable to your debt. This does not have to be complex. I am a numbers person. I take comfort in numbers. yes, I've heard I'm weird. So what has worked for me is to constantly be staring at the numbers. Next to my desk at work I have a list.

  • Car

  • Credit card

  • Medical

  • Total

Each of these has the current amounts owed to the debt. Everytime A bill is paid, I subtract the amount from the debt and lower the total owed. When I make my car payment, I subtract the amount that was lowered from the principal. My medical is set up on a monthly payment schedule so each month $30 comes off of it. It is very rewarding to even just subtract $30. I also keep a spreadsheet and enter in my progress at the end of the month. This way I can see how far I've come in just a month versus the previous month, and set goals towards the next month.

Other ways to become accountable to your debt. Will these ways work for you? Maybe not. But perhaps they can start a brainstorming session to decide what will work for you.

  • Create a visual vertical thermometer put the amount you owe at the bottom and a biz ZERO at the top. Then write the amounts in $10/$20/$50/$100 increments from bottom to top. Every time you pay down the debt, get out a big marker and start coloring in the paid off part.
  • Another way to see your debt is to fill a jar with unpopped popcorn, jelly beans, marbles, etc. Each one representing a dollar amount such as $5 or $10. When ever money is put towards a debt, remove a few jelly beans that equal that amount. Work toward emptying the jar.

SEEING your debt is a powerful visual tool to becoming accountable. If you can see your debt, it will make it more real. Something you can almost touch. Debt is money owed. There is nothing to see. Make it into a visual aid and you will be able to trigger your mind to take it that much more seriously.


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    • The Rising Glory profile image

      The Rising Glory 

      9 years ago from California

      Stay the track you'll get your debt cleared. We started out with $63K in debt and got it paid off within 2 years. It's awesome to be debt free. If you want to also pay off your home in record time check out Staying the course is essential

    • Lily Rose profile image

      Lily Rose 

      9 years ago from A Coast

      Very good article, sunstreeks. I, too, have had surgeries in the last year (a few) - plus chemotherapy and all that goes along with that. Thank goodness we have good insurance through my husband's job, but still we have a maximum out of pocket of $5000, which we easily met last year and this year - so on top of credit card balances and a car loan, I have $10k in medical bills alone! I am a fan of Suze Orman and David Bach, but I haven't read any of Ramsey's books yet; I'll have to check them out. I agree with livewithrichard, the idea to make your debt visual is a great one that I haven't heard of before. I may have to try that and do a jelly bean jar - that way as I take them out I can eat them!

    • sunstreeks profile imageAUTHOR


      9 years ago from Western Washington

      Thanks, Triplet Mom

      That's awesome livewithrichard! I enjoy Dave Ramsey's approach. Although I do not stick strictly to his methods, I do keep them in consideration and apply them in ways that work for me. I also find myself going back to his book everytime I need a little push of encouragement. Good luck on your own finaicial freedom!! =)

    • Triplet Mom profile image

      Triplet Mom 

      9 years ago from West Coast

      Sounds like you are on the right track!! Great hub.

    • livewithrichard profile image

      Richard Bivins 

      9 years ago from Charleston, SC

      Great article and very good idea on making the debt visual. Good to see your links to Dave Ramsey too, I think he is a genius when it comes to fincancial awareness and getting you on track to becoming debt free. We follow his prgram and are on track to be completely debt free in five years and that includes a $340,000 mortgage.

      Good luck on your road to becoming debt free.


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