How to Become Debt Free

If you command your wealth, you command your life. Do not let debt sap your wealth and limit the fullness of life that you are destined to experience.

There are many ways to conquer debt. Here are three ways you can fight the debt battle, become debt free, and reclaim a healthy personal financial life.

Cleanse yourself of toxic debt

Toxic debt is poison. It constricts your financial wellbeing by burdening you with interest payments, fees, and dependence on further debt. Toxic debt also prevents you from investing and achieving financial independence.

For most consumers, their debt is working against them. They have toxic debt that only takes and does not give.

Even if you understand this, it still may be hard to stop using your credit card. When you want something you cannot afford, it is easy to think, "I'll just put it on the card."

You may be "living large" now, while you are racking up debt. You may be keeping up with your friends, family, and neighbors. Nevertheless, they may be spending beyond their means too, and you could all be quietly sliding down the road to ruin together.

In any case, if you keep up your current level of debt, you will not have enough money left over to invest in your future and create financial independence for yourself.


Protect your credit rating

You may be handling those "easy, low, minimum payments" every month. Nevertheless, what if something happened in your life that made it difficult to make those payments? What if you lost your job, got injured, sick, or divorced? What if the interest rate on the credit card was increased?

If you are late on your payment, the credit card company has the right to "dial down" your credit rating. This is very serious. A low credit rating, also known as your credit score, could prevent you from getting a loan or buying a home. Protect your credit rating by refusing to take on any more credit debt until you have paid down the debts you already have.


Keep a small wallet

Here's another trick related to dieting. You may have noticed that if you have a larger plate, you tend to take more food. In addition, if you put a large portion on your plate, you tend to eat it all!

The same concept of the size of your dinner plate applies to the size of your wallet. Keep a small wallet. Do not carry more cash with you than you are going to need.

As an experiment for one week, reduce by 20% the amount of cash you usually keep in your wallet for weekly spending money. At the end of the week, you will probably have managed just fine. Now you can save that money every week. It will start to add up!

Try these three techniques to become debt free. They are simple and doable. Remember, simple is not always easy, but you can build these techniques into your life, one by one, and gain freedom from debt gradually and persistently. Good luck!

Heidi Clingen is a long-time resident of Stevenson Ranch. She and Samuel K. Freshman are authors of The Smartest Way™ to Save, Why You Can’t Hang on to Money and What to Do About It. They offer only their opinion, which does not constitute professional, financial, or legal advice. To receive a copy of The Principles of Financial Independence or submit questions, email them at Heidi@TheSmartestWay.com