7 Solid Tips For Living Debt Free

by Ron Haynes

One of the comments from yesterday’s post asked for more specific tips for staying debt free. To be certain, living debt free is more important than getting debt free. Why? When you have a goal to become debt free, you have a mission, a target, a light at the end of the debt tunnel. But what happens when you arrive in debt free land? You better have a plan for staying debt free otherwise you’ll wind up back in debt again.

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.

So here’s my follow up post as requested! :grin:

“Debt free” is a state of mind. Getting there is not as hard as staying there. I know. I had everything but the mortgage and a small student loan paid off at one point. When someone goes on a diet, they have to change what they eat forever if they are to keep the weight off. Debt is no different. Staying away from it requires a way of looking at life that is different than anything you’ve experienced up to this point. Up until a few years back, I used credit cards freely. I bought anything I saw that I wanted because “I could afford the payments.”


If I’m to remain debt free, it will require a completely different mindset, one that isn’t satisfied with the status quo, one that completely shuns debt for depreciating items. What that means is:

Live debt free by

  • No debt for eating out at that fancy restaurant.
  • No debt for that expensive hair styling treatment.
  • No debt for clothing.
  • No debt for groceries.
  • No debt for car rental.
  • No debt for hotel stays.
  • No debt at Christmas.
  • No debt for birthday gifts.
  • No debt for airline travel.
  • No debt for “the rewards.”
  • No debt for the rebates.
  • No debt for that new four-wheeler.
  • No debt for a new or used car.
  • No debt for a new boat.
  • No debt for a new camper.
  • No debt for a new lawnmower.
  • No debt for books.
  • No debt for the new exercise equipment.
  • No debt for the infomercial that promises to make you rich.
  • No debt for depreciating junk. Period.

Stop everything you’re doing and write a list of everything you’ve ever bought on credit. Everything.
Circle the things that have increased in value…and be honest.

Everything that’s left should have been bought with cash or on your debit card…or maybe you shouldn’t have purchased it at all. You pay for the things you want anyway, but buying them on credit causes you to pay much more for them because of interest and the “credit card factor.”

The credit card factor and living debt free

The “credit card factor” is well known by retailers and other merchants. People who buy on credit, spend more than they would otherwise, usually up to 20% more. This is common knowledge amongst retailers. That’s why almost every retailer offers some sort of in-store financing, accepts visamastercardamericanexpressdiscovercardcarteblanchdinersclub, or offers a private label credit card with oodles of rewards programs and points. Who do you think is really paying for all that?

There’s nothing wrong with using a credit card so long as you use it responsibly. It’s like dynamite … you really should know what you’re doing and how to use it before lighting that fuse.

I’d say that 95% of personal financial success is determined between your ears and what’s between your ears dictates your behavior. The credit card and banking industries didn’t get to be multi-billion dollar industries because they were stupid, it’s because they were smart at separating you from your money.

So what tips other than “responsible credit card use” do I plan to employ?

1. I will continually keep 6 to 12 months in a liquid emergency fund.

Yes, I said 6 to 12 months in my emergency fund. In today’s economy how long would it take YOU to find another job making what you’re making now? I’d rather err on the side of caution.

2. I will stay on budget

I will not allow myself to get crazy with the excess cash I’ll soon have left over every paycheck. This is where I failed last time.

3. I will divide my savings as follows:

  • Savings for college (I have three kids).
  • Savings for weddings (I have two girls).
  • Savings for a replacement vehicle. I have a company car and my wife has a minivan. It will probably last at least another 5+ years. It’s a Honda.
  • Savings for retirement. Currently my company makes a contribution to an ESOP plan for my retirement. It’s been 15% of gross salary on my W2 but the last two years has been 25%. The year before that it was 20%. This is a hard deal to beat. I contribute nothing (not allowed to by law) and the company puts money into my retirement account which has historically grown at a rate greater than the S&P 500. I plan to save an additional 15% to 25% over and above what’s in my ESOP.
  • Savings for other major purchases. If I need a new [ fill in the blank ] I will have the money to pay cash and will only pay cash.

4. I will employ all the lessons of frugality I possibly can…within reason.

I don’t plan on going hunting for my food (yet), I don’t plan on getting a milk cow or some chickens, nor do I plan on spinning my own yarn. Gardening, sure, but I’ll leave the homemade laundry detergent to others!

5. I will learn to negotiate a better deal on everything.

Negotiation is an art form that anyone can learn. Employing a little bit of haggling can put a little more money in my pocket!

6. I will learn some good old fashioned self control.

How’s that for a revolutionary tip? Control your desires and how you act on them and you can control your own destiny. Self control is the key to making it. Master yourself and you can then master anything.

7. The most important tip is to…drum roll please…PLAN.

We plan for the next week, maybe the next quarter, but rarely do we REALLY plan further out than that. We “want to keep our options open” and we fear being tied down to some strict budget. But planning and budgeting is more about controlling your money than about restricting your fun. Planning lets you enjoy the fun of dressing up in shabby clothes, popping in the Billy-Bob teeth, and buying a car with all cash from a surprised salesperson. Wouldn’t that be fun? How about telling the furniture salesperson that you don’t need financing and that you’d like a 25% discount…heck, make it 35% since you’re paying cash. Or maybe just that deep secure feeling that you don’t owe anyone anything? That’s what I’m talking ’bout.

About the author

Ron Haynes has written 1000 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.

If you enjoyed what you just read and would like to get FREE email updates with the freshest articles from The Wisdom Journal delivered right to your inbox, subscribe today! It's ridiculously easy and you can unsubscribe at any time. Since your email address is never sold or abused, you can subscribe with confidence, PLUS you'll get free reports/guides/eBooks, subscriber only benefits, and other perks.



Great that I get to be the first to comment….hehe

I think you have given us all a well thought out and laid out piece of advice.

Thanks for sharing these, particularly in what seems to be increasingly tough times.


Thanks fathersez,
Appreciate the feedback!
Debt is a terrible taskmaster. I just hope my kids can learn from my mistakes.

Frugal Dad

Excellent resource for those desiring to live debt free (and thanks for mentioning my garden).


Thanks Frugal Dad,
Glad to mention the garden!

Brian Lang

Thanks for the follow up.


Hey Brian,
THANK YOU for the inspiration. Ask me a question anytime.


Question: Would you consider yourself debt-free if you had debts, but had more cash/investments than debt? This is what I’m doing… I have $12K in “arbitrage” debt and have that money tucked away in a high-yield savings account (separate from my emergency fund) earning a bit of interest until November when the note comes due.

Would you still consider yourself debt-free at that point?



Thanks Erica,

In your case YES. Very few people are able to master arbitrage. Very, very few. But having read your story, I’d say you were debt free. Do you “feel” debt free?


Jeff@My Super-Charged Life

This spells everything out very clearly. Remaining debt-free is as you state mainly about having the right attitude. You have to hate, loathe, despise, detest, abhor it! Avoid it at all costs!


Thanks for the link Ron. As usual, great post!


You’re welcome Daniel,
I thought you had a great post on haggling! :D


We followed Dave Ramseys Total Money Makeover and we are now Debt Free thanks to a BIG income tax return and years of self control aand saving! ( We do still have our mortgage, a small personal loan that we are attacking and my husband truck loan that we to are attacking and will have then 2 paid off in 6 months) It feels so wonderful not oweing credit card companies money every month and being able to go grocery shopping or shopping in general and not worring about how much we spent. We have money left over every month and our checking account is in great shape! Our savings, even better shape! I have never had this much money in liquid form every in my life and I just LOVE IT! I am the happiest i have ever been in my entire life and I am only 27 about to be 28 in April. We have 2 beautiful kids who I am finally about to save for there future now. Just a few years ago I had to borrow money from them to pay the bills. Now we have paid back everything that we borowed from them times 3! I felt horrible doing that cuz they are only 8 and 3 but we had to do what we had to do to survive. I’m also glad we had our familes there to support us and push us to do what we set out to do! You need support to keep you going in times like this. If you have no support you have to find it somewhere. I also pat myself on the shoulder for reading all the books known to man about Money, personal finance ect. Anything that had to do with budgeting, saving and paying off debt. It helped me to figure out how to get out of the mess we created. The thing that always suprised me was how quick and easy it was to get into a huge amount of debt ( $150,000 to be exact) and how it takes so long to get out of it. I am a very impatient person so this was extremly hard for me, but it taught me to wait for the things you want in life. This year me and my husband will finally be able to buy 2 newer used cars with cash! I can’t wait cuz the dealership we work with has always found financing for us and given us great deals and when we go in there with cash I’m sure we will get even better deals! I can’t wait. I’ve been waiting FOREVER for a Lincoln Navigator and now I will finally have my black beauty and not have to ever make a payment on her! And my husband will be able to have his Ford F 150 King Ranch crew cab with no payments. ( We do have to do them 1 at a time but oh well We are getting what we want and that’s all that counts!!!) I wish everyone all the luck in the world on being debt free. The economy would prosper more if everyone was debt free and we would have alot more happier people in this world!


Nice Article Ron. Reading the lines on credit cards, it was like reading about myself…lol.Its comforting to know its a general tendency.I think you have provided a well rounded and detailed write up with some useful tips.Thank you.


Hi Ron,
I thought I could learn something here. Is it possible to email me, please?
Thanking you in anticipation.

Previous post:

Next post: