How to make debt free living a reality

When you are living paycheque to paycheque and struggling to get control of your debt, the thought of debt free living may seem impossible. Maybe you’ve been in debt for so long that you find it hard to remember what life was like when you were debt free.

“Becoming debt free can happen for you, even if you find the prospect daunting. It will take hard work and patience, but if you develop a solid debt repayment strategy and stick to it over time, you can embrace the benefits of debt free living,” says Jeff Schwartz, Executive Director, Consolidated Credit Counseling Services of Canada.

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How long have you been in debt?

It’s not uncommon for people to not even be aware of what it is like to live debt free. With the high cost of education, young adults are beginning their earning years saddled with student debt. For many, this is where the debt cycle begins; people accept debt as a means to an end, or simply an aspect of life that they must endure.

That’s not true. Debt free living is a choice. And you can decide to do it.

The benefits of living debt free

Obviously, the benefits of debt free living are numerous, but have you ever really stopped to consider specifically how getting rid of your debt would enhance your life?

How much money are you paying out every month to cover your debt? What else could you do with that amount of money every month? You could accomplish any number of financial goals. Is it really worth giving those up? That’s what you’re doing when you continue to live your life with debt.

Don’t forget about the negative physical, mental and social effects that are caused by debt. When you carry debt and are living paycheque to paycheque, the stress can be enormous. That anxiety translates into physical symptoms. Carrying debt can also create social problems, as it’s common for people burdened with debt to begin to avoid family and friends, because they’re embarrassed about their debt, or don’t feel that they can talk about it.

Do you work extra hours so you can cover your debts? How about injecting a little work-life balance by living debt free?

You can avoid all of these negative things simply by making a decision to work towards becoming debt free. Think of the freedom!

Habits for success

Good money management is learned behaviour. It takes changing your attitudes and habits around spending and saving. So what kind of behaviours do people who are debt free exhibit?

Focus on what they do have

People who are debt free tend to not be materialistic and are content to simplify their lives. That means being creative with your spending and valuing some of the more important things in life (i.e. that don’t come with a price tag).

Able to follow a process

The key to getting out of debt is developing a realistic strategy and sticking to the plan. You’ve also got to be able to identify that following the process of your strategy is your path out of debt. That means making following your strategy, and whatever sacrifices that may entail priorities.

Self-control

If you intend to become debt free, it’s a good idea to start exercising self-control. That means saying no more often and resisting the temptation of instant gratification with the “buy-now, pay later mentality”. Think about what you’re getting from going debt free, rather than what you’re giving up in the moment.

Elbow grease

Being debt free means spending within your means, which may mean you’ve got to do more with less. If you’re willing to DIY wherever you can or put in extra time to plan your spending, you’ll be able to stretch your budget further.

Goal-oriented

People that have gotten themselves out of debt have been successful in doing so because they set a goal. They made it visible and understand how their daily choices add up together to reach that goal. It’s all about being able to be a long-term thinker, because if you can see the big picture and visualize the benefits of being debt free, you’re more likely to achieve success.

How to become debt free

Now that you’ve seen the benefits of debt free living and have an idea of how to adapt your thinking around money, what are the actual steps that you need to take to get rid of your debt?

Tally your debts

You can only make an effective plan to pay down your debts if you truly know what you are up against. Gather all of your debts so you can plan to pay them down.

Set a realistic budget

Do you have a budget? It’s entirely possible that is one of the reasons that you ended up in debt in the first place. Set a detailed budget that lays out all of your expenses. Allocate some of your budget towards savings and then figure out how much you’ve got left over to direct towards debt payment.

Plan to revisit your budget at least once a quarter to make sure that it’s still helping you reach your goals.

Paying debt down

There are a few strategies. A common one is to choose your highest interest bearing card first and pay that down as quickly as possible, moving on to the next highest interest rate debt after that. Focus as much as you can on a single card, rather than paying small amounts on lots of cards.

“You can also consider debt consolidation or other debt relief options if your debt situation is more serious,” says Schwartz.

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How to remain debt free

Make sure you’ve got savings

It is essential that you continue to save, so you can avoid having to turn to debt if you encounter emergency expenses. That would erase all your hard work.

Cash-only living

Put the credit cards away and use cash only going forward. If you do use credit cards, plan your purchases and only spend what you’re able to pay off in full every month.

Spend within your means

Don’t turn to credit as a way of stretching your household budget. Rather, use the good habits that you’ve learned to enjoy debt free living.

Make debt free living part of your future. Call one of our trained credit counsellors at or check out our free online debt analysis.