Frugality Magazine - Frugal Living Tips for Financial Freedom

The Simple 5-Step Plan To Becoming Debt Free This Year

The first step in gaining control of your finances starts with becoming debt free. Once you can stop worrying about repayments on your credit cards, loans and vehicle purchases you’ll instantly start to feel wealthier.

What’s more, all that money that you have been spending on debt repayments can – at last – be put towards more exciting things. Even just a few hundred dollars a month can start to grow rapidly when you know how, turning into a nest egg that will protect you and your family for years to come.

But how do you pay off debt most easily?

Luckily, having paid off over $40,000 worth of consumer debt myself since starting this blog, I consider myself pretty well-versed in the process.

What follows are therefore the steps that I have found to be most effective, placed carefully into the order I recommend following. In other words, it’s what I would have done if I knew then what I know now

Negotiate Your Debt

First things first – not all debt is set in stone. In many cases, contacting the companies you owe money too can be surprisingly effective. In many cases interest can be eliminated or reduced, rapidly cutting your debt before you’ve even paid off a single penny.

You just need to be willing to ask each creditor what they might be able to do to help you become debt free.

You can either do this yourself (if you have the time) or utilize a company like National Debt Relief to negotiate your debt down on your behalf.

Transfer to a Lower Interest Rate

Once you’ve successfully knocked a reasonable amount of debt off the total you owe, the next step is to stop the debt growing any further. This means you should stop using your credit cards, stop applying for any more credit and, if possible, reduce the interest you’re paying on your outstanding debts.

In some situations companies may even put a hold on interest payments altogether, while in others you can transfer high-interest debt (such as credit cards) to a lower interest alternative.

For example, you may be able to take out a low-cost loan or a credit card with a zero interest period, and then shift your existing debt onto this more cost-effective vehicle.

In doing this, you won’t have that nasty feeling of your debt constantly running ahead of you. Instead, every payment you make will make a positive impact in your debt, helping you to pay it off much sooner.

Increase Your Income

The more money you can throw at your debt, the sooner you’ll have it paid back. The math is pretty simple of course, assuming you’ve managed to halt interest on the debt. If you want to be debt free in a year then simply divide what you owe by twelve, and aim to pay back this amount of debt each month.

One handy tip for paying off debt sooner is simply to earn more money – so you have more disposable income to throw at the problem.

While this may sound like a pipedream, these days there are a huge number of ways to earn extra money. You could offer to do overtime at work, you could set up a local pet sitting business or – and this is my recommendation – you could start your own blog to earn extra money from home.

Even if your new business venture brings in just a few hundred extra dollars a month, you’ll be astonished just how much time it will save you when paying off debt.

Create a Spending Plan

By now you know how much debt you owe, and you’ve increased your income as much as possible. Step four therefore involves creating a “spending plan”.

The goal here is to reduce down your expenses as much as possible, so that you have as much disposable income as possible to use for debt repayments. So try to reduce your rent. Cancel services you don’t need. Make sure you’re earning money back on purchases.

The higher your income, and the lower your outgoings, the easier you’ll find it to put aside the money to become debt free.

Make Your Payments Automatic

Lastly, once you’ve decided on your spending plan, the final step is to automate as much of it as possible. The reason is simple: not only does it reduce the effort required to pay off debt, but you can also rest easy that you’re becoming debt free without needing to constantly watch and worry.

Try setting up payments to go out whenever you get paid, ensuring that the most important expenses – your rent or mortgage, and your debt repayments – come out straight away. In this way you’ll never have that sinking feeling of finding that you haven’t got enough cash left at the end of the month to cover your debt repayments.

What’s more, once these “critical” payments have been made, it’s much easier to see how much you have “spare” to spend between now and your next paycheck.

Follow these five simple steps and you’ll find that paying off debt can become reasonably painless. What’s more, think of how you’ll feel in a year’s time when those statements finally drop to zero. That’s the point at which you can really start to make a difference in your financial future.  


Pay off debt and become debt free with these simple tips. I spent years carrying out excessive debt and letting it drown me. This guide reveals the tips I wish I had when I was paying off my debt. If you want to be debt free by the end of the year then simply follow along and see how easy it is!


Tarantula-keeper, sun-worshipper and obsessive frugality blogger. For loads more money-saving advice come and join us on Facebook.

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Hi, I'm Richard, a UK personal finance blogger on a journey to financial freedom.

I've paid off my consumer debt thanks to a frugal lifestyle and now I'm saving hard for the future.

Why not stay in touch by following me on social media?

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