The Beginner’s Guide to Living Debt Free

by Ron Haynes

D-day is fast approaching. Debt Day. The way I calculate it, I could very easily be debt free within 12 months, sooner if I drained my 6 month emergency fund, cashed in some brokerage accounts, cut out vacations, and took the kids out of private school. I’ll pass on those and just settle for a little slower debt payoff. Some things are really important to me and when it comes to my kids, I want them to . All our credit card debt will be gone in about 3 weeks and the balance of our consumer debt will be paid off by Christmas. Our “good” debt in student loans should be zeroed out by summer ’09 and if we decide to continue on with our current rate of payoff, our mortgage debt could be retired no later than 2015. We started getting really serious about becoming debt free a few months ago and have paid off over $30,000! These last two months have seen us really cutting back and getting that “gazelle” intensity.

I’ve started thinking about what life will be like once we are debt free (excepting the mortgage). What ever will we spend our money on? Another thing I’ve started thinking about is…specifically…how do I insure I never go back into debt again? I was almost completely debt free after going through Consumer Credit Counseling back in 1998 but I lost my tenacity and fell back into my old habits.

I once considered debt to be liberating, because credit cards and other types of loans allowed me to spend more than I had. It seemed like free money. This is exactly the type of thinking that I need to reverse in order to avoid another debt spiral in the future. I have to keep in mind that:

  • I got into debt by spending more than I actually had, mostly with the help of credit cards. Others have avoided debt by spending only money they DO have AT THE TIME.
  • I also have to make the decision to be happy with what I have. Debt doesn’t help me happy considering the hard work I’m putting in to become debt free.

  • Bad debt is not free money—buying things with credit cards makes everything cost more in the long run. It’s like paying for something twice.
  • I have to insure I know where all money is spent. I do this by daily tracking every dime that comes out of my checking account and assigning a category.
  • I have to stay on budget and avoid those budget busters. Thankfully, my wonderful wife isn’t above clipping coupons and is a very frugal shopper. She keeps our food and household budget under control. Thanks Sweetie! XOXOXO
  • I have to insure that I put my savings into accounts that will work for me and my family to shore up our financial future and to have enough for retirement.

With the skyrocketing cost of basic living necessities, debt seems to be the chief option to get most people through the rough times. But debt is a terrible task master. Debt doesn’t stab you and it’s over, debt kills you in a slow financial death of a thousand cuts.

What ideas, tips, or techniques do YOU have to help someone stay debt free?

[tags]credit, debt, budget, money, credit card[/tags]

About the author

Ron Haynes has written 989 articles on The Wisdom Journal.

The founder and editor of The Wisdom Journal in 2007, Ron has worked in banking, distribution, retail, and upper management for companies ranging in size from small startups to multi-billion dollar corporations. He graduated Suma Cum Laude from a top MBA program and currently is a Human Resources and Management consultant, helping companies know how employees will behave in varying situations and what motivates them to action, assisting firms in identifying top talent, and coaching managers and employees on how to better communicate and make the workplace MUCH more enjoyable. If you'd like help in these areas, contact Ron using the contact form at the top of this page or at 870-761-7881.



I resolved to be debt-free around last July/August time. I realised that while my good job could cover my debt payments and that debt had allowed me to get ahead and develop my career, it had now become a millstone that inhibited my freedom. Of course, in retrospect, that’s all it was ever going to be. Realising I was in the wrong career, and that changing would require a drop in salary, really made me confront this.

Now I’m just over half way through clearing my unsecured credit card debt, which aside from mortgage and student loan is all my debt. I have one spreadsheet to calculate my “non-discretionary” monthly spending – mortgage, rates, electricity – based on previous bills, plus 5% for inflation and the unexpected. Each month when I get paid everything comes out the current account except for that non-discretionary amount.

Then I have separate sheets for each thing I choose to spend on – clothes, books, music, entertainment/random (meals out or stuff that won’t fit anywhere else). These are virtual bank accounts – the money is all in a savings account, but on my spreadsheet each category is an account in its own right. The original idea was that each month I’d pay some into each, then whenever I wanted to spend the money would already be there. In practice I sometimes end up robbing peter to pay paul – which is what I used to do with “bad credit” – but the difference now is that I’m borrowing from myself!

Aside from one VISA I keep for things that won’t take any other payment, and which is set to automatically pay off every month, I don’t use credit at all. Only that one VISA is in my purse for genuine emergencies (stuck in a foreign country type emergencies). The balance is on a different card, in a filing cabinet.

This approach allows me to budget and plan ahead, and I can clearly see where I need to compromise between different spending. When you just have a big number in your account you think you can spend it five times over; start splitting it up and you soon realise there isn’t as much to spend as you’d thought.

Hope this helps – its certainly helped me, have paid off more than £4,000 debt in the last 9 months and am on track to be (bad) debt free by December. :D


Thanks Victoria,
All I can say is, “Wow!”
You are very well organised (English spelling!) Thanks for taking the time to comment and share your ideas…and congratulations on your success with paying off bad debt! It appears that you will have a very celebratory Christmas!

Jeff@My Super-Charged Life

You are right on the money about debt! It is a terrible master. I just finished paying off all my debt except for my mortgage just a few months ago and I can tell you that it feels great! It is just nice knowing that the money I earn goes to me now instead of to a creditor.

It took us about 20 months to pay off what we owed. The 12 months you have left will fly by. When we look back, it seems like just yesterday that we started paying down our debt and at first it seemed like it would take forever.


Thanks Jeff,
I can’t wait to get this burden off my back! Congratulations on your success!

Rachel @ Master Your Card

Make sure that if you feel you do have to have a credit card (ideally do not have one) then set up an automatic payment to have the full balance paid off each month. Do not use storecards. Ask the bank to cancel your overdraft facility. Make sure that you save some money each month so that rather than borrowing to buy things, you should actually be able to afford them.


Thanks Rachel,
All great tips. I don’t have overdraft protection, but keep a very, very close eye on my checking account online.
Saving up for those things we want IS the best idea.

Four Pillars

Congrats on the great progress!

I would suggest you apply that “Gazelle” intensity (or some of it at least) and increase your retirement savings as well as pay down your mortgage debt – debt is debt after all.


Brian Lang

I’d be interested in you posting a follow up to this story once you get some tips.
My wife and I sold our house last year, moved 750 miles to a new city. The sale of the house let us pay off everything. We owe a tiny amount on one credit card that we’re able to pay off each month. Other than that, we have no debt.
What I’m looking for is some solid tips on staying debt free. I don’t want to go back into that trap. The only debt I’m willing to consider is a mortgage, and that’s not going to happen in my new community as real estate prices are too expensive for us to afford to buy a house.


Thanks Brian,
Check out the post from April 22!


I recommend haggling to help you stay and get debt free. It really gives you an appreciation for how much you have been over charged in the past! Soon after starting to haggle you’ll realize how much “other” people are still being charged!

I recently wrote . I hope it helps!


So apparently I failed at including the link properly. Let me try again.

<a href “” title= “10 Pointers for successful Haggling” Ten Pointers for Successful Haggling


Thanks Daniel,
These are great tips. I linked to them in a follow up post! :D

Mrs. Micah

How I stayed debt free until marrying my debt: Saved up for everything (except college, I got scholarships for 75% of expenses, a small inheritance, and a little parental help).

Better violin–saved for a year. Trip to Europe–saved for 2 years. And for the little stuff, I only allowed myself a certain amount of spending per month.


Thanks Mrs. Micah,
Yours is an example we all need to follow. Save up for what we want and pay less for it by NOT paying 24% interest!

We saved for 5 years to go to Disney World. It was a great feeling knowing it was paid for when we were there.

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