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10 Steps On How to Become Debt Free

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Do you want to learn how to become debt free?

If you have debt, don’t worry, you are not alone.

Millions of people have debt.

Today, it’s become a necessity for many families.

We are going to show you how to finally eliminate your debt for good.


Keep reading while we share these 10 ways to banish your debt for good.

Understand Your Debt

It’s important to know what kind of debt you have and how much you owe.

This is when you face your debt, and this is how you do it:

  1. Make a list of money owed (including balance and interest)
  2. Track Your Spending
  3. Make 2 lists: need to spend and want to spend

Make a List of Money Owed

This is when you sit down with your debt, figuring out how much you we, including the balance and interest.

To stay organized, write all this information down.

This will include:

  • Credit cards
  • Personal loans
  • Student loans
  • Auto loans
  • Any other type of debt you might have

Tracking Your Spending

Do this for 30 days to fully understand how much money is going into your account and how much is leaving your account.

Why is this important?

Most people don’t know how much money is coming into their account.

They might know their salary but they don’t actually know how much money is entering into their bank account and most importantly, they are clueless to how they spend their money.

You might think that your $5 Starbucks coffee this morning and your $15 lunch out with your coworkers last week won’t amount to much, but all those little charges do add up and they can hit your budget hard, catching you off guard in the worst way.

Then, there you are the week before your rent is due, trying to figure out where your money is, and wondering how to make money in one day.

When I was working my full-time 9 to 5, I did this every month, like clockwork, tracking spending.

I tracked my income and I tracked my monthly expenses.

I put everything on a calendar so I knew when my bills were due and when I could pay those debts, according to when I got my biweekly paycheck.

When I became self-employed, everything in my life became more flexible, and so did my financial habits.

Soon after, I put myself back on track with this financial plan and now, I’m back to tracking my spending.

Tools to help you track your spending:

Making Your “Need to Spend” List

These are your bare necessities like:

  • Rent/mortgage
  • Food
  • Insurance
  • Utilities

When creating this list, keep in mind that these are items that you need to survive.

Making Your “Want to Spend” List

This list includes your wants in life, like:

  • Going to dinner with friends
  • Shopping for a new outfit
  • Going on vacation at the end of the year

Once you’ve gone through all this, it’s time to move onto creating your debt-free plan!

Before you do though, it’s important to know the purpose of your “Want to Spend” list.

The purpose is to identify your purchases that you want to do so you can acknowledge them, then, banish them for good.

If you want to become debt free, then you’ll be abandoning the items on the list, at least temporarily.

Creating a Debt-Free Plan

Once you make the decision to become debt-free, you’ve got to make a plan.

First, make your debt-free plan.

Then, put it into action.

Planning is easier than you might think.

You create goals and put them on paper (or on the computer).

  • Consider how quickly you want to pay off debt
  • Put some major and minor goals down
  • Reward yourself for milestones hit along the way in your debt payoff journey
  • Check in often
  • Hold yourself accountable
  • Become debt-free with a buddy

10 Ways How to Become Debt Free

Check out these tips to help you become debt free starting today!

1. Stop Using Credit

The first thing you want to do is stop putting yourself in debt.

This means:

  • Stop using your credit cards
  • Stop drawing from your line of credit accounts
  • Stop renewing your loans for cash back

You want to halt all debt usage activity, period.

There are some perks to using credit, specifically credit cards, like:

  • Gaining rewards
  • Gaining airline miles
  • Getting cash back
  • Getting discounts on gas and other goods
  • Getting free stuff

There are even these dozen crazy ways to get credit card points.

If you can manage to use credit cards for perks AND pay off the amount you charge to avoid carrying the balance, feel free.

Some of the perks might be worth it and there are opportunities where using credit is more rewarding than not.

Aside from this though, avoid using debt.

You don’t want to go backwards in your debt payoff journey.

How to Pay Off Credit Card Debt?

To pay off your credit card debt fast, take a look at these tips to help you shrink this debt:

  • Pay more than the minimum payment requirement
  • Stop using credit cards
  • Pay your credit card bill on time
  • Call the creditor and negotiate a lower interest rate

Paying More Than the Minimum Payment

This is crucial in paying off your credit card debt quickly.

You can take two approaches to this:

  • Debt snowball or,
  • Debt avalanche

The debt snowball method involves paying off your debts in order of smallest balance to largest balance.

Why pay off your debts this way?

You can eliminate more credit account balances faster, usually.

And, while you are doing this, it’s gratifying.

You are paying off small accounts and watching those accounts hit a zero balance and then moving onto the next largest bill.

It gives you motivation to continue on in your debt payoff plan.

So, if you have 3 credit cards: $200 balance, $1,000 balance, $5,000 balance, you would pay off the $200 balance card first, then move onto the $1,000 balance account, and lastly the $5,000 account.

The debt avalanche method works in a different way.

You pay off your debts in order of largest interest rate first.

The thinking behind this is that you will be saving the most interest overall by tackling your highest interest debt first.

And, this makes sense.

It’s a completely different mindset than the debt snowball method but both are very effective.

3 credit cards: $200 balance with 6% APR, $1,000 balance with 20% APR, $5,000 balance with 10% APR,
you would pay off the high interest 20% APR $1,000 balance first, then the 10% APR $5,000 balance, and lastly the 6% APR $200 balance.

Adopt one of these approaches when paying off your credit card debt.

Stop Using Your Cards

You want to move forward and not backwards so, stop using your credit cards.

Paying Credit Cards on Time

The top reason for not paying credit cards on time is due to forgetfulness.

Yes, you read that right.

People just forget.

Cope with this by putting yourself on an automated payment plan to pay your bills on time or consider setting a reminder.

If you pay your credit cards on time, you get to enjoy:

  • Avoiding late fees
  • Preventing your credit score from declining (payments 30 days or more late get reported delinquent to the credit agencies)
  • Preventing your interest rate from rising (since some creditors will increase your interest rate due to derogatory payments)

Helpful resources to check out:

Recommended reading: 7 best tips for using credit cards & avoiding costly mistakes

2. Stop Being an Impulse Buyer

Are you guilty of this?

Can’t resist a sale?

Feel like shopping every week?

This bad habit will keep you in debt!

How to avoid impulse purchases? 

  • Get on a budget
  • Get rid of FOMO (fear of missing out)
  • Stay away from opportunities to buy
  • Don’t visit shopping websites
  • Clear your email inbox of shopping offers.

Check out these 12 more ways to stop impulse buying online.

3. Stop Eating Out

Eating out can get you in debt.

It’s a costly lifestyle habit that too many people do.

This can impact your financial and physical health.

Do these things instead:

  • Cook at home
  • Eat more fruits and vegetables
  • Meal prep
  • Practice minimalism
  • Batch cook
  • Pack lunches for the entire family
  • Make drinks at home

Cooking and Making Drinks at Home

Cooking at home is nutritious and saves so much money.

You can prepare healthy meals and drinks at home, cutting out expensive fast food and drinks on the go.

Eating More Fruits and Veggies

Fruits and vegetables are actually cheaper than processed foods and they are so much better for you.

Embrace this way of eating more and save money in the process!

Meal Prepping

Meal prep is a huge time saver that I have personally benefited from.

Sunday is the day for me to meal prep for the entire week.

I can spend a few hours making meals for the entire week, storing them in the fridge and leftovers in the freezer.

Then, our family has food and meals prepared and ready to eat all week long.

It’s great!

A time saver and a budget saver!

Practicing Minimalism

If you are minimalist, you are naturally saving money.

You don’t spend money on unnecessary things like takeout meals, fast food, and restaurant meals out.

Learn about these 10 ways to stock a minimalist kitchen.

Batch Cooking

Batch cooking goes along with meal prep.

You make meals in huge batches, for the current period (like for the week) and for the future (freeze these).

Packing Lunches for the Entire Family

Make a prepped lunch a no-brainer by packing lunches in advance and making them easily attainable all throughout the week.

This way you aren’t tempted to grab for food on the go.

4. Stop Trying to Keep Up With The Joneses

Stop trying to keep up appearances.

You don’t have to compete with others.

If you can’t afford a lavish lifestyle, that’s ok!

What does living beyond on your means look like?

  • You buy things you can’t afford
  • You are materialistic and buy luxury goods
  • You try to one-up your friends
  • You try to impress people with things

Avoid this and shift your mindset so you can start living within your means.

5. Start A Budget

Start a budget easily and save money instantly.

How to get started? 

  • Get a budget app
  • Track your spending and purchases
  • Reward yourself

Download a Budget App

Getting a budgeting app from your phone or tablet.

It’s one of the easiest ways to start budgeting.

Enjoy these perks:

  • Track your spending and uncover spending behavior
  • Categorizes your purchases
  • Get a picture of your financial health
  • And, more!

Check this out: 16 best budget apps to save you money

Tracking Your Spending

Tracking your spending is super important and can be done easily, with the help of a budget app.

You want to know how you’re spending money.

This helps you avoid overspending and uncovers purchase trends that you might want to eliminate, like spending $100/month on Starbucks ( I have done this before) or spending an extra $50/month at the gas station for odds and ends (I have done this, too).

A couple bucks here and there.

It adds up.

A budgeting app can help with this too.

Reward Yourself

I do this all the time, with just about everything.

If there’s a task I don’t want to do, I create a reward on the end of it, giving myself a perk for completing the task.

For example, on Saturdays once a month I do a deep clean in the house.

The reward for doing the deep clean is renting a movie from Amazon for $5 or enjoying a glass of wine at home.

A rewards system will help keep you motivated and get in gear to meet your goals.

Give this a try!

6. Stop Spending More Than You Earn

Again, it’s about living within your means.

You can actually spend more than you earn and survive, on debt and credit cards.

You do not want to do this.

So stop.

If you are in situation where you struggling, pick up a side gig.

Ideas to Make More Money:

Ideas to Lower Your Monthly Expenses:

7. Make Payments On Time

Making payments on time helps you get on the good side of your creditors, which is great because you’ll be more likely to:

  • Keep a lower interest rate
  • Get more credit line increases
  • And, many more benefits

It also helps to keep your credit standing strong, avoiding delinquent marks, from being 30 days or more past due.

How are payments made late?

  • You forget (most common reason)
  • You don’t have enough money to pay on time

You Forget to Pay

This is one of the most common reasons payments are not made on time.

Fix this by setting a reminder.

You can set a reminder on your cell phone.

Another solution?

You can also put your bills on autopilot with automated payments.

You Don’t Have Enough Money to Make Payments on Time

If this is you, there is a solution.

Increase your income!

  • Get a Second job
  • Ask for Overtime
  • Start a business
  • Gig work
  • Side hustle

Get Second Job

Work after your main job or on weekends.

Overtime at Work

Asking for overtime at work is easy.

If there is overtime available, you can take advantage and quickly boost your earnings from your job.

Starting a Business

Starting a business was my start into the world of entrepreneurship.

It allowed me to leave my 9 to 5 and six years later, I’m still working as an entrepreneur!

There are small businesses you can start with no money, like:

  • A number of service-based business like furniture assembly, blinds assembly, pet washing, tutoring, etc.
  • Freelance-based businesses like virtual assistance, video editing, and related
  • Tech businesses like computer programming
  • Design businesses like graphic design, logo creation, and related

Learn more about starting a business with no money.

Gig Work Jobs

The gig economy is growing year after year.

Working a gig job will afford you perks like these:

  • Weekly and/or daily pay
  • On-demand work
  • Casual attire
  • Comfortable and relaxed work environment
  • Flexible schedule
  • Freedom to work on your own

Recommended reading: 35 work from home gigs that pay weekly or daily.

Side Hustles

Side hustles are an easy, quick, and rewarding way to start earning money.

They usually require basic skills that most people have, like:

  • Basic computer skills
  • Communication skills
  • The ability to work well independently and in teams
  • Organized
  • Self-starter
  • Disciplined and diligent

Take a look at these:

8. Staying on Top of Your Credit Report

You are allowed one free credit report per year.

Take advantage of this!

Checking your credit report allows you to check for errors:

  • Incorrect name and address
  • Incorrect accounts, balances, and payment history
  • Mistakes in derogatory payment information like charge-offs, foreclosures, collections, and bankruptcies

If you do find an error, you can then take the steps to correct it and restore your credit.

Learn more about credit report errors, why they happen and how to fix them

9. Save Money on the Things You Buy

Saving money on the things you buy means you’ll have more money leftover to throw towards your debt.

Here are some ways to save money on everyday purchases:

  • Use cashback apps
  • Coupon for grocery purchases
  • Buy used instead of new
  • Cut back on spending, in general
  • Shop less often, for bigger hauls at the grocery store

Cashback Apps

You can earn up to 20% cash back on select purchases through cashback apps and website.

They work like this:

Sign up to the cashback app or website for free then, purchase from your favorite retailers like normal.

Earn cashback on your purchase, after you checkout!

For some of the cashback apps, they require you to link a debit and/or credit card and you earn cash back when you buy, using that card.

Here are some cashback apps and sites to review:

Couponing at Grocery Stores

Start couponing by clipping physical coupons and using digital coupons.

Are you a beginner?

Check these helpful articles for guidance on getting started:

Try grocery apps too, like Ibotta or other free receipt scanning apps for cashback.

Buying Used Instead of New

Should you buy new or used?

Buy used!

You get a lot of value for your money and you can buy so many things at a huge discount used, instead of new, like:

  • Used cars
  • Used houses
  • Used electronics
  • Used clothes on consignment

Cutting Back on Spending

Avoid spending and shopping in general, to save.

Take yourself out of situations where you will have to spend money.

Embrace free activities for entertainment like trips to the library, strolls in the park, walks in the neighborhood, bike riding, hiking, watching free movies at home, etc.

Shop Less Often for a Bigger Haul at Grocery Stores

Yes, you can save money buying more food, less often.

Instead of your once a week grocery trip, try a once a month grocery trip, saving you time and money.

I made this switch and could not be happier.

First of all, I hate grocery shopping.

So, if there’s a chance for me to cut back on grocery trips, for no other reason than saving me time in the store, I am all for it.

But, you can save time and save money.

Make a huge list for the entire month, menu plan, meal prep, feed yourself before you shop, grab your coupons, use apps and hit your grocery store once a month!

10. Stop Paying Off Your Debt with More Debt

I did this as a struggling college student.

It was a time that was not long-lived but I was living paycheck to paycheck and living off credit cards for part of my expenses.

How did I get out?

I got another job and enjoyed a more balanced lifestyle, stopped struggling, and had more money to pay my bills!

Paying your debt with more debt is not the way to go.

If you’re doing this, stop!

If not by choice, make a change so you don’t have to live in this money spiral.

Get a job, take on a side hustle or gig work.

Or, make some big changes to your lifestyle to cut back on your expenses.

Taking on More Work for More Money

More work means more money.

Don’t be overwhelmed by this.

Many people take on a second job or side hustle for extra money.

And, it can be temporary.

It doesn’t have to be forever.

Lowering Your Expenses

Cut back on monthly spending by lowering your expenses.

Here are some ways you can achieve this:

  • Lower your utility bill: turn off appliances when not in use, turn off lights when you leave a room, fix a leaky toilet or faucet, keep rooms closed
  • Refinance: call your auto loan and student loan companies and try to refinance for a lower interest rate
  • Embrace these 26 frugal grocery shopping tips
  • Lower your household expenses (rent or mortgage) by getting roommates, subletting, or doing AirBNB
  • Lower your car expenses by carpooling or letting go of your auto in lieu of public transportation

BONUS: Build An Emergency Fund

Building an emergency fund can help you if an unexpected expense were to arise, while providing you peace of mind.

Unexpected expenses that could arise:

  • Insect or rodent infestation
  • Car or house repair
  • Medical or dental expenses
  • Unexpected high bill

Start building your emergency savings now.

Final Thoughts

There you have it, 10 ways on how to become debt free.

What do you think?

Are you on the road to becoming debt free?

What are some things you do?

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