Falling into heavy debt often feels like there is no way out. This is especially true when the economy and job market gets tough. Climbing out from under a mountain of debt might seem impossible, but if changes are made, eliminating personal debt and living debt-free is doable.

Unfortunately, sometimes this is easier said than done, particularly if heavy debt has been accrued over time. In order to live a debt-free life, one has to first eliminate all the financial obligations that are above and beyond routine living expenses.

US Money
Credit: RoamingPro via Pixabay https://pixabay.com/en/users/RoamingPro-1398292/

Create a Budget

Creating a budget can help you get the most out of your money. 1 When getting started, it is important to tally up all your income and all of your current and outstanding bills. Once you do this, enter these into a spreadsheet or other financial tracking mechanism and carefully document your incoming and outgoing money. As you add up where your cash inflow and outflow goes, you get a better and more accurate picture of what you earn and how much you spend.

From here you can begin to separate necessary expenses from more optional expenditures that are not necessary to live. Weeding out unnecessary expenses is the first step to becoming debt-free because you can effectively stop adding more growth to that mountain of debt. In the long run, a budget can help you bring down your outstanding debt.

Start Saving

As a part of your budget, create an emergency fund. For each paycheck allocate an amount of money to put into this account to have on hand in the event an unanticipated large expense arises. Not have enough money to put away? Look to the lines in your budget where you cut out unnecessary spending. Put those dollars into your emergency fund.  

An emergency fund comes in handy in situations where an expense is unavoidable and is a good alternative to using a credit card which will rack up more debt, not to mention interest payments if you pay by installments.

Scale Back on Other Expenses

Even though you may have already scaled back on unnecessary expenses when your budget was created, now is the time to look at other areas where you can potentially save. Most people find when they closely examine their bills there are still lots of areas they can easily scale back on.

For instance do you have a large monthly cable or mobile bill? Are there lots of bells, whistles and extras you like to have, but can actually live without? Maybe more movie channels than you can even watch? Do you tend to shop on the weekends for clothing or household goods that aren't really necessary?

Look for alternatives to these costly expenses. For instance, look into streaming services online that may be cheaper than a traditional cable bill. Search out new options for mobile that could cost you less. Shop at thrift or consignment stores for some items. There are many ways to cut back. Once these are identified and cut out, they even may find their standard of living hardly changes at all. This is money that can be put towards savings and creating a debt-free way of living.

Credit cards in wallet
Credit: U.S. Navy photo by Mass Communication Specialist 2nd Class LaTunya Howard/Public Domain

Credit Cards

One of the biggest debt issues people have are with credit cards.  Steadily pay down your credit card and do not use it - focus on paying it off. Once the debt is settled, if you use the credit card be sure and pay off the total monthly every time the bill arrives. Also be sure to pay on time. This way you eliminate interest and late fees, which can be costly. If you hold many credit card accounts, close out most of them and only keep 1 or 2 that best meet your needs (perks, low rates, relationship with bank, etc).

A good rule of thumb to follow is if you can't afford to pay it off, don't buy the item. Of course, there will be times a purchase is necessary, but this is where your emergency savings can help.

Examine Utility Use

Many people find when they look at their utility bills they are higher than they'd like these expenses to be. Often, money can be saved in this area, all it takes it a bit of proactive changes in lifestyle and habits.

Instead of leaving lights, computers, video games and other electronics running when not in use, make a conscious attempt to turn off all unused utilities. In terms of water, be sure and run appliances with full loads, take shorter showers and do not waste water. With heat and/or air conditioning, make it low or high enough to be comfortable, but don't use in excess.

The changes won't be seen all at once, but over the course of time these small changes will help save money which you can apply towards paying down debt or be added to savings.

Impulse Buys

Impulse buys are another one of the most common ways people find themselves landing in debt. The best way to avoid this problem is to not engage in this type of spending. Stay out of stores that are too tempting and, when you do have to shop, only go into stores you need to -- be sure to carry a list and stick strictly to the items written down. Avoid shopping online for items you don't truly need.

Over time, the desire to impulse buy will decrease and as the debt is lowered and savings begin to increase, the urge for impulse will probably just start to fade. Once debt-free, this can be a huge incentive to remain that way as, while getting debt-free is not easy, once that goal is achieved, it can become a lifestyle.

Stick to the budget, watch spending and do not allow yourself to accumulate unnecessary debt. If you can do this you can eventually see the rainbow and essentially live a debt-free lifestyle.

[Related reading: How to Differentiate Between Good Debt and Bad Debt ]

Credit: Leigh Goessl