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How to Dump Debt if You're REALLY Serious About Financial Freedom

What to Do if You’re Serious About Getting Out of Debt This Year

Hey, frugal friends! As I wrote on Fruclassity on Monday, I’ve got a serious itch to dump the remainder of our consumer debt this year and to lower our mortgage as well. Not sure what’s prompting it, but the urge has been going strong for three straight weeks now. The conspiracy theorist in me tells me it’s because America is headed for a nasty financial meltdown, but I’ll spare you from that rant for now. 🙂

Meltdown or no meltdown, it’s always good to get out of debt and to take advantage of those times when your motivation is strongest. So, in that vein, here are some rock solid tips for dumping debt if you’re really serious about becoming debt free.

How to Dump Debt if You’re Serious About Becoming Debt Free

Do the Challenge Everything Budget

My blogging pal J$ uses this budget and has experienced major league success in cutting his family’s expenses. I’ll let you head over to his site to get the details, but suffice to say that the Challenge Everything budget is a rockstar way to cut expenses so that you have more money to put toward debt payoff. If you’re really serious about paying off debt this year, you’ve got to make cutting expenses a top priority. Forgive my bluntness, but it’s a huge waste of your life and your time to pay for cable TV when you could be using that money to get out of debt and work toward financial independence.

Have a “Crisis Mindset” About Your Debt

If you’re really serious about paying off debt, you’ve got to have a crisis mindset when you look at your debt numbers. You’ve got to start viewing that debt as the ultimate enemy. And in reality, it is an enemy. Debt is an enemy to everything we hold dear: time, peace, freedom, and fun.

  • Debt forces you to work extra hours than you’d need to work if you didn’t have debt, therefore robbing you of your time.
  • Debt robs you of peace as you ponder the slavery you’ve put yourself in to credit card companies and banks.
  • Debt takes away your freedom via time and money and leaves you with less options in life
  • Debt takes away your fun on many levels. Don’t allow it to do that any longer

When you acquire a crisis mindset about your debt and start viewing it as something you’e got to get out of your life ASAP, like a woodtick that’s bored its head into your arm or that boss that makes your life a living hell every day, you increase your drive and momentum as you work to rid yourself of the crisis that’s holding you back in so many ways: DEBT.

Recommended Reading: Start Late, Finish Rich: A No-Fail Plan for Achieving Financial Freedom at Any Age (Finish Rich Book Series)

Don’t Be Tempted by Immediate Gratification Expenditures

It’s easy to be tempted to spend when you see a great outfit online, a great pub deal through a coupon company or that new car on TV. Don’t fall for the trap. View these spending temptations as mini-enemies working for your main enemy; your debt. You deserve better than a new shiny something or a dinner out: you deserve debt freedom!

For more information on how to break the temptation to spend on immediate gratification stuff, read this article on “How We Broke the New and Shiny Cycle.”

Have an “Every Extra Dime Toward Debt” Mentality

And I mean EVERY extra dime. No dollar amount is too small to put toward your debt. Each dime and nickel will eventually add up to dollars, and then ten dollars and then a hundred dollars and then a thousand. Like the magic of nickel and diming yourself into credit card debt, that same rule of compound interest will help you nickel and dime your way out of debt.

Recommended Reading: Money Love: A Guide to Changing the Way That You Think About Money

Find “Extra Money”

Extra money for debt can take on many forms. Here are some ideas:

  • All bonuses, tax returns, side hustle and overtime monies go toward debt
  • All money saved when you buy an item on sale goes toward debt
  • All money saved when you were going to spend money but didn’t goes toward debt. For instance, if you were going to order takeout for dinner but then decided to eat at home, the money you would have spent goes toward debt. Or if you were going to buy a pair of shoes that you found on clearance but decided not to, put the money you would’ve spent on the shoes toward debt
  • All money earned by going through each drawer and closet to find stuff to sell on Craigslist goes toward debt
  • All money earned by cutting expenses using the Challenge Everything budget goes toward debt

If you truly want to dump your debt this year, you’ve got to have that crisis mindset, and to utilize the momentum that comes with the crisis mindset to spend a whole lot less and earn a whole lot more to put toward your debt balances this year. Downsize your housing, your car or whatever other thing in your life that’s holding you back and keeping you from a life of debt freedom. Treat your debt as the ultimate enemy this year and you will indeed succeed at becoming debt free.



    • Laurie says:

      Yay!!!!!!!! Yes, that is a problem. My hubby’s fine with the Sunday national station TV games, so I’m lucky in that respect. 🙂

  1. We are excited to become completely debt-free this year. Although the type of debt we still really isn’t a crisis, we are ready to be done with it and will definitely be using the “challenge everything” approach and putting all extra income we receive from bonuses, returns, gifts, etc. toward it. So excited!

  2. Love the term “mini-enemies!!

    “…these spending temptations as mini-enemies working for your main enemy; your debt”.

    Impulse purchases and temptations absolutely are “mini-enemies” and a really powerful place to find extra money to put toward the real enemy. They’re not even big sacrafices, because it’s just a passing impulse. I love that analogy! cheers Laurie!

    • Laurie says:

      Hey, my debt free friend!!!!!! SO very happy for you. You are an inspiration to many. Can’t wait to see what the next stage brings!!

  3. Great article, Laurie! Our spending in 2015 was unreasonably high – guess we just decided to let it slip and thought that things will fix themselves up. They don’t, you have to take action so we’re starting to be (again) very strict about it this year and set a budget that is 33% lower than our average spending last year. If we continue doing things as we are now, we’re going to spend even less than that in January. So it can be done!

    • Laurie says:

      I know you can do it, C! We had to spend a lot last year on home repairs. It was so disheartening! But pick yourself up and move on, right? Here’s to an AWESOMELY frugal 2016, my friend!

  4. Debt Hater says:

    Hoping that I will be able to completely pay off my student loans in 2016! Ever since I started taking my repayment seriously I have been in crisis mode and I think that has helped me stay focused. I also have taken the approach of putting a majority of any bonus I receive at work towards my loans, it always feels good to make “extra” payments.

  5. I remember when I was in great debt last year, I was so serious that I didn’t procrastinate and looked for more side hustles to work on. In the end, I paid off my debt. It was one of the best motivation I had. Now that I have less debt, I’d like to make saving more as my motivation to hit my target amount, Laurie. Nice advice by the way.

  6. Sudarto says:

    Actually many ways to be free of debt. From large to small. For example, to sell our assets that are not needed. Assets only decoration in the home. Old furnishings. If we are not as valuable as the house we live in, of course we can sell it to earn a lot of money that will be used to pay off the debt. In addition, we must dare to be frugal. Although, we would not be comfortable. However, the debt must be repaid.

  7. Kae Lee says:

    You are speaking to my heart! Your words are soaking in! I found your page from a comment you made on Finance Girl. I have my Master’s Degree, but can’t make myself follow my budget. I have just been spending and spending and now I am in a terrible mess. Your words tell me I have to do this. I have to get out of debt and it will be worth it. Thank you. What was your successful side hustle?

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