How To Be Debt Free: Keep It Simple

A simple activity with my youngest son last night had me thinking that for those wondering how to be debt free the answer was right there.  Keep it simple.  It all started when my youngest, up past his bedtime again, came excitedly into my office where I was working to announce that we had to go downstairs right away because you could see Jupiter clearly in the night sky, right there next to the Moon. So down we went, and truth to tell it was quite a show — both the event and my son’s excitement — all free.

Like my evening’s entertainment, living debt free is a simple concept.  It takes just three easy steps:

1. Stop adding to your debt.

2. Get free from debt.

3. Once there, live a debt free life.

Debt Free Math

Being debt free starts with the simple concept of spending less than you earn. You can’t become debt free if you keep adding to your debt. You need to be honest with yourself about where your money is going. As a start, pull out your bank and credit card statements for the last three months. Take a look at all your withdrawals, payments and expenses. Do you know where your money went? If not — there’s your first easy step. Take that information and make a budget. Now, for the next three months keep track of everything you earn and everything you spend money on. Look for ways to cut back on your expenses. You need to reduce your expenses and, if you can, increase your income. In simple terms, if you take home $2,500 each month and spend $3,000 you are not going to be free of debt, ever. If, on the other hand, you take home $2,500 each month and spend $2,000 you have just earned free money to reduce your debt.

Ask The Experts

If you are overwhelmed with debt, cutting back on your spending is a great start but may not be enough to get you free of debt. You may need help managing your debt. Finding a professional debt manager however can be like walking in a minefield — and that is hardly simple. So what do you do?  Ask around, ask questions. Has anyone you know experienced some financial difficulties and talked to a professional debt advisor they can recommend?  Even if you don’t want to consider bankruptcy, talking to a Trustee in Bankruptcy is a good start. Why? Because a licensed bankruptcy trustee offering a free initial consultation will talk to you about your debt problems.  They will look at your situation and help you decide what would be your best strategy to becoming debt free.  If bankruptcy is not your best option — they will tell you that and help you develop a debt repayment plan or debt settlement plan that best suits your needs.

The hardest part is making the first call. Here’s something simple: Ask yourself if you have 30 minutes to talk to someone about becoming debt free? If you do, then making that call just became easier.

Life Changes Give You Total Debt Freedom

Living frugally is not a bad thing. But these changes need to be permanent. Becoming debt free takes time, you need to have the discipline to hold out. More importantly, once you are debt free, you will want to stay that way. Now that you have some financial freedom, keep on track:

  • control spending
  • live within your means
  • save money

Debt does not have to be a way of life. Being in debt is a choice. Being debt free is also a choice.  If you want to know how to be debt free it’s simple:  Make the right choice.

Category: Debt Solutions |

Jan 22, 2013

About Sharon Hoyes

Sharon Hoyes, CA, CPA is a Chartered Accountant and Managing Editor at MoneyProblems.ca writing about personal finance and consumer news and how it affects your debt.

Join the Conversation

Leave a Reply

Your email address will not be published. Required fields are marked *

eleven + 9 =