Debt Free Living, A Simple Concept?


Sounds simple, right?

Living debt free is a simple concept: Spend less than you earn, and accrue no debts. Pay as you go. Sounds simple, right? So, why are so many people unable to do it? We’ve heard it before… “live within our means,” “develop budgets”. But in the end, most people inevitably find themselves in the hole, trying to dig out. Why are they facing mounting bills?

Permanent lifestyle changes

Going back to the basics, being debt free happens when you spend less than you earn and are committed to live that way. It means developing a plan, and seeing it through long enough to get out of the hole, and not going back to your old habits. But in order to stay debt free, you need to plan for the long-term and make permanent lifestyle changes. Eliminating debt is only half the battle; you also need to develop sound financial skills to keep you on track down the road.

Plan now for those expenses

So, how do you plan for a future that involves minimum debt? “Debt free” is a misnomer, as few people can afford to pay cash for a home or car these days. First, develop a long-term financial plan. Do you want to buy a home, or a new car, in the next five years? Are you planning to start a family? Plan now for those expenses, and start putting money away. Instead of waiting until after the purchase to budget for the $300 car payment, start setting it aside now, and use it as a down payment. Remember, less money borrowed means less interest paid. Here’s a thought… forego the new car and buy a used car for cash or a lesser loan?

Budget, be honest about your expenses

Next, develop a realistic budget. Budget is not a bad word. In fact, except for our governments, successful people and corporations live by budgets. To create your personal budget, you must take into account your current expenses, your long-term plan, and the development of an emergency fund. Every budget should also include some “me” money – this is cash you can spend, without strings or thought, on whatever you want. Be honest about your expenses and goals when you develop your budget – this needs to be a plan you can follow for years, not for weeks or months. You need to think of a budget as a life plan to reach your goals, not a restriction on your money.

Discipline, follow it through

Finally, you must face the hardest part of staying out of debt – making these plans part of your everyday lifestyle. Most people don’t fail because they have a bad plan; they fail because they lose sight of the plan, and don’t have the passion and discipline to follow it through. Now that your budget and long-term plan are done, stop debating and discussing them – it’s time to follow through, and live by the decisions you made. You may need to be brutally honest with yourself, and take some drastic actions to make this work: If you tend to use your credit card impulsively, then take it out of your wallet and leave it at home. If you enjoy shopping with friends, only go when you have “me” money to spend. Only shop in places that fit into your budget (there’s no point test driving a Mercedes, if you can only afford a Kia) to minimize temptation. Practice saying “no thank you.” Remember, this is your money.

Retrain your thinking and spending

Yes, debt free living is a simple concept, and one not easily executed. Many of us have spent our entire lives learning to live in debt; it will take time, commitment, and skill to retrain our thinking and spending, and get us back to living this way. Living debt free requires change, and change is a process. We will face setbacks, make mistakes, and wonder “Why did I do this?” at some point. But in the end, adjusting our lives in these simple ,yet crucial, ways will provide many benefits.


  1. Good comments all around. Household debt is a huge problem in America, and I believe it shows the reasons why we tolerate government debt.

    But I would add a caveat to the part about buying used cars. When someone buys a cheap used car, they can end up spending the equivalent of a car payment on repairs, and they also run the risk of it “dying” unexpectedly at an inconvenient time.

    I would encourage people to look at a certified used car that comes with a warranty, or a basic-entry new car with no bells or whistles. A lot of dealerships these days are offering free oil changes and such.

    My husband and I get a new car, pay cash for half the value up front, and then pay off the remaining balance within two years. It’s a really good feeling to have a new car still under warranty, no car payment and no worry about repair costs. By the time we need another car, we’ve had plenty of time to save up several thousand.

    It was hard those first few years at the beginning. We used to be so tight with our money that it was a special occasion to go to McDonald’s. Every tax refund, every bonus at work, it all got spent to pay off a debt or save up for something.

    Just as debt is a circle people get into, living with minimal debt is a circle too. The less payments yo have to make every month, the more resources you have to save up for things.

  2. This works. Recently after almost 12-15 years Ive finnaly payed my debts down to a single car payment. Having addtional cash to save spend what ever has been such a stress relief. I worry less and can be focused on the things I want to do with my family. Wish the government could figure this out.

  3. Don’t give up hope. Set a plan for “Debt Free Living” and take it one step at a time. My wife and I did just that; Put more onto the principle house payment, paid off cars, paid off VISA each month, stuck to our budget 99% of the time. It was difficult sometimes, but now we are enjoying our “Debt Free Living” and our retirement.

    What we had to do when in the Air Force (budgeting) was carried through into civilian life. Budgeting helped keep us focused on the goal: college for our daughters and being out of debt by retirement time.

    Set up your budget, adjust when necessary as in winter fuel oil or propane is needed for winter heat, you get the picture – but leave some flexibility.

  4. I have the opposite problem really. I am from a poor family and my Dad always said when you go to pick something up ask yourself “Is it need or greed” answer yourself honestly. This has led me to the problem of not having credit really (which is not really a bad thing) I had to learn to buy little things and then make sure to make the payments rather than do as I always do and pay cash. I save and save and then when I really want something I go in and pay for it. I finally bought my first new fancy SUV at the age of 45, problem again I went in and paid cash for it (tax and all in $50,000 {about the price of my house}). Well the police were there in minutes and the stricken panic on the salesman’s face was priceless. With confidence I had them call my bank and be assured this is what I do. It’s a strange world when cash is no longer king. However it feels good to owe no one anything outside of monthly bills. I have a debit card and nothing else. I don’t make a lot of money but I have a good home and the kids are fed, dressed nice and happy. They don’t want the fancy games. We do just fine without keeping up with the Jones. Image is not important to me, I wish so many others could stop competing with each other and earn to live not live to earn.

    1. “earn to live, not live to earn”

      Well said. Those who live to earn, often have no time to really live and enjoy life and its abundant simple pleasures. It can be a delicate balancing act.

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