How To Be Debt Free 14 Steps With Pictures

Generally credit card debt, car payments, mortgage, and student loans make up the majority of outstanding debt that most people struggle with. Add up these debts and any other types of debt that you’ve incurred. Get a number on the table and face it.

Part of the reason debt is so hard to get out of is that it gets bigger over time. If you don’t pay it down quickly, you end up paying a lot more in the long run, making it very difficult to get out from underneath. [5] X Expert Source Benjamin PackardFinancial Advisor Expert Interview. 11 March 2020.

Work on paying down the debt with the highest interest first, while making minimal payments on everything else. [7] X Research source This is sometimes called “laddering” your debt, and helps the borrower feel more actively in control of the debt. If the interest rates are similar for your debts, pay off the one with the lowest balance first. This is sometimes called “reverse laddering,” which allows you see your progress faster, and will make you feel good after each smaller debt is paid off.

It may also be possible to get the interest rate lowered on certain loans, or to establish a deferral for a short period of time. [9] X Expert Source Benjamin PackardFinancial Advisor Expert Interview. 11 March 2020. [10] X Expert Source Brian Stormont, CFP®Certified Financial Planner Expert Interview. 21 July 2020. In some situations, you may be able to defer the payment for a certain length of time, during which you won’t accrue interest. During this time, you can aggressively pay down the loan while it’s not getting any bigger, a serious advantage.

Balance the amount of money that goes into each category of your necessary expenses to try to get as much as possible of your income into the loan payment category, so you can pay down your loans more quickly. Stick to this budget month in and month out. If the outgoing funds are more than the incoming funds, you’ve got some work to do. Obviously, you’ve got to either cut some expenses or make more money. In some situations you can do both. Consider getting a second job, taking extra hours and extra responsibilities at work, and cutting costs wherever you can find them.

Cook dollar-saving meals. Stop going out to eat and start buying cheap bulk ingredients and learning to cook big meals that’ll help feed your family on the cheap. Fast food restaurants trick people into thinking it’s cheap, but a pot of vegetables, rice, and beans goes much farther much more healthfully than a cheeseburger. Cut inessential entertainment expenses. Are cable and Netflix subscriptions really necessary when you live in a town with a public library? Do you really need to hit that restaurant, club, or music venue? Find ways to have fun for cheap.

Come up with a savings goal. Even if it’s just a few hundred dollars, going about the steps necessary to save money instead of spending it and watching your savings account grow can be a hugely satisfying experience for some people. Make saving more addictive than spending.

Being debt free doesn’t mean living like a miser. If you want to spend a little on vacation, or splurge a little every now and then, feel free to go for it. Just make sure that these kind of fun expenses come from monthly income that’s in excess, not being charged on accounts that are already swollen beyond capacity.

If you’re uninsured, make sure you get some kind of affordable health insurance as quickly as possible. Talk to your employer about insurance options, or research national options in the marketplace. It’s very important to have health insurance for when you need a little help.