Things You Will Need
The first step is to establish being debt-free as a goal. Once this is done, create a priority list. On this list, identify what debts should be paid first. Your priority list should include things that need to be paid such as mortgage, utilities, car payments and groceries.
One method for paying down debt is the snowball effect. The principle is to stop everything except minimum payments and focus on one debt at a time. The snowball plan maximizes rather than dilutes efforts. Mathematically, it would make more sense to pay higher interest debt first. However, there are many that pay their smallest debt first to see results and build momentum. Paying the smaller debt first allows you to see the accomplishment and you are more likely to stay focused with the plan.
Step 2Secondly, eliminate impulse purchases which are often necessary. A good way to do this is to establish a budget that allows you to live within your means but not live just to pay bills. For example, you can budget $50 a month on entertainment and rent a movie instead of going to the movie theatre.
Step 3The third step is to delay making major purchases as long as possible. For example, evaluate whether it will be cheaper to repair an item than make a new purchase. This may be a good time to adopt the habit of living below your means. Sack lunches and home brewed coffee are home-made solutions to four dollar lattes and lunches that can eat a hole in your pocket book.
. Your focused effort on paying off your debts, following your budget and not making impulse purchases will lead to debt-free living and financial freedom.