Rid yourself of debt for good

Dealing with the debt problem involves shifting the mindset and tackling the old die-hard habits that keep you from staying out of debt.

People end up in debt for many reasons, including unfortunate circumstances like unforeseen medical expenses and job losses, but a leading cause of avoidable debt problems is overspending. A study by popular personal finance site, Nerdwallet, showed that much debt accumulates as a result of the unnecessary use of credit cards. When credit cards first came into existence, they served as a means of promoting customer loyalty and improving the efficiency of customer service, however, they have now become a symbol of convenience that is rapidly becoming detrimental.

Figure 1: Reasons why people get into credit card debt

nerd wallet

Source: nerdwallet.com

Credit card use for getting out of a murky situation is justifiable, but the increasing use of the cards for luxuries rather than necessities is becoming a big problem. Overspending when using credit cards has become the norm, although it should never have become normal to begin with. A vicious cycle of overspending on money that is not there in the first place now exists, and it has created the sort of debt crisis that many people now find themselves in.

According to CNBC, as of mid-2017, at least 43% of Americans have outstanding credit card balances of over 2 years – spending habits are worsening, costs are increasing, and income is either decreasing or remaining constant. On average, one person has more than one credit card in the hope that they can strike a balance if they have more to spend with an improved credit rating. The reality is that this is only aggravating the situation. While credit rating may improve in the short-term, the unsustainable spending is likely to worsen financial position by promoting debt accumulation that a person is in no position to pay off.

Some forms of debt are necessary e.g. your mortgage, but credit card and other unnecessary debts are best evaded. Uncontrolled credit card debt is now viewed as one of those things that are part of the modern world but this is simply not right. By eliminating unnecessary debt you pave a way for paying off the bigger debt. There are several ways to get out of unnecessary debt, but what is more important is adopting the right mindset and habits to avoid the debt in the first place.

To rid yourself of unnecessary debt for good, you need to:

  1. Learn how to stay out of debt,


  1. Know how to repay anything you owe.

It may look like the plan is in the wrong order, but there is no point in being debt-free for a short while and then ending up in debt again within a couple of months just because some old habits are still at play. Knowing how to stay out of debt trouble once you are out is more important than getting out first because it is what will keep you safe in the long run.

The important thing here is forming the right habits. Whether they are good or bad, habits take time to form and what this means is that you will have to exercise some patience with yourself to replace the bad spending habits with good ones. It is tough but, it is achievable.

Commit to saving more than you spend

Make it a rule to save more than you spend. Better yet, do not just save, invest. By habitually saving and keeping your spending limited to the necessities, you can build wealth and escape living from paycheck to paycheck. Even if all you have is a grant and you are jobless, stick to the basics when it comes to spending and only go all out when it comes to multiplying your money.

Never increase your spending as your income increases. The common trap is to increase spending in line with increased earnings, but it is vital to maintain your expenses so that you are left with more to save and invest. This does not mean you have to live frugally all the time as spoiling yourself sometimes is equally as important as saving. Increasing spending as your income increases means you cannot grow, but sacrificing some luxuries now means you can build a better financial position that will allow you to reward yourself with even bigger luxuries in the future.

Avoid credit cards at all costs

If possible, stay away from credit cards, and if you must have a card, try to have just that one. Not only do credit cards attract fees, but they may also pull you back into the overspending cycle. If you must have a credit card, make sure it’s for something specific that you really cannot do without. Ensure you have a system in place for repaying any credit card balances and always pay these on time every month to avoid any additional charges. A better alternative to a credit card is a debit card, which will actually force you to live within your means.

Have an emergency fund

Keep some extra money stored for emergencies so that you do not have to go back to your credit card when a problem arises. Be very stingy with your emergency fund and use it only for emergencies. Do not be drawn into feeling sorry for people who are not in dire need and refrain from disturbing your fund over unfounded pleas that are not life-threatening. By being in control of your emergency fund you will also learn better control of your life in general.

Once you have prepared yourself not to fall back into unnecessary debt you can tackle getting out of the current debt situation that you are in:

Know your standing

It may seem pretty obvious that you know how much you owe, but it is possible that you may have missed some payments that you have completely forgotten about in your state of frustration and due to having more than one type of debt to pay off.  The first thing you have to do is to figure out exactly how much you owe. This may involve simply going back to where you have written everything down or it may involve setting up a meeting with the people or institution you owe to find out just how much you need to pay back.

Formulate a plan

Once you know how much you need to give back, you need to come up with a repayment strategy. This may involve deciding which payments are crucial and which ones you can leave for later. A plan may include negotiating lower interest rates that can save you a lot of money and help you pay off your debts faster.  Negotiation can also help you to consolidate your debt so that the overall negative balance of the borrowing is reduced. A crucial element of coming up with a plan is deciding how you are going to get the money to pay back because there is no point in putting in place a plan that has no way of being executed.

Stick to it

When all is said and done, what is perhaps the crucial step is learning to stick to the plan. Debt can weigh you down and it is possible to feel demotivated. This can make it difficult for you to stick to the plan and get rid of the debt. You have to constantly remember that where there is no pain, there is no gain and this will help you to disregard any temptation to slide back into debt. You have to keep on going and working hard, and before you know it, you will be debt-free and then you can really enjoy your life. What’s more, the contentment you will get from achieving the difficult task of getting rid of debt will make you a better and stronger person.

A better you

Once you have eliminated credit card and other unnecessary debt, you can put in place a system for saving money. This money can go towards any emergencies and paying off other debt like your mortgage or student loan. What is even better than saving is investing because the latter allows your money to grow at a higher rate and this can ease your financial burdens faster.

It was only in the olden days when investing was something that was done by a special group of people who had lots of money to spend. We now know better and are aware that even you can change your financial future by beginning to invest now. It is all about prioritizing your financial freedom, taking it seriously, and working tirelessly towards it without giving up. Working towards getting rid of debt not only shows financial discipline, but it is a great precedent for tackling other issues that you may face in life.



9 thoughts on “Rid yourself of debt for good

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