by JQ Adams

Created on: February 28, 2009

Over the last decade or so, millions of individuals across the nation have found themselves sinking deeper and deeper into debt. Getting out of debt has become more difficult over the years because many debtors have found that they make more money by keeping people in debt, by charging the individuals late fees, over limit fees, and higher interest rates on their debt instruments. Becoming debt free is not easy and it can take a fair amount of time to become completely debt free, but once the lessons have been learned, it is possible to remain debt free forever.

1. Dramatically Reduce Your Spending

The first thing that you must do to become debt free is to dramatically reduce the amount of your paycheck that you spend each month. The main reason that individuals begin to drown in debt is because they are living beyond their means "trying to keep up with the Jones" and are using credit instruments to bridge the gap. To become debt free, you must break the mindset of having the latest clothes and electronics as soon as they come out or going out to lunch every workday and start using the money that you save to pay down your debts.

2. Stop Charging Items

It will do you no good to pay down a credit card if you are just going to be placing charges on the credit card later in the month. Purchases paid for with a credit card can end up costing the individual much more than if the purchase had been paid for in cash because of the finance charges, interest rate charges, and in some cases, late charges levied against the purchase by the credit card issuer. If you do not have the money to pay for a purchase in cash, you will be better off postponing the purchase until you can pay for the items with cash.

3. Track Your Spending

Tracking your spending is a very important part of becoming debt free because it allows you to see where your money is going. Many individuals have found numerous ways to reduce their total spending by examining the many unnecessary purchases that occur in everyday life. For example, you could save up to $3.50 per ATM transaction just by going to an ATM branded by the bank where your account is held, and assuming 1 ATM withdrawal per week, over the course of a year you would save nearly $200 in ATM fees.

4. Create An Emergency Fund

One reason that many individuals become mired in debt in the first place is because an unexpected expense has come up and the person did not have enough money in their savings to cover the cost of the expenses, so they put the charge on their credit card. Unexpected expenses will routinely occur in life, such as having to repair a car, a child growing out of their clothes, or other minor emergencies, and having the money in a savings account to cover these unexpected expenses help you resist the urge to charge the purchase to your credit card, where you will still have to pay the entire amount plus interest costs.

5. Make The Repayment Of Your Debt A Priority

To truly become debt free, you must make the repayment of the debts you already hold a priority in your life. Instead of spending your "extra" money on things such as dinners out, movie tickets, or the hottest new CD, you should use that money to pay down your debts. Although these expenses may seem small at the time, they do add up over time and the money that you spent on that immediate gratification purchase would have been better put to use breaking debt's hold on your life.

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