Tips To Becoming Debt Free


Debt has become a national pastime in America. We charge purchases on credit cards. We overdraft our bank accounts. We take out loans for our houses, cars and education, and when it’s all said and done, we owe thousands of dollars of debt. It’s a nightmare, but it doesn’t have to stay that way. You can get out of debt.

Credit Report

The first thing you need to do is get a copy of your credit report. Your credit report will list every account you own whether it’s in good standing or bad standing. Write down each account and how much is owed along with the phone numbers for the companies. This will give you an accurate list of how many debt accounts you own, how much is due on each account and the total amount you are in debt.


Now, it’s time to calculate your income. This is best done with net income since you never see your entire gross income due to taxes. Take your weekly or biweekly checks and multiply to get your monthly take-home income. This is the income that you have in order to pay your bills, food, gas, essentials and debt.


Next, it’s time to take a long hard look at your bills. On a separate sheet of paper, list all your bills including your mortgage or rent payment, electricity, gas, car loans, student loans, cell phone bills, gym memberships, cable or satellite bills, internet bills, insurance payments and any other bills you have. Total them. This is the monthly amount of money you are spending on your bills.

Food, Gas, And Essentials

Next, figure out how much money you spend on groceries, essentials and gas for the entire month. For example, if you spend $50 on gas, $100 on groceries and $50 a week on essentials, you’re spending $800 a month on food, gas and essentials.


Once you’ve calculated everything, subtract your bills, food, gas and essentials from your income. This is the amount of money you have every month to pay down your debt.

Cut Back

Now, it’s time to determine where you can cut back in order to pay down your debts faster. If you have a $50 a week fast food habit from work lunches, cut it to $20 a week and take your lunch three days a week. If you have a $25 weekly coffee shop habit, brew your own. You can buy a large container of coffee for $10, and it should last an entire month. That’s a savings of $90 a month.

You can also cut back on unnecessary expenses. Ask yourself if you really watch enough TV to justify a $100 a month cable bill? Do you really need the fastest internet your provider offers? Are you paying for cell phone insurance you’ve never used? All of those things may seem small, but the savings add up. If you cancel your cable television, you could save $100 or more a month depending on the amount of the bill. Most cell phone providers charge $6.99 a month for phone insurance. That’s a savings of $84 a year. Simply look for the things that you don’t use and don’t need and start cutting. You’ll be amazed at the savings.

Pay Off Your Debt

With the extra money you have and the extra money you’ve found, start paying off your debts. Once you get one debt paid off, don’t spend that money, snowball it into your other debts until you are completely debt free.

This post was written by

jason – who has written posts on Budget Clowns.
Father of three and married to a lovely women. Always looking for ways to save money, and invest it properly for my children's future.

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