Debt sucks. Being in debt sucks more. But it happens; it’s a major part to the financial system we’ve created and are apart of.

Plastic IOU cards are some of the easiest things to get, and we always have something in mind that we want to buy.

 

So, how do we make sure we stay out of debt?

From what I’ve learned, the answer is simple – yet still pretty difficult.

It’s this: Live below your means – spend less than you earn.

 

Of course, this topic has a lot that can be written on; however, the general idea does scratch deep through the surface.

If we can create a lifestyle where we’re content with living below our means, we’ll never accumulate debt.

 

Now, if we’re already in debt – there’s a way out.

It starts with a commitment to get out of debt; a real commitment.

This isn’t something we should do, but something we must do.

 

It’s usually a big help to have things on paper.

 

So, on a fresh sheet of paper, we can list sources of income – every dollar that we earn per month (as close as we can get).

On the other side, we can list all our expenses – every dollar we spend per month.

Also, somewhere on there should be a list of all our debts. Starting from lowest to highest, and including the minimum payment for each.

 

We can start chopping down our debt by setting aside some extra money (with intentions of paying more than the minimum payment).

We can consider it an extra tax – if the government established an additional tax, we’d find a way to pay it, right? This is just another tax – a tax for our freedom from debt.

This extra money can come from a number of places. Ideally, they can come from something we cut out from our expenses list.

 

Obviously, things like rent, utilities, and food would stay.

However, things like Starbucks, chips, candy, extra data on our cell phones, cable TV, Netflix, can be cancelled or put on pause – we’re probably better off without them anyway.

If we’re going to be real with ourselves, and if we’re staying true to our commitment – it’s extra stuff that we really cannot afford.

The extra $100-200 can be put to way better use – towards our freedom.

 

Something that can be done in addition to cutting our expenses, is adding more income. This can be done a number of ways, but the best would probably be to create your own job.

 

Once we have some extra money coming in, our focus should be to pay off our smallest debt first.

This will not only create more “extra money” once that debt is cleared (and is added to our funds to make future payments bigger), but will serve as a small victory to motivate us to continue towards to bigger debts.

 

As long as we keep our commitment, and continue to live below our means, we’ll find our way out of the trap of debt.