In today's society, almost everyone carries some amount of debt. In fact, many people carry massive amounts of debt compared to their income. Becoming debt free will make a huge difference in the lives of those who can achieve it. Beware however; it will take discipline and personal sacrifice in order to get there. For anyone who truly wants to become debt free and is willing to work at it, begin with these smart techniques.

Step 1:

Know your financial situation. Compile all your assets, income and debts so you can see exactly where you are financially.

Step 2:

Set a budget. This is not a simple process. You must track where you spend your money and why. It may take a couple of months of adjusting before your budget represents something realistic and reasonable for you.

Step 3:

Live within the budget. Live by the budget you set and save for high cost purchases.

Step 4:

Save money for emergencies. Not everything can be covered by your budget. The unexpected will happen and you may need money right away. Having a savings fund will ensure that you do not incur new debt in these situations.

Step 5:

Stop using credit. The only people who should use credit cards are those who are disciplined enough to use rewards cards wisely and pay them off entirely every month. In that way, they can reap the benefits of the card without incurring the interest charges.

Step 6:

Pay off your lowest credit cards first. After you have those credit cards paid off, dedicate the amounts you would typically pay on them to the next highest cards.

Step 7:

Pay off car loans. When all high-interest credit cards have been paid off, work on paying off your car loans by using the money that you no longer have to use to make credit card payments. When the car is paid off, do not buy another right away. Hold off as long as you can and put a monthly average car payment into a savings account each month, so you can hopefully buy your next vehicle without a loan.

Step 8:

Pay off your mortgage. When you have only a mortgage left as your one form of debt, you should now focus on it. Imagine the financial freedom that will come with not having a house payment. The money that you were paying on credit card payments each month should now be devoted to paying down the principal on your home. Consider refinancing only if it will lower the interest and do not take any equity out of your home.

Step 9:

Use money-saving techniques. Use coupons, do comparison shopping and bulk shopping in order to save money. Sell things you no longer use. Delay purchases until you can pay cash. Do not go out to eat because you don't want to cook. Seek out other money saving tips in order to come up with the money you need to start paying off your debt.

Being debt free takes hard work, commitment and discipline. By using tried and true tips such as the ones above, you will have a livable plan for becoming debt free. Remember that you did not get into debt overnight and you definitely cannot get out of it overnight. It requires a long-term investment in your financial future. Follow these guidelines and you will become debt free sooner than you think.

Jason Kay's picture
About this Author:
Jason Kay recommends you learn more practical debt reduction techniques at DebtSecret.net. Learn how to become anything you want at HowToBecomeAnything.com.
View more information and all guides by Jason Kay