How to become debt free?
Have too much debt? Don’t know where to start? Every fix takes too long or is too expensive. Here’s what we did to pay off $51,000 in under three years, and we’ve helped others pay off over $1,000,000 (so far). Or skip ahead and start here: 7-Step Credit Card Debt Slasher here.
Becoming debt free is more than a list
Becoming debt free is more than a laundry list of dos and don’ts, which ChatGPT will find for you when you search “how to become debt free.” Yes, doing and not doing things such as:
- Cutting coupons
- Buying in bulk
- Shopping consignment
- Using tax refunds, bonuses, and cash gifts to pay off debt
- Cutting the cable cord
- Selling your car
- Downsizing your home
- Acquiring no more debt
- Selling unwanted/unused items
- Stopping eating out so much
- Canceling monthly subscriptions
- Canceling gym and other memberships
- Downsizing your social life
- Cashing in life insurance to pay off debt
- Finding free and cheap entertainment
- Temporarily reducing or eliminating investing
- Quitting Facebook and Instagram
- Making your own coffee
- Earning more money with a new job, promotion or side hustle
- Canceling Amazon Prime
- Meal planning
- Increasing the monthly payments to your credit cards
- Cutting your credit cards
- Doing a spending freeze
- Negotiating lower interest rates
- Reducing time spent on social media – it makes you buy things
- Using a grocery list
- Using the library
- Making a budget
are great ways to save money and put more money toward your debt to become debt free. But all these practical and tactical steps don’t tackle the real reason most – not all – people get into credit card debt.
For most of us, the reasons we get into credit card debt are limiting beliefs about who we are and what we’re worth. So, step #1 to becoming debt free is always, always, always. . .
1. Adopting the mindset to become debt free
Designer clothes, grand vacations, homes in the choicest neighborhoods, and happy hours that stretched well beyond an hour—sound familiar?
Some might call it the “gay lifestyle.” A while back, a young gay man asked in a Facebook group, “Why’s it so expensive to be gay?” We knew exactly what he meant. Maybe you do, too.
Keeping up with “gay money” was turning us into two very unhappy homos. We were the epitome of the gay cliché: looking fabulous but being fabulously broke—like those four guys crammed into a two-bedroom apartment in L.A., but somehow still driving Beemers and Audis.
Sound familiar? Yeah, we thought so.
One night, as we sat on the dining room floor of our basement apartment—yes, a basement—we finally said, “Enough!” We were beyond frustrated because of the debt itself and because it stood in the way of the life we truly wanted. The life we were pretending we had. We’d tried fixing it before, but every quick fix made things worse. We couldn’t keep living like that and knew something had to change.
We had to change. Maybe you’re feeling that way, too?
The first step in any fundamental transformation is changing your mind. There’s a vast difference between wishing for change and believing you can.
That’s why shifting our mindset was crucial. We had to stop dreaming about a different life and start believing we could create it.
2. Creating the vision to become debt free
Many of us can’t imagine a life without debt. Whether it’s student loans, credit cards, or medical bills, debt feels like that annoying friend who always overstays their welcome. But here’s the kicker: it doesn’t have to be.
When we finally got honest about our $51,000 in credit card debt (yep, that’s not a typo), we had to ask ourselves, “What would life look like without this financial ball and chain?” We were paying $10,000 a year in interest to credit card companies. I know, ridiculous, right? So we started imagining what we could do with that $10,000 instead of using it to fund our luxury subscription to the debt club.
It was FUN to daydream. We fantasized about taking real vacations that didn’t leave us with a credit card hangover. We even dared to dream about moving out of our basement apartment and into a condo that didn’t come with a soundtrack of creaky upstairs neighbors.
So, what would your debt-free life look like? Imagine the freedom with no debt—a little extra cash in your pocket, much less stress, and maybe even some guilt-free spending. Can you picture yourself living that debt-free dream? Because if we can do it, so can you.
3. Being friendly with the Benjis
As Macklemore sang in Thrift Shop, “Only got $20 in my pocket, I’m, I’m, I’m hunting. This is fcking awesome.” Turns out, you can have a lot of fun when you know where the fck your money’s coming from and where it’s going.
A clear sense of where you are financially and where you want to be gives you a roadmap to make it happen. That roadmap was essential when we decided to get serious about becoming debt-free. Without it, we’d still be stuck on the path of least resistance—Sunday Funday, poppin’ bottles at happy hour and feeding our Amazon addiction, all while Visa and MasterCard happily enabled our bad habits.
One of the best perks of getting our financial act together is that we now spend with purpose. We ask ourselves, “What brings us true joy, not just a fleeting hit of happiness?” We’re not talking about the slight buzz from a couple of cocktails at happy hour, but what makes you smile days or weeks later?
That’s where your money should go. So, ditch the impulse buys and the instant gratification and start spending on what makes you happy. Your wallet—and your future self—will thank you.
4. Having the audacity to do it
Think back to your last unique first date. How did it all unfold? I’m not talking about the logistics—some details are too juicy to share unless you’re on Grindr or Bumble.
Think about how it started. Who made the first move? Who had the guts to ask the other out? After that date, didn’t you feel pretty great? (Cue mischievous grin.)
Well, managing your money is a bit like that first date. It’s not a lifelong commitment, but your wallet and future self will thank you. Because let’s face it, nothing’s sexier than someone who has their shit together—and that includes their finances.
Speaking of which, did you know that couples who talk about money have better sex? So, get your financial act together, and you might find that both your wallet and your love life get a little extra boost
5. Doing it smart to become debt free fast
Most people who Google ways to become debt free often read advice from one of Dave Ramsey’s staff writers. Ramsey, a big fan of the Debt Snowball Method, suggests paying off the credit card with the smallest balance first. You throw any extra money—bonuses, gift money, tax refunds—at it while making minimum payments on your other cards. Once the smallest balance is gone, you move on to the next smallest balance.
The Snowball Method is great for initial wins and a bit of debt payoff drama. But here’s the kicker: it can cost you more in the long run, as it’s not the most fiscally responsible method. Plus, tuning into Dave Ramsey’s show or buying Financial Peace University might also come with a side of religious fervor that some people aren’t interested in—hey, “don’t cram your lifestyle down my throat and all!”
On the flip side, the Avalanche Method is the more fiscally responsible option. This method focuses on paying off the credit card with the highest interest rate first while making minimum payments on the rest. It’s a surefire way to save more money over time. The only downside? It feels like it takes forever to see the light at the end of the tunnel.
When we assessed these methods for tackling our $51,000 credit card debt, we realized it would take 5 to 8 years to become debt-free. Patience isn’t exactly our strong suit!
So, we had to figure out what was dragging out our journey. Can you guess?
It was those pesky high credit card interest rates—some charge over 22%! So, we created our approach: the Debt Lasso Method. Because if you’re stuck wrangling with debt, you might as well do it with a bit of style and much less time.
6. Lassoing your debt
The Debt Lasso Method says to rein in your debt to as few locations as possible with the lowest interest rate, ideally 0%. This is most easily achieved with 0% interest rate credit card balance transfer offers. Low-interest personal loans or loans from friends and family are other options, though we’re not super fans of the latter two.
There are five total steps to the Debt Lasso Method to make it super-effective:
- Commit
- Commit to stop using your credit cards
- Commit to paying more than the minimum monthly payment each month
- Trim
- Immediately trim or pay off any cards that can be paid within a month or two months
- Lasso
- Lasso your debt into as few locations as possible with the lowest interest rates possible
- Automate
- Automate credit card payments, focusing on paying more than the minimum on your credit card with the highest interest rate
- Monitor
- Make sure you never miss a payment and adjust your payments as you pay off credit cards
More tools for becoming debt free:
Read the full article here
